Mental Disability Law Clinic v. Hogan

853 F. Supp. 2d 307, 2012 WL 1118601, 2012 U.S. Dist. LEXIS 47098
CourtDistrict Court, E.D. New York
DecidedMarch 30, 2012
DocketCase No. 96-CV-1485 (FB)
StatusPublished
Cited by1 cases

This text of 853 F. Supp. 2d 307 (Mental Disability Law Clinic v. Hogan) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mental Disability Law Clinic v. Hogan, 853 F. Supp. 2d 307, 2012 WL 1118601, 2012 U.S. Dist. LEXIS 47098 (E.D.N.Y. 2012).

Opinion

MEMORANDUM AND ORDER

BLOCK, Senior District Judge:

This case is on remand from the Second Circuit. The circuit court’s remand revives the claim of the Mental Disability Law Clinic, Touro Law Center (“the Clinic”), that certain practices of the New York State Office of Mental Health (“OHM”) violate the First Amendment and the Equal Protection Clause of the Fourteenth Amendment. In addition to addressing the merits of the Clinic's claims, OMH (through its commissioner, Michael F. Hogan) has moved for summary judgment on the grounds (1) that the Clinic lacks standing, and (2) that its claims are barred by the doctrine of collateral estoppel. The Clinic, for its part, asks the Court to recertify the class it decertified in connection with its prior dismissal of the Clinic’s claims. Finally, Edward Davison, a current OMH patient, seeks leave to intervene as a plaintiff.

For the following reasons, the Court concludes that the Clinic has individual standing to pursue its claims, and that OMH has waived the argument that the claims are barred by collateral estoppel. On the merits, however, its holds that OMH’s practices do not violate either the First Amendment or the Equal Protection Clause.

I

The relevant facts are taken from the existing record, as supplemented by the parties’ respective Rule 56.1 statements and their stipulation dated March 28, 2007. They are undisputed.

OMH is charged with providing care and treatment to the state’s mentally ill population. See N.Y. Mental Hyg. Law § 7.07. By statute, it must “charge fees for its services to patients and residents.” Id. § 43.01(a). To ensure, however, that services are made available to the indigent, OMH’s Commissioner is authorized to “reduce or waive fees in cases of inability to pay.” Id. § 43.03(a). Accordingly, OMH does not calculate or assess care and treatment charges if it believes that the patient will not be able to pay them. It may rethink that decision if the patient’s financial picture improves because of some new source of income. How OMC proceeds when the potential source of income is a lawsuit against it in the New York Court of Claims is the subject of this case.1

A. Pre-Acevedo Practices

Prior to 1992, OMH would respond to a suit by an indigent patient or indigent former patient by sending a verified claim for the full amount of his or her unpaid charges. If the patient pursued the suit and prevailed, OMH would assert the claim as a lien or offset against the judgment. Since OMH’s claim was not formally asserted as a counterclaim in the patient’s suit, the only means of challenging the validity of the claim was to bring a separate proceeding (either a declaratory judgment action or an Article 78 proceeding) in New York Supreme Court.

Two patients, represented by the Clinic’s lead attorney, challenged the practice in federal court. In Acevedo v. Surles, 778 F.Supp. 179 (S.D.N.Y.1991), Judge Ward [310]*310of the Southern District upheld the challenge on three grounds. First, he held that sending a verified claim to a suing patient violated the First Amendment because it chilled the assertion of claims against OMH by vitiating the monetary incentive to pursue the claim and threatening the patient with out-of-pocket liability in cases where the amount due exceeded the amount of the patient’s claim. See id. at 183-185. Second, he held that the same practice violated the Equal Protection Clause of the Fourteenth Amendment because it singled out certain patients for different treatment with the “intent to inhibit or punish the exercise of constitutional rights.” Id. at 186 (quoting LeClair v. Saunders, 627 F.2d 606, 609-10 (2d Cir.1980)). Third, he held that asserting a lien or offset to reduce a judgment against OMH violated the Due Process Clause of Fourteenth Amendment because the practice did not allow for a predeprivation opportunity to challenge OMH’s claim. See id. at 187-89.

At the conclusion of his opinion, Judge Ward noted that “[t]he filing of a counterclaim is but one mechanism that the State could use to provide a constitutionally valid predeprivation hearing.” Id. at 189. He further noted that OMH’s assessment practice could not be viewed as a good-faith effort to recover a valid debt based on a change in the patient’s financial condition because its assessment was always for the full amount of charges due, without regard to whether the charges exceeded the amount sought by the patient. See id. at 190 (“The current practice of filing verified claims for amounts far exceeding the amount of the underlying claims for damages against the State can only be viewed as an effort at retaliation against those who sue the State.”). Ultimately, he approved a post-judgment stipulation clarifying that his decision did not prohibit OMH from asserting a counterclaim limited to the amount recovered by the patient, but also did not preclude a subsequent challenge to such a policy.

B. Post-Acevedo Practices

In 1992, OMH changed its practices in response to Acevedo; those practices remain in effect today. It continues to calculate an assessment of all charges due when it is sued by a patient. Instead of informing the patient of the full assessment, however, it authorizes its attorneys to file a counterclaim for the charges, but only up to the amount of the patient’s claim. If, after investigation, OMH believes a patient’s claim has merit, it will attempt to negotiate a settlement. Such a settlement almost always includes a waiver of all charges due, even those exceeding the amount of the counterclaim. Thus, OMH will pursue the counterclaim only if the case proceeds to trial (either because OMH has decided not to pursue settlement negotiations or because those negotiations have failed). Even in cases that proceed to trial, OMH’s current practice could not result in an affirmative money judgment against the patient.

Four OMH patients, again represented by the Clinic’s lead attorney, challenged the revised practice in New York Supreme Court.2 In Siegel v. Surles, Case No. 405319/93 (N.Y. Sup.Ct., N.Y. County Jul. 10, 1995), Justice Lebedeff “applied] the same constitutional principles set forth in Acevedo,” but concluded that the revisions had cured all of the constitutional problems with the original practice. The Appellate Division affirmed “for the reasons [311]*311stated by [Justice Lebedeff],” Siegel v. Surles, 239 A.D.2d 115, 657 N.Y.S.2d 549, 549 (1st Dep’t 1997), and the Court of Appeals declined review, 91 N.Y.2d 804, 668 N.Y.S.2d 559, 691 N.E.2d 631 (N.Y.1997) (table).

OMH made a refinement to the practices approved in Siegel in 1999. It will not even begin the assessment and counterclaim process in cases involving allegations of rape, sexual abuse or severe physical abuse unless settlement negotiations have failed. In addition, it will never assert a counterclaim in a case involving the death of a patient. The effect, if any, of these exceptions on the practice’s constitutionality was not addressed in either Acevedo or Siegel.

C. The Present Action

While

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Bluebook (online)
853 F. Supp. 2d 307, 2012 WL 1118601, 2012 U.S. Dist. LEXIS 47098, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mental-disability-law-clinic-v-hogan-nyed-2012.