New York Law Review

Tag: Social Services Law § 153-i

  • City of New York v. Wing, 93 N.Y.2d 430 (1999): Retroactive Application of Social Services Law § 153-i

    City of New York v. Wing, 93 N.Y.2d 430 (1999)

    Social Services Law § 153-i can be applied retroactively to allow the State to recoup from New York City the full amount of federal disallowances for foster care expenses, including interest, when the final federal agency decision or settlement occurred after July 1, 1995, regardless of when the underlying mismanagement occurred.

    Summary

    This case concerns a dispute between New York State and New York City over who should bear the cost of federal recoupment of foster care aid due to mismanagement by the City. The central issue is the retroactive application of Social Services Law § 153-i, which allows the state to recoup federal disallowances from the city. The Court of Appeals held that the amended statute applied retroactively because the final settlement between the State and the federal agency occurred after July 1, 1995, the date to which the amendment retroactively pertained. The Court also found the State had authority to recoup the interest charges associated with the disallowance from the City.

    Facts

    From 1983 to 1985, New York City received federal funds for foster care expenses under Title IV-E of the Social Security Act. In 1988, a federal audit found that the City did not comply with federal eligibility requirements in numerous cases. As a result, the federal government sought to recoup approximately $92 million from the State. The State appealed the disallowance. In April 1995, HHS issued a negative grant award and recouped $31.2 million. A final settlement between HHS and DSS was reached in December 1996, with DSS paying HHS an additional $42.8 million. DSS then notified the City it would recoup the entire $74 million.

    Procedural History

    The City sued the State in a CPLR Article 78 proceeding, seeking to annul the recoupment efforts. Supreme Court granted relief to the City, rejecting retroactive application of Social Services Law § 153-i. The Appellate Division modified the judgment, agreeing that the State was responsible for half the disallowance but concluding that the State could recoup half the interest. Both the State and the City appealed to the Court of Appeals.

    Issue(s)

    1. Whether Social Services Law § 153-i may be applied retroactively to authorize the State to recoup federal foster care expenditures from the City.

    2. Whether the State may recover from the City the associated interest charges assessed by the Federal Government.

    Holding

    1. Yes, because the 1999 amendment to Social Services Law § 153-i (8) applies retroactively irrespective of whether the actions underlying the disallowance occurred prior to July 1, 1995, if the final settlement occurred after that date.

    2. Yes, because Social Services Law § 153-i authorizes the State to recoup any disallowance based on a final agency decision or settlement, which includes the interest component.

    Court’s Reasoning

    The Court found that the 1999 amendment to Social Services Law § 153-i (8) clearly states that the law applies retroactively. The crucial factor is when the final settlement between the State and the federal agency occurred. The Court determined that the final settlement occurred in December 1996, after July 1, 1995. Before that point, the disagreement over disallowance between DSS and HHS was still subject to review and dispute. The Court cited DAB’s acknowledgment that the administrative decision on the 72 uncontested sample cases was not yet final as of August 2, 1995. Therefore, the City is accountable for the entire amount recouped from the State by HHS.

    Regarding the interest charges, the Court noted that Social Services Law § 153-i (8) declares that the “block grant apportionment shall reflect the state share of sanctions or disallowances taken against the district pursuant to this chapter or federal law.” The Court reasoned that federal regulations, such as 45 CFR 30.13 (a) (1), stipulate that interest accrues on debts from the date the party has notice of the debt and is treated as part of the disallowance under federal law. Therefore, the State has the authority to recoup the interest amount from the City.

    The Court rejected any other contentions, stating they did not alter the outcome of the litigation. They concluded that the State is entitled to recoup from the City the entire amount of the Federal disallowance, including its interest component.