NYSHFA/NYSCAL Challenges Executive Order #38 & DOH Regulations

Esq. Stephen B. Hanse

On Wednesday September 25th, NYSHFA/NYSCAL, together with Leading Age, Southern New York Association, Greater New York Healthcare Facilities Association, Empire State Association of Assisted Living, the Home Care Association of New York State, and over 170 individual member providers filed a lawsuit in Supreme Court in Albany County, challenging Governor Cuomo’s Executive Order #38 and the regulations promulgated by the Department of Health (“Regulations”) to implement the Executive Order.

Generally speaking, Executive Order #38 and the Regulations place caps on executive compensation and administrative expenses for “covered providers” that receive an annual average of at least $500,000 in State funds during a two year period and for whom at least 30 percent of total annual in-state revenues during that same period constituted State funds. Among other things, the Executive Order and Regulations prohibit “covered providers” from compensating an executive in amount greater than $199,000 per year.

Through this litigation, we are taking the lead in seeking the annulment of Executive Order #38 and the Regulations by challenging their legitimacy on numerous grounds, including the following:

  • ·        The Executive Order and Regulations violate the separation of powers doctrine between the Executive and the Legislative branches of New York State government;
  • ·        There is no constitutional or statutory provision that grants the Governor the authority to regulate the fiscal operations of providers;
  •  ·        The Regulations exceed the powers of the Department of Health and usurp the role of the Legislature;
  • ·        The regulations do not have a rational basis, are arbitrary and capricious, and undermine the delivery of high quality services;
  • ·        The Executive Order and Regulations are preempted by the Federal Medicaid Act; and
  • ·        The Executive Order and Regulations violate the substantive due process rights of providers.

We will be providing ongoing updates as this litigation progresses.

NYSHFA/NYSCAL Contact:                              Stephen B. Hanse, Esq.

Vice President of Governmental Affairs