New York Law Review

Blue Cross & Blue Shield of Central N.Y. v. McCall, 89 N.Y.2d 160 (1996): Limits on Legislative Power to Assign Administrative Duties to Comptroller

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Blue Cross & Blue Shield of Central N.Y. v. McCall, 89 N.Y.2d 160 (1996)

The New York State Constitution prohibits the Legislature from assigning administrative duties to the Comptroller that are not incidental to the Comptroller’s fundamental duty to supervise the fiscal concerns of the state, even when the Legislature has broad authority to delegate duties.

Summary

This case concerns the constitutionality of legislation granting the State Comptroller the authority to conduct audits of private health insurance corporations. Blue Cross and Blue Shield challenged the legislation, arguing it violated the New York State Constitution. The Court of Appeals held that the legislation was unconstitutional, as it assigned administrative duties to the Comptroller that were not incidental to the Comptroller’s core function of supervising state fiscal matters. The Court emphasized that the Constitution delineates the Comptroller’s role and that the Legislature cannot expand it to include administrative tasks already assigned to other departments, like the Insurance Department.

Facts

Blue Cross and Blue Shield are private not-for-profit health insurance providers under Article 43 of the New York Insurance Law. The Superintendent of Insurance already possessed the authority to conduct management and financial audits of these corporations. The Legislature then passed a budget bill granting the State Comptroller the same authority to audit these insurers, appropriating special funding for these audits, initially through the Insurance Department. The Superintendent of Insurance and the State Comptroller agreed to a plan to coordinate these audits. During an audit, the Comptroller issued subpoenas for claims records, which Blue Cross and Blue Shield challenged.

Procedural History

Blue Cross and Blue Shield filed an action challenging the legislation authorizing the Comptroller’s audit as unconstitutional. The Supreme Court rejected the constitutional argument but quashed the subpoenas as overly broad. The Appellate Division reversed, declaring the statute unconstitutional, holding that it violated the New York Constitution by assigning administrative duties to the Comptroller not incidental to his specified functions. The Court of Appeals then reviewed the Appellate Division’s decision.

Issue(s)

Whether the Legislature has the constitutional authority to assign to the Comptroller the power to conduct audits of private health insurance corporations subject to substantial state regulation, when such audits are not incidental to the Comptroller’s constitutional duties.

Holding

No, because the plain language of the New York State Constitution prohibits the Legislature from assigning administrative duties to the Comptroller that are not incidental to the Comptroller’s fundamental duty to supervise the fiscal concerns of the state.

Court’s Reasoning

The Court reasoned that the New York State Constitution, Article V, § 1, defines the Comptroller’s powers and duties. While the Legislature can define these powers and assign supervisory duties, it cannot assign administrative duties that are not incidental to the Comptroller’s core fiscal responsibilities. Audits of corporations under Article 43 of the Insurance Law are administrative duties. Since the Insurance Department already had the power to conduct these audits, assigning the same duty to the Comptroller was an unconstitutional delegation of administrative power. The Court dismissed arguments that the Comptroller’s experience with Medicaid audits justified the delegation, stating that the Legislature cannot override a plainly expressed constitutional prohibition. The Court emphasized the principle of delineated responsibility and control, stating that the assignment of auditing duties to the Comptroller in this case ran counter to the purpose of government restructuring which sought to streamline government and avoid duplication of effort. The Court noted, “Simply, the Legislature may not delegate administrative duties of the Insurance Department relating to article 43 audits of private insurers when such duties are clearly administrative and not incidental to the primary function of the Comptroller.”

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