State’s Highest Court Agrees to Hear LeadingAge NY Challenge to Executive Order #38 Regulations

The New York State Court of Appeals has retained jurisdiction in LeadingAge New York et al v. Shah, a challenge we brought along with other groups to Executive Order #38 (EO #38) and the resulting regulations which cap executive compensation and administrative costs. The Court has established a briefing schedule for the case requiring all filings to be completed by March 2018, with oral arguments expected soon thereafter.

By way of background, the New York State Appellate Division, Third Department issued a decision in June 2017 in the LeadingAge New York case. The Third Department’s decision annulled the “soft cap” portion of the EO #38 regulations, which caps executive compensation paid from all funding sources, but upheld the “hard cap,” which limits executive compensation paid from state funds. The decision by the Third Department conflicted with earlier decisions issued by the Second Department upholding the regulations in their entirety, which made it likely that the Court of Appeals would take the case.

The Court of Appeals has agreed to hear arguments on both the hard cap and the soft cap. The Attorney General had asked the Court to consider only the legality of the soft cap, which we opposed. We are pleased that the Court will also be reviewing the legality of the hard cap.

Pending consideration by the Court of Appeals, the regulations and filing requirements associated with EO #38 remain in effect throughout the state except for Nassau County, where an earlier Supreme Court decision had stayed their implementation. As this issue of Intelligence goes to press, the EO #38 website still indicates that the stay remains in effect in Nassau County. For Medicaid providers, the due date for EO #38 filings is the due date associated with the provider’s cost report.

Contact: Dan Heim, dheim@leadingageny.org, 518-867-8866