Opinion
# 2015-049-002 Claim No. 107884 Motion No. M-85602
01-05-2015
EDWARD DAVISON v. THE STATE OF NEW YORK
Jacob D. Fuchsberg Law Center By: William M. Brooks, Esq. Eric T. Schneiderman, New York State Attorney General By: Kimberly A. Kinirons, Assistant Attorney General
Synopsis
The Court denied claimant's motions to amend his answer to defendant's counterclaim, and for summary judgment dismissing defendant's counterclaim to recover its charges for the treatment claimant received while he was in the care of the State's Office of Mental Health.
Case information
| UID: | 2015-049-002 |
| Claimant(s): | EDWARD DAVISON |
| Claimant short name: | DAVISON |
| Footnote (claimant name) : | |
| Defendant(s): | THE STATE OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 107884 |
| Motion number(s): | M-85602 |
| Cross-motion number(s): | |
| Judge: | DAVID A. WEINSTEIN |
| Claimant's attorney: | Jacob D. Fuchsberg Law Center By: William M. Brooks, Esq. |
| Defendant's attorney: | Eric T. Schneiderman, New York State Attorney General By: Kimberly A. Kinirons, Assistant Attorney General |
| Third-party defendant's attorney: | |
| Signature date: | January 5, 2015 |
| City: | Albany |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
This action was initiated back in 2003, when claimant Edward Davison alleged that he had been wrongly treated as a sex offender during his stay in a State psychiatric hospital from December 1996 through April 2002 (Recco Aff. Ex. A ¶¶ 9-24). In a verified amended answer dated February 4, 2005, defendant State of New York asserted a counterclaim to recover its charges for "medical care, treatment, and services to claimant" while he was in the care of the State's Office of Mental Health ("OMH") (Kinirons Aff. Ex. C at 3). Although the counterclaim stated that the total charges owed by Davison amounted to $1,109,598.85, defendant sought the lesser of either that amount plus interest, or the "recovery due claimant pursuant to any judgment in favor of claimant" (id. at 4). Put simply, the State seeks to recover any award claimant receives in this action, unless that award exceeds the amount due it for the expense of Davison's time in State psychiatric care, in which case it seeks its charges for such care.
Defendant subsequently submitted a second amended verified answer, which advanced a counterclaim in the same amount.
The action was stayed while claimant's counsel, the Mental Disability Law Clinic at Touro Law Center ("MDLC" or "the Clinic") pursued a challenge to the constitutionality of OMH's policy of presenting counterclaims of the sort raised here whenever the State was sued in the Court of Claims by individuals who could be charged for OMH care. Specifically, Davison sought to intervene in a lawsuit captioned Mental Disability Law Clinic v Hogan ("Hogan"), filed in the United States District Court for the Eastern District of New York. In that suit, the Clinic alleged that the State's counterclaim practices precluded any realistic chance of recovering against the State, chilled plaintiffs' exercise of their right of access to the courts, and violated their rights under the First Amendment and Equal Protection Clause. As discussed in more detail below, the district court dismissed the action (853 F Supp 2d 307 [ED NY 2012]), and that ruling was subsequently affirmed by the Second Circuit (519 Fed Appx 714 [2d Cir 2013]).
Following these decisions, claimant answered the State's counterclaim, asserting as an affirmative defense that the counterclaim is against public policy and "objectively chills [his] right to petition the government under New York State Constitution Article I, § 9." Claimant now brings this motion for summary judgment, seeking dismissal of that counterclaim, on essentially the same grounds rejected in the Hogan litigation, albeit relying on state, rather than federal, constitutional provisions. He also moves to amend his answer to the counterclaim, so as to add a defense under the Equal Protection Clause.
Specifically Davison argues that the "OMH practice of assessing full charges":
•impermissibly burdens claimant's right to free expression under Article I, §§ 8 and 9 of the New York State Constitution (Cl. Mem. of Law at 8 - 12);
•impermissibly burdens claimant's right of access to the courts (id. at 12-13);
•violates claimant's right to equal protection of the laws (see NY Const, art I, § 11), in that the State only assesses charges in the Court of Claims (and not in other fora), and does not assess charges in wrongful death claims (Cl. Mem. of Law at 15-18); and
•violates New York public policy, in removing the use of tort law to deter unlawful conduct by the State (id. at 13-15).
Section 8 provides in relevant part that every citizen "may freely speak, write and publish his or her sentiments on all subjects," and bars the passage of any law "to restrain or abridge the liberty of speech." Section 9, as pertinent here, guarantees each citizen the right to "petition the government." In his brief, claimant frequently refers to his claims as arising under the "First Amendment," notwithstanding that this case is ostensibly distinguishable from Hogan because it is premised on state, not federal, constitutional grounds (see e.g. Cl. Mem. of Law at 8 ["the OMH practice of assessing full charges impermissibly burdens patients' First Amendment Right to petition for redress of grievances"]).
Section 8 provides in relevant part that every citizen "may freely speak, write and publish his or her sentiments on all subjects," and bars the passage of any law "to restrain or abridge the liberty of speech." Section 9, as pertinent here, guarantees each citizen the right to "petition the government." In his brief, claimant frequently refers to his claims as arising under the "First Amendment," notwithstanding that this case is ostensibly distinguishable from Hogan because it is premised on state, not federal, constitutional grounds (see e.g. Cl. Mem. of Law at 8 ["the OMH practice of assessing full charges impermissibly burdens patients' First Amendment Right to petition for redress of grievances"]).
Claimant contends that Hogan does not foreclose these arguments, since the State constitution has been construed in certain instances to provide for greater protections than its federal counterpart.
Defendant contests the motion on essentially three grounds: First, it argues that the Court of Claims has no jurisdiction to issue the constitutional rulings necessary to grant Davison's motion. Second, it contends that, to the extent this Court has jurisdiction, it is compelled to reject Davison's argument under the binding precedent of Siegel v Surles, (Index No. 405319/93 [Sup Ct NY County 1995], affd 239 AD2d 115 [1st Dept 1997], appeal dismissed 90 NY2d 934 [1997], lv denied 91 NY2d 804 [1997]). Third, it asserts that claimant's motion must fail on the merits, as the counterclaim is permissible under the New York State Constitution, and consistent with New York public policy.
Before I may address these arguments, some background on the prior litigation of the issues that underlie this case is in order.
Article 43 of the Mental Hygiene Law allows OMH to charge fees for the services provided in its facilities, although no person may be denied services due to inability to pay. (MHL § 43.01). OMH may initiate suit to collect any fees owed (MHL § 43.07[b]). In practice, many individuals in OMH care have no assets to pay these charges, which therefore remain uncollected.
The question at the heart of this motion is how the State may respond when such an individual sues the State for monetary damages. If the action is successful, that person will then possess funds from which the State could recover for the cost of its services. But if the State seeks to impose such charges, they may offset the entire value of the suit. According to claimant, this poses an insurmountable obstacle to any recovery, and is a significant deterrent to the commencement of litigation by those injured in State mental health facilities.
The State's position on this issue has gone through several incarnations, and each has faced legal challenge. Initially, when an individual formerly in OMH care sued in the Court of Claims, the State sought to recover charges owed under Article 43 by presenting the claimant with a verified claim for any amount owed. The State then announced that it would "setoff" the debt against any recovery claimant obtained, without indicating that it would limit that setoff to the amount of claimant's judgment. It would then simply deduct its charges from any payout to be made to claimant (or not pay out anything at all, if the State's charges equaled or exceeded the judgment).
Two individuals who had withdrawn Court of Claims actions in the face of the State's claim to setoff challenged this policy in federal district court, represented by MDLC. In 1991, Judge Robert Ward of the United States District Court for the Southern District of New York struck down this practice as violative of the First Amendment, Equal Protection Clause and Due Process Clause of the US Constitution, in Acevedo v Surles (778 F Supp 179 [SD NY 1991]). In regard to the first two claims, Judge Ward found that "OMH's policy has an especially chilling effect because OMH does not tell the patient that it will collect charges only in the amount of any recovery against the State" (id. at 185). He also held that the use of "setoffs" to recoup the State's charges violated the Due Process Clause. In reaching this conclusion, Judge Ward noted the following:
"Plaintiffs have argued that, when patients file claims against OMH, the agency could file a counterclaim seeking to recover care and treatment charges in an amount no greater than the amount of recovery sought by the patient. This would certainly provide those who sue OMH with an opportunity to have a predeprivation hearing on whether OMH's assessed charges were accurate, valid and legal. Because OMH would already be involved with litigation against the patient, the incremental time and cost associated with filing a counterclaim would be minimal"
(id. at 189).
Following this decision, the parties in Acevedo entered a post-judgment stipulation stating that the Court's judgment "does not prohibit the filing of a counterclaim by the State of New York in a lawsuit in the Court of Claims . . . , provided that the counterclaim is limited to the amount of the bill for the cost of hospitalization or the amount recovered by the patient-plaintiff in the Court of Claims lawsuit . . . , whichever is less" (Siegel, supra, at 8).
The State then adopted just such a practice, asserting its claims for hospital and treatment charges via counterclaims in Court of Claims actions, making clear that those counterclaims were capped at the amount of claimant's recovery (Siegel, at 2, 8). Three former and one then-current patients at OMH facilities, each of whom had withdrawn actions in the Court of Claims once the State asserted its counterclaim, challenged this practice in a State Supreme Court action, captioned Siegel v Surles. Once again, MDLC represented plaintiffs, who sought a declaratory judgment that the "State's counterclaim policy violates their rights to equal protection under the United States and New York State constitutions, violate[s] their rights of access to the courts under the United States and New York State constitutions and violates New York State public policy" (id. at 2).
The defendants in Siegel, the Governor and OMH Commissioner, initially argued that jurisdiction over the matter properly belonged in the Court of Claims. The Court rejected that argument, on the ground that the primary relief sought was equitable, and the Court of Claims lacked jurisdiction to grant it (id. at 3-4). It also declined to find that Acevedo had preclusive effect, since that case concerned defendant's "serving [of] verified claims and not counterclaims" (id. at 9).
Finally, the Court rebuffed petitioner's constitutional and public policy arguments, upon the following reasoning:
•The assertion of counterclaims does not violate the Equal Protection Clause of the US and New York State constitutions, since the practice of asserting counterclaims is "motivated by legitimate consideration" (id. at 12).
•The capping of the recovery to the amount owed "addresses the concerns raised in Acevedo . . . that the OMH's then existing policy of not informing claimant that the State would not seek any amount over such recovery had a 'chilling effect' under the First Amendment of the United States Constitution" (id. at 13).
•The use of counterclaims rather than setoffs "cures the due process violation found in Acevedo" (id. at 14).
•The State's practice does not violate public policy by creating a disincentive for OMH employees to conform to legal norms, as the State has numerous reasons to comply with state law besides the threat of actions for monetary damages (id. at 15).
The ruling in Siegel was affirmed by the Appellate Division, "for the reasons stated" in the Supreme Court opinion (239 AD2d 115 [1st Dept 1997]). The Court of Appeals dismissed the appeal on the ground that "no substantial constitutional question is directly involved" (90 NY2d 934 [1997]).
In 1999, the Clinic brought another challenge to the policy, this time in federal court in Mental Disability Law Clinic v Hogan. In its opinion, the Court indicated that there had been various changes to the State's policy. The State determined it would forego counterclaims in cases arising out of a plaintiff's death, and altered the circumstances under which the State would settle particular claims (Hogan, 853 F Supp 2d at 312). After protracted litigation, including two trips to the Second Circuit, the federal courts rejected plaintiffs' constitutional challenge.
Specifically, the Second Circuit found that to succeed on their First Amendment claim, plaintiffs had to show the State acted based on retaliatory intent, and they had failed to do so (Mental Disability Law Clinic v Hogan, 519 Fed Appx 714, 717-18 [2d Cir 2013]). As to the equal protection claim - based on the contention that the State asserts counterclaims in suits against the State, but not in actions brought against individual OMH employees - the Court found that the Clinic had "produced no evidence demonstrating that the differential treatment was based on the intent to inhibit or punish the exercise of the constitutional rights of OMH patients" (id. at 718). The Court further held that the differences in approach were not arbitrary, since the State is a party to a Court of Claims action (and thus can assert a counterclaim in such a case), while it is not in the Supreme Court action (and thus no counterclaim is available to it in that forum) (id. at 718).
The defendant had also argued that the suit was barred by the outcome in Siegel, but the Second Circuit did not address that contention.
Following the conclusion of the Hogan litigation, claimant brought the present motion.
Discussion Claimant asserts that OMH's "current practice of . . . asserting counterclaims against patients who sue OMH for the cost of treatment up to the total amount claimed by such patients" is unconstitutional (Recco Aff. ¶ 66). Defendant argues initially that the Court has no authority to rule on this argument, because it "does not have subject matter jurisdiction to declare a state statute unconstitutional" (Def. Mem. of Law at 5).
Court of Claims Act § 9(3) and (4) grant jurisdiction to the Court of Claims to "hear and determine any claim in favor of the state against the claimant," and to render judgment thereon. The Court of Claims only has jurisdiction over claims for money damages, however, and its power to grant equitable relief is circumscribed to matters incidental to the grant of monetary relief (see Ozanam Hall of Queens Nursing Home v State of New York, 241 AD2d 670, 671 [3d Dept 1997]). Therefore, the Court is "not the appropriate forum in which to seek declaratory relief" regarding the constitutionality of a statute, which must be sought in Supreme Court (see Cass v State of New York, 58 NY2d 460, 462 [1983]; accord Shelton v New York State Liq. Auth., 61 AD3d 1145, 1151 [3d Dept 2009]). The Court also has no jurisdiction to review the final acts of an administrative agency, which must be challenged via an Article 78 proceeding (see Buonanotte v New York State Off. of Alcoholism & Substance Abuse Servs., 60 AD3d 1142, 1143 [3d Dept 2009], lv denied 12 NY3d 712 [2009]).
These limitations on the Court's jurisdiction do not, however, deprive the Court of the ability to rule on the legal validity of a claim or counterclaim before it. Rather, in determining whether a case falls outside this Court's subject matter jurisdiction, the key question is whether "the essential nature of the claim is to recover money, or whether the monetary relief is incidental to the primary claim" (Madura v State of New York, 12 AD3d 759, 760 [3d Dept 2004], citing Matter of Gross v Perales, 72 NY2d 231, 236 [1988]). There is no bar to this Court construing state law, or the state or federal constitution, in determining whether a claim before it for monetary damages may proceed. Thus, where a damages claim is at odds with a statute or constitutional provision, the Court may dismiss it on that ground (see Cathedral Academy v State of New York, 47 AD2d 390, 396 [3d Dept 1975] [affirming Court of Claims' dismissal of claim by religious school for reimbursement pursuant to state statute as contrary to the Establishment Clause], affd on reargument, 43 NY2d 940 [1978]; Rigopoulos v State of New York, 236 AD2d 459, 460 [2d Dept 1997] [Court of Claims should have dismissed claim under Labor Law § 240(1), since it was preempted in context of maritime activity by Federal maritime law]). In short, while I cannot examine the legality of the overall OMH policy of asserting counterclaims, or issue any sort of equitable or declaratory relief to enjoin it, I can consider whether the assertion of the State's counterclaim in this case is in conflict with state constitutional restrictions, and must be dismissed on that basis.
Claimant points to Brown v State of New York (89 NY2d 172 [1996]) as providing a basis for this Court's jurisdiction. That case considered whether the Court of Claims has jurisdiction to award damages for a state constitutional tort. It answered that question in the affirmative, holding that such claims were covered by the waiver of the State's sovereign immunity set forth in the Court of Claims Act. Brown did not consider whether this Court may pronounce on the constitutionality of a particular claim or defense. It is relevant here only to the extent that it makes clear that there is no bar to this Court construing the state constitution, where that is relevant to matters properly within its jurisdiction.
Some decisions by this Court have held that a dismissal motion must be denied if it turns on the Court's finding a statute unconstitutional, and thereby implicitly striking it down (see Zimmerman v State of New York, 116 Misc 2d 521, 526 [Ct Cl, 1982]). If this is a correct understanding of the Court's jurisdiction (but see Cathedral Academy, supra), it does not preclude me from addressing the constitutional question here. I do not read claimant's argument as asking that any provision of New York law be found unconstitutional, but rather that the OMH practice of asserting counterclaims to the full extent of its liability be so found. As stated above, while I may not determine this broader question, but can decide if the assertion of a counterclaim was constitutionally improper in this case.
In any event, as set forth below, there has already been a declaratory judgment action challenging the constitutionality of the State's practice of asserting counterclaims up to the amount of recovery in lawsuits like this one. That case was Siegel, and it upheld that practice. I am bound by that decision, and in any case find there is no constitutional infirmity in the State's assertion of a counterclaim in this case.
In Siegel, the First Department fully adopted the reasoning and determination of the trial court in rejecting a legal challenge to counterclaims indistinguishable from those asserted here. As claimant concedes, since there is no other Appellate Division ruling on point, Siegel is binding on this Court (see Mountain View Coach Lines v Storms, 102 AD2d 663, 664 [2d Dept 1984]). Claimant argues, however, that the decision applies only to the "public policy issue," since the plaintiffs in that case did not raise constitutional arguments (Cl. Reply Mem. of Law at 2). But that is not so. As the language from the decision cited above makes clear, the Court also rejected plaintiff's challenges to OMH's policy under the Due Process Clause, the Equal Protection Clause and the right of access to the courts - which findings foreclose claimant's arguments here.
Claimant also contends that its challenges are not barred by prior caselaw because those only considered the application of the federal constitution, and the State constitution offers potentially broader protections. That argument, though, is unavailing.
As noted, claimant makes this point only in regard to Hogan. He does not do so explicitly in regard to Siegel, instead saying (incorrectly) that no assertion of unconstitutionality was raised in that case. But since Siegel, like Hogan, was arguably decided only on federal grounds, I will address the substantive state constitutional arguments below, in the event that Siegel could be read to leave open the prospect of such challenges.
--------
In regard to the Equal Protection Clause, claimant's premise is erroneous. While the Court of Appeals has indeed recognized that state constitutional provisions can be read more expansively than those in the US constitution, it has explicitly held that the reach of the State's Equal Protection Clause is co-extensive with its federal counterpart (see Matter of Walsh v Katz, 17 NY3d 336, 343 [2011], citing Golden v Clark, 76 NY2d 618, 624 [1990] ["this Court has held that the State Constitution's equal protection guarantee . . . is as broad in its coverage as that of the Fourteenth Amendment"]; Under 21, Catholic Home Bur. for Dependent Children v City of New York, 65 NY2d 344, 360, n 6 [1985] ["We have held that the State constitutional equal protection clause . . . is no broader in coverage than the Federal provision"]). Thus Siegel and Hogan require rejection of claimant's equal protection argument.
As to claimant's arguments under sections 8 and 9 of Article I of the New York State Constitution (concerning the right to freedom of expression and the right to petition the government), those, too, are without merit. At bottom, this challenge boils down to the assertion that the State has denied claimant access to the courts (see Cl. Mem. of Law at 8 ["the right to petition the government for the redress of grievances encompasses the right to pursue a civil action in a court of law seeking compensation for injury caused by the government"]). The Court of Appeals has characterized this right as follows:
"Access to the civil courts is primarily a matter of State concern and legislatures have been granted broad latitude in establishing the machinery for resolving disputes as long as the challenged provision is adopted in the interest of the community, is reasonable in relation to its subject, and affords litigants the fundamentals of procedural due process. As a general rule, access to the courts in and of itself is not a right protected by the Constitution. It will be required only when the right sought to be asserted is one recognized as carrying a preferred status in the constitutional sense, and so entitled to special protection, and only then when there is no alternative forum where vindication of the right may be sought. When no such fundamental interest is at stake, the State is free to condition access to the courts or deny it on an arbitrary basis without a hearing. Nevertheless, a State may create a right of access by its Constitution or statutes, as petitioner claims it has done here, and if it does, the Legislature may not alter or restrict this property right arbitrarily. . . . [O]ur State Constitution does not create a per se right of access to civil courts . . . ."
(Matter of Colton v Riccobono, 67 NY2d 571, 576-77 [1986] [internal citations omitted]).
Applying these standards, Davison has shown no constitutional violation here. He has not shown the underlying action implicates some "fundamental interest," or is protected by a specific constitutional provision or statute (see Sisario v Amsterdam Mem. Hosp., 159 AD2d 843, 845 [3d Dept 1990], appeal dismissed 76 NY2d 844 [1990] [no constitutional infirmity in statute that limits right of access to courts so long as denial has "rational basis," and does not involve "rights subject to special constitutional protection may be denied if there is a rational basis"]). Indeed, the courts of this state have specifically declined to find that the recovery of OMH charges in a Court of Claims action violates New York public policy - a finding at odds with the notion that this practice impermissibly shuts the courthouse door (see Matter of Carlon v Regan, 98 AD2d 544, 547 [3d Dept 1984] [rejecting argument that setting off costs for mental health care against unrelated claim against state should not be permitted "as a matter of equity"; "the State rendered the services to petitioner . . . and by statute the State is authorized to charge fees for those services and petitioner is liable for those fees [so w]e therefore perceive no inequity"]).
To the extent that the claim is to be analyzed as one for retaliation against the exercise of First Amendment rights, the Second Circuit rejected such a claim on the ground that plaintiffs did not prove retaliatory intent (see Hogan, 519 Fed Appx at 717-718). Davison has proffered no evidence of such here. And while claimant contends that the broader construction given protection of freedom of expression under New York law warrants a different result here (see Cl. Mem. of Law at 9 [citing People ex rel. Arcara v Cloud Books, 68 NY2d 553, 557-558 (1986)], the federal caselaw relied upon by the Second Circuit in Hogan has been cited by New York appellate courts in setting out the standard for a First Amendment retaliation claim, without any indication that New York law requires a different approach (see Sonne v Board of Trustees of Vil. of Suffern, 67 AD3d 192 [2d Dept 2009], citing Curley v Village of Suffern, 268 F3d 65 [2d Cir 2001]).
Finally, in regard to both the equal protection and free expression claims, claimant contends that because defendant's assertion of a counterclaim has chilled the exercise of his constitutional rights, it is only permissible if justified by a compelling interest - a test it says is not satisfied by the State's desire to "collect[] charges against patients" (see Cl. Mem. of Law at 10-11). I find that argument also without merit.
The State here has pled a facially valid counterclaim, authorized by Court of Claims Act § 9(3) and (4) and article 43 of the Mental Hygiene Law. It has capped that claim at the amount of whatever recovery claimant achieves, and thus there is no prospect that the counterclaim may punitively impose costs beyond what is sought in this lawsuit. Thus, the only "chill" that would result from the counterclaim arises out of the threat that it may defeat Davison's recovery in this action.
If claimant's argument is correct, though, every counterclaim - and every affirmative defense for that matter - that precludes a claimant from securing damages would become a potentially unconstitutional act, subject to strict scrutiny, because it restricts access to the courts. That would be the case even if (as here) the counterclaim is authorized by state law and otherwise facially valid. Claimant does not cite any authority for such a standard, which would upend every aspect of the New York State legal system, and I can find none. As the Second Circuit has noted, in the absence of a retaliatory intent requirement, the upshot of holding a counterclaim or defense unconstitutional because it "chills" litigation (i.e., would defeat the prospect of recovery) is essentially to impose strict liability (see Greenwich Citizens Committee, Inc. v Counties of Warren and Washingon Industrial Development Agency, 77 F3d 26, 32 [2d Cir 1996]). Since I do not believe this is an accurate reading of New York's constitutional standard, I find claimant's "access to the courts" argument to be without merit.
In light of the foregoing, claimant's motion to amend his answer to the counterclaim, and for summary judgment, are hereby denied.
The Court will contact the parties following the filing of this Decision and Order to schedule a conference regarding future proceedings in this litigation.
January 5, 2015
Albany, New York
DAVID A. WEINSTEIN
Judge of the Court of Claims
Papers Considered:
1. Claimant's Notice of Motion, Affirmation in Support and annexed exhibits;
2. Claimant's Memorandum of Law in Support of Claimant's Notice of Motion;
3. Defendant's Affirmation and annexed exhibits;
4. Defendant's Memorandum of Law in Opposition to Claimant's Motion; and
5. Claimant's Reply Memorandum of Law in Support of Claimant's Motion.