Preview
(FILED: ALBANY COUNTY CLERK 0871972022 Wz:5a PM INDEX NO. 905669-22
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STATE OF NEW YORK COUNTY OF ALBANY
SUPREME COURT
In the Matter of the A pplication of
PEOPLE HOME HEALTH CARE
SERVICES — LICENSED, INC.,
Plaintiff/Petitioner, DECISION, ORDER &
JUDGMENT
For Judgment Pursuant to Article 78 of the Index No. 905459-21
Civil Practice Laws and Rules and a Declaratory Judgment
Pursuant to Section 3001 of the Civil Practice Laws and Rules
— against —
NEW YORK STATE DEPARTMENT OF HEALTH, and
HOWARD A. ZUCKER, in his capacity as Commissioner of
Health,
Defendants/Respondents.
Appearances: For Petitioner/Plaintiff: Barclay Damon LLP
By: Brian M. Culnan, Esq. and Mary T. Connolly, Esq.
For Respondents/Defendants: Letitia James, New Y ork State Attorney General
By: Denise P. Buckley, Esq., Assistant A ttorney General
Plaintiff/Petitioner People Home Health Care Services — Licensed, Inc. (People LHHA)
commenced this hybrid CPLR article 78 proceeding/declaratory judgment action seeking an Order
(1) annulling a determination by the Defendant/Respondent Department of Health (DOH) to
disqualify People LHHA from consideration for an award of a contract to provide certain fiscal
intermediary services to Medicaid’s Consumer Directed Personal Assistance Program (CDPAP);
(2) declaring People LHHA was a “qualified offeror” to provide fiscal intermediary services under
a Request for Offers (RFO) #20039 issued by DOH; and (3) remanding People LHHA’s response
to RFO #20039 to DOH for review (see Verified Complaint & Petition [Petition] { 3).
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Defendants/Respondents DOH and Howard Zucker as Commissioner of DOH (collectively
referred as “DOH”) move to dismiss the complaint and petition on the grounds that People LLHA
failed to exhaust its administrative remedies and the administrative determination at issue is not
ripe for judicial review.
Background
CDPAP is a Medicaid program that allows chronically ill and/or disabled individuals who
are eligible to receive home care services to self-direct their care (see Petition §] 11). Individuals
who are eligible to participate in CDPAP are defined as “consumers” under Department of Social
Services’ regulations (see 18 NYCRR 505.28 [b] [1]). Under CDPAP, “Personal Assistants”
provide personal care services, home health aide services, and skilled nursing services to
consumers at the consumer’s direction, instruction, and supervision (see Social Services Law §
365-f [3]; 18 NY CRR 505.28 [b] [3]).
CDPAP also provides for “Fiscal Intermediaries” to assist consumers in fulfilling various
administrative responsibilities required by law, including processing wages and benefits for
Personal Assistants, processing of all income tax and other wage withholdings, and maintaining
various types of records (see Petition { 13; Social Services Law § 365-f [4-a] [a] [ii]; 18 NYCRR
505.28 [i]). A Fiscal Intermediary must have “a contract for providing such services with [DOH]
and is selected through [a] procurement process described in [Social Services Law § 365-f (4-a)
(b)]” (Social Services Law § 365-f [4-a] [a] [i]). The eligibility requirements for applicants seeking
to become Fiscal Intermediaries are set forth in Social Services Law § 365-f (4-a) (i).
On or about December 18, 2019, DOH issued RFO #20039 by which eligible entities could
seek to contract with DOH to provide CDPAP Fiscal Intermediary Services (Petition § 20; A1-
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A36).! In RFO #20039, DOH reserved the right to “[rJeject any or all offers received in response
to the RFO,” “[s]eek clarifications and revisions of offers,” and “[d]isqualify any Offeror whose
conduct, and/or offer fails to conform to the requirements of the RFO” (A16 [§ 5.8 (1), (4), (5)I).
RFO #20039 also outlines the rights afforded to Offerors. Specifically, once a decision of
award or non-award is announced, Offerors may request a debriefing of their offer within 15 days
from the date of the announcement (A18 [§ 5.12]). Moreover, section 5.13 provides “[i]n the event
unsuccessful Offerors wish to protest the award resulting from this RFO, Offerors should follow
the protest procedures established by the Office of the State Comptroller (OSC)” (id. [§ 5.13]).
RFO #20039 provides a hyperlink whereby Offerors can access the protest procedures. The protest
procedures specifically provide “a contract will not be approved by the OSC Bureau of Contracts
before the expiration of the time period for filing a protest, or, if a protest has been filed, before
the resolution of the protest” (see Contract A ward Protest Procedure for Contracts A warded by the
Office of the State Comptroller § 4 [h], available at
https://web.osc.state.ny.us/agencies/quide/MyW ebHelp/C ontent/files/XI_17 att2.pdf).
People LHHA’s Offer & DOH?’s Disqualification
On or about February 27, 2020, People LHHA submitted an offer to RFO #20039 (A37-
A171). By letter dated February 11, 2021, DOH advised People LHHA that it “did not meet the
Offeror Qualifications as identified in the RFO” (A172). Specifically, DOH indicated that People
LHHA “did not submit a fully completed Attachment B” demonstrating how People LHHA was
eligible to submit an offer (id.). Consequently, DOH disqualified People LHHA’s offer. By email
dated that same day, People LHHA sought reconsideration of DOH’s decision to disqualify its
offer (A174). In response, DOH clarified that Offerors are required to submit a fully completed
1A” refers to the Appendix submitted with the Petition.
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Attachment B, “which was a specific pass/fail criteria” (A176). DOH advised “any offer submitted
with an incomplete Attachment B . . . was disqualified” and the agency “does not seek clarification
or revisions to mandatory or material items” (id.).
By email dated February 22, 2021, People LHHA protested the disqualification of its offer
with OSC (A178-A179). By letter dated, March 1, 2021, OSC confirmed receipt of the protest and
advised People LHHA that it may attend a “general” debriefing session for all unsuccessful bidders
and request an individualized debriefing session (A 180-A181). People LHHA previously sought
a debriefing of its offer by letter dated February 15, 2021 from DOH (A175). People LHHA
attended both the general debriefing conducted by OSC on March 4, 2021 and received an
additional, individual debriefing conducted by DOH on or about April 14, 2021 (Petition 11 63-
64).
By letter dated April 21, 2021, People LHHA, through counsel, submitted an Amended
Bid Protest seeking a reversal of DOH’s decision to disqualify its offer (A182-200). People LHHA
included a fully completed Attachment B with its Amended Bid Protest (A198-A199). It is
undisputed that this Amended Bid Protest remains pending undecided before OSC (see Petition 4
66).
RFO #20039 Reopened
As part of the 2021-2022 New York State Budget, the Legislature authorized DOH to
award additional Fiscal Intermediary contracts under RFO #20039 (id. {| 78). Consequently, by
letter to DOH dated May 10, 2021, People LHHA sought to be considered for these additional
Fiscal Intermediary contract awards (A201-A202). People LHHA followed up this request with
emails to DOH dated May 18, 2021 and May 19, 2021 (A203-A 204).
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By email dated May 19, 2021, DOH responded that it was in “a restricted period” with
regard to the RFO and could not discuss same “beyond the debriefing already afforded” (A203).
As to People LHHA’s request to be reconsidered for the additional awards under the RFO, DOH
advised “this [sic] is not much we can do,” but noted People LHHA “have options, such as
protesting the procurement” (id.).
Arguments
People LHHA seeks an Order (1) annulling DOH’s determination to disqualify People
LHHA from consideration of a Fiscal Intermediary Contract under RFO #20039; (2) declaring
People LHHA was a “qualified offeror” to provide fiscal intermediary services under a RFO
#20039; and (3) remanding People LHHA’s response to RFO #20039 to DOH for review.
DOH moves to dismiss the proceeding on the grounds that People LHHA failed to exhaust
its administrative remedies and the proceeding is not ripe for judicial review. Specifically, DOH
contends that, because People LHHA’s protest remains pending with OSC, its administrative
remedies have not been exhausted. DOH also argues that the proceeding is not ripe for judicial
review because OSC has not made a final determination with regard to People LHHA’s protest.
People LHHA contends that the motion to dismiss is untimely under CPLR 7804. On the
merits, People LHHA alleged in the Petition it exhausted its administrative remedies by reason of
OSC’s failure to respond to its Amended Bid Protest and DOH’s failure to consider People LHHA
for the additional Fiscal Intermediary contracts authorized as part of the 2021-2022 New Y ork
State Budget (Petition | 70-72). In response to the motion to dismiss, People LHHA argues that
it will suffer irreparably injury if it is forced to exhaust administrative remedies and wait for a
determination from OSC. In particular, People LHHA argues that by the time OSC renders its
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determination on People LHHA’s protest, the time to be considered for additional awards under
the re-offer process will have passed.
Discussion
CPLR 7804 (f) provides “[t]he respondent may raise an objection in point of law by setting
it forth in his answer or by a motion to dismiss the petition, made upon notice within the time
allowed for answer.” CPLR 7804 (c) specifies that “[aJn answer and supporting affidavits, if any,
shall be served at least five days before [the return date].” It appears beyond dispute that the motion
to dismiss fails to comply with the time periods set forth in CPLR 7804.
However, the Order to Show Cause bringing on this proceeding specifically directs the
service of any opposition papers to the petition on or before July 22, 2021—one day before the
return date (see Order to Show Cause, dated June 30, 2021). Courts have held that the failure to
serve a motion within the statutory time period should be treated as a “procedural irregularity”
which may be disregarded where an order to show cause reduces the period of notice (Coonradt v
Walco, 55 Misc 2d 557, 558 [Sup Ct, Rensselaer County 1967] [“(t)o hold an untimely notice of
motion as a jurisdictional defect would be unduly harsh in view of the fact that a show cause order
might be obtained reducing the period of notice”). It is undisputed that DOH complied with the
service requirements set forth in the Order to Show Cause and served its motion on July 22, 2021
(see Notice of Mot). Inasmuch as People LHHA did not seek an adjournment of the retum date
and provided a response to the motion on the return date, it is not prejudiced by the notice provided
by DOH (see National Microtech v Satellite Video Servs., 107 AD2d 860, 861-862 [3d Dept 1985],
lv dismissed 65 NY 2d 637 [1985], appeal dismissed 64 NY 2d 612 [1985]). Consequently, the
Court will not deny DOH’s motion to dismiss as untimely.
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Tuming to the merits of the motion to dismiss, “[i]t is hombook law that one who objects
to the act of an administrative agency must exhaust available administrative remedies before being
permitted to litigate in a court of law” (Watergate II Apts.v Buffalo Sewer Auth., 46 NY 2d 52, 57
[1978]). In the context of government contract procurement, a petitioner exhausts administrative
remedies by engaging in the protest procedures set forth in the bid specifications (see e.g. Matter
of Barrett Paving Materials, Inc. v New Y ork State Thruway Auth., 184 AD3d 1173, 1175 [4th
Dept 2020], lv denied 35 NY 3d 916 [2020]; Matter of Loeb Boathouse Servs., LLC v City of New
York, 182 AD3d 468, 468-469 [1st Dept 2020]; Matter of Guilderland Print., Inc. v New Y ork
State Off. of Temporary & Disability Assistance, 163 AD3d 1318, 1320 [3d Dept 2018]).
Additionally, “[t]o challenge an administrative determination, the agency action must be
final and binding upon the petitioner” (Matter of Ranco Sand & Stone Corp. v Vecchio, 27 NY 3d
92, 98 [2016] [internal quotation marks and citations omitted]). “An [administrative] action is
considered to be final when it represents a definitive position on an issue which ‘impose[s] an
obligation, den[ies] a right or fix[es] some legal relationship,’ resulting in an actual, concrete
injury” (Matter of Guido v Town of Ulster Town Bd., 74 AD3d 1536, 1536 [3d Dept 2010],
quoting Matter of Gordon v Rush, 100 NY2d 236, 242 [2003]). Stated differently, an
administrative determination is final and ripe for judicial review where the action is “not amenable
to further administrative review and corrective action” (Matter of Eadie v Town Bd. of Town of
N. Greenbush, 7 NY 3d 306, 316 [2006] [internal quotation marks and citation omitted).
“The finality [of administrative action] and exhaustion of remedies requirements are drawn
from case law on ripeness for judicial review” (Walton v New Y ork State Dept. of Correctional
Servs., 8 NY 3d 186, 195 [2007]). A pending administrative proceeding implicates both issues of
exhaustion of remedies and finality of the agency determination. Courts have held that where an
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administrative proceeding challenging an administrative determination is still pending, the
petitioner has not exhausted administrative remedies (see e.g. Matter of Mayeri v Commissioner
of the N.Y. State Dept. of Motor Vehs., 192 AD3d 1223, 1225-1226 [3d Dept 2021]; Matter of
Presbyterian Home for Cent. N.Y. v Dowling, 262 AD2d 1046, 1047 [4th Dept 1999], lv denied
94 NY 2d 758 [2000]; Matter of Sylcox v Chassin, 227 AD2d 834, 835 [3d Dept 1996]) and the
proceeding is not ripe for judicial review (see e.g. Matter of Adirondack Council, Inc. v
Adirondack Park Agency, 92 AD3d 188, 191 [3d Dept 2012] [“because the harm anticipated by
[the] petitioner may be prevented by further administrative action, it has not alleged an actual,
concrete injury and its ‘facial’ challenges to the Guidance are therefore not ripe for review’).
Here, it is undisputed that People LHHA’s protest is pending before OSC (Petition 4 61-
66). Thus, People LHHA has failed to exhaust its administrative remedies. Moreover, because the
protest remains pending, there has been no final determination with respect to People LHHA’s
offer to provide Fiscal Intermediary Services under RFO #20039. Indeed, as DOH notes, the
disqualification of People LHHA’s offer by DOH may be overturned by OSC and obviate judicial
review of same. Consequently, this proceeding is not ripe for judicial review.
People LHHA have failed to establish the applicability of any of the exceptions to the
exhaustion rule. It is well settled that a petitioner need not exhaust administrative remedies “when
an agency’s action is challenged as either unconstitutional or wholly beyond its grant of power, or
when resort to an administrative remedy would be futile” (Watergate II Apts., 46 NY 2d at 57
[internal citations omitted]). In its Petition, People LHHA argues administrative review would be
futile due to “DOH’s repeated refusal to reconsider the disqualification [of its offer]” (Petition 4
73). In advancing this contention, People LHHA relies on a portion of an email from DOH dated
May 19, 2021, whereby DOH advised “if your proposal failed the minimum qualifications[,] this
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[sic] is not much we can do” (A203). However, this argument ignores the remainder of the email
in which DOH advised People LHHA that it has “options, such as protesting the procurement”
(id.). Indeed, People LHHA has availed itself of the protest procedure and has not established that
review by OSC would be futile. Accordingly, the Court concludes that People LHHA’s futility
argument lacks merit.
The Court also rejects People LHHA’s contention that it will suffer irreparable injury if it
is forced to wait fora decision of its protest from OSC. The protest procedures specifically provide
“a contract will not be approved by the OSC Bureau of Contracts before the expiration of the time
period for filing a protest, or, if a protest has been filed, before the resolution of the protest (see
Contract Award Protest Procedure for Contracts Awarded by the Office of the State Comptroller
§ 4 [h]). In short, no action, adverse or otherwise, can be taken against People LHHA’s offer until
a determination of People LHHA’s protest is made by OSC. As such, People LHHA’s argument
that it will be irreparably harmed is speculative pending final determination by OSC.
Based upon the foregoing it is hereby:
ORDERDED Respondents’ motion to dismiss is GRANTED; and it is further
ADJUDGED that the petition is DISMISSED.
Pa Albany, New York [lawns
CATHERINE E. LEA,
Acting Justice of Supreme Court
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