OMH assesses charges when the patient begins to receive the
benefits, rather than when the application is made for such
benefits. If OMH learns that a patient is eligible for a lump-sum
back payment from the Social Security administration, OMH will
assess charges upon receipt of entitlements and not when an
application is made. The reason for this policy is that, "OMH
does not have the ability to off-set any claims like it does when
the patient sues the State." Joint Stipulation of Facts at ¶ 43.
In addition, if OMH learns that a patient or fiduciary acting
on the patient's behalf has received funds that can satisfy
charges, a bill may be generated commensurate with that patient's
ability to pay.
OMH's Practice Concerning Lawsuits Against the State
Shortly after a patient files a claim against the State in the
New York Court of Claims, OMH will serve a verified claim against
the patient in which the patient is assessed full charges for the
hospitalization and treatment received in OMH facilities. OMH
will not attempt to collect an amount greater than any recovery
against the State, unless it learns that the patient has
additional assets. However OMH does not tell the patient or
patient's attorney that it will collect charges only in the
amount of the recovery against the State.
The reason for the OMH policy is, "[b]y notifying the patient
and his counsel of the State's ability to set-off, such action
saves the time and resources of State staff in defending a
lawsuit which would serve no good purpose since the State has the
ability to defeat almost any recovery. . . . In addition, the
set-off policy . . . avoids the necessity of pursuing claims
against parties whom the State Comptroller has already paid and
such action was patterned after the practice of general hospitals
in personal injury actions." Joint Stipulation of Facts at ¶¶ 51,
OMH exempts from its offset, and will pay out on the patient's
behalf, allowable costs (including witness fees), attorney's
fees*fn4 and "an amount equal to the maximum Medicaid or SSI
reserve as such an amount would be exempt from [OMH] charges
under normal circumstances." Joint Stipulation of Facts at
A patient cannot challenge a verified claim by OMH in the State
Court of Claims because the State does not assert the charges as
a counterclaim and thus the Court of Claims lacks jurisdiction to
rule on the validity of the set-off. However a patient could
challenge the verified claim in New York State Supreme Court by
means of an action for declaratory or injunctive relief against
the New York State Comptroller. Furthermore, a patient could also
challenge a verified claim pursuant to Article 78, New York State
Civil Practice Law and Rules. In either case, the burden of proof
is on the patient to establish that the charges were incorrect.
The State does not provide the patient with notice of the
opportunity to challenge the verified claim.
The Instant Action
Plaintiffs have filed a motion for summary judgement, asserting
that: (1) the State's practice of assessing full charges against
plaintiffs in response to their decision to file lawsuits against
the State violates the plaintiffs' First Amendment rights of
access to the courts and to petition for redress of grievances,
as well as 42 U.S.C. § 1983; (2) the State violates the equal
protection clause of the Fourteenth Amendment, as well as
42 U.S.C. § 1983, because OMH selectively assesses charges against
plaintiffs in response to plaintiffs exercising their First
Amendment rights to sue OMH; and (3) the ability of the State to
set-off against any judgment obtained by plaintiffs the full care
and treatment charges violates plaintiffs' right to due process
of law under the Fourteenth Amendment, as well as
42 U.S.C. § 1983.
Defendant has filed a cross-motion for summary judgment,
claiming that: (1) plaintiffs' rights have not been violated by
the State's action of billing them in response to their filing of
lawsuits against the State; and (2) plaintiffs' rights have not
been violated by the State's ability to set-off its charges
against any judgments obtained by plaintiffs. Defendant seeks
dismissal of the complaint.
Plaintiffs' complaint challenges two logically distinct OMH
policies: (1) when a patient or ex-patient sues the State, OMH
files a verified claim against that individual which is based
upon the full charges for hospitalization and treatment of the
patient or ex-patient, rather than the patient's or ex-patient's
ability or potential ability to pay and (2) the State uses a
set-off by the State Comptroller, rather than a pre-deprivation
hearing, as the means for collecting any verified claim against
patients or ex-patients who sue the State. The complaint alleges
that the first OMH policy violates the First Amendment and the
equal protection clause of the Fourteenth Amendment, and
therefore 42 U.S.C. § 1983, while the second OMH policy violates
the due process clause of the Fourteenth Amendment, and therefore
42 U.S.C. § 1983.
Standards for Granting Summary Judgment
The standards for granting summary judgment in this Circuit are
well-established. A court may grant this extraordinary remedy
only when it is clear both that no genuine issue of material fact
remains to be resolved at trial and that the movant is entitled
to judgment as a matter of law. Rule 56, Fed.R.Civ.P. In deciding
the motion, the Court is not to resolve disputed issues of fact,
but rather, while resolving ambiguities and drawing reasonable
inferences against the moving party, to assess whether material
factual issues remain for the trier of fact. Knight v. U.S. Fire
Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied,
480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987) (citing Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505,
2509-2511, 91 L.Ed.2d 202 (1986)). Only where the entire record
would inevitably lead a rational trier of fact to find for the
moving party is summary judgment warranted. National R.R.
Passenger Corp. v. City of New York, 882 F.2d 710 (2d Cir.
While the party seeking summary judgment bears the burden of
demonstrating the lack of material factual issues in dispute,
Schering Corp. v. Home Ins. Co., 712 F.2d 4, 9 (2d Cir. 1983),
"the mere existence of factual issues — where those issues are not
material claims before the court — will not suffice to defeat a
motion for summary judgment." Quarles v. General Motors Corp.,
758 F.2d 839, 840 (2d Cir. 1985) (per curiam).
Although the movant faces a difficult burden to succeed,
motions for summary judgment, properly employed, permit a court
to terminate frivolous claims and defenses, and to concentrate
its resources on meritorious litigation. Knight v. U.S. Fire
Ins. Co., supra, 804 F.2d at 12. Summary judgment then:
is properly regarded not as a disfavored procedural
shortcut, but rather as an integral part of the
Federal Rules as a whole, which are designed "to
secure the just, speedy and inexpensive determination
of every action." Fed. Rule Civ. Pro. 1. . . . Rule
56 must be construed with due regard not only for the
rights of persons asserting claims and defenses that
are adequately based in fact to have those claims and
defenses tried to a jury, but also for the rights of
persons opposing such claims and defenses to
demonstrate in the manner provided by the Rule, prior
to trial, that the claims and defenses have no
Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548,
2555, 91 L.Ed.2d 265 (1986).
Plaintiffs' First Amendment Claim
In order to prove a First Amendment violation and recover under
§ 1983, plaintiffs must demonstrate that: (1) their actions are
protected by the First Amendment, (2) defendant's actions have
the effect of chilling plaintiffs' First Amendment
rights, and (3) defendant's actions are motivated by, or
substantially caused by, plaintiffs' decision to exercise these
rights. If this is demonstrated by plaintiffs, the burden then
shifts to the defendant in this case to "show by a
preponderance of the evidence that it would have reached the same
decision as to [serving a verified claim on plaintiffs for full
treatment costs] even in the absence of the protected conduct."
Mt. Healthy City School Dist. Bd. of Educ. v. Doyle,
429 U.S. 274, 287, 97 S.Ct. 568, 576, 50 L.Ed.2d 471 (1977).
The right of access to the courts is guaranteed by the First
Amendment right to petition the government for the redress of
grievances. Bill Johnson's Restaurants, Inc. v. NLRB,
461 U.S. 731, 741, 103 S.Ct. 2161, 2169, 76 L.Ed.2d 277 (1983);
California Motor Transport Co. v. Trucking Unlimited,
404 U.S. 508, 510, 92 S.Ct. 609, 611, 30 L.Ed.2d 642 (1972); Easton v.
Sundram, 947 F.2d 1011 at 1015 (2d Cir. 1991).
Furthermore, "[t]he Supreme Court has described the right to
petition government for redress of grievances as `among the most
precious of the liberties safeguarded by the Bill of Rights.'"
Franco v. Kelly, 854 F.2d 584, 589 (2d Cir. 1988) (quoting
United Mine Workers v. Illinois State Bar Ass'n, 389 U.S. 217,
222, 88 S.Ct. 353, 356, 19 L.Ed.2d 426 (1967)); see also,
Harrison v. Springdale Water & Sewer Comm'n, 780 F.2d 1422, 1427
(8th Cir. 1986). In addition, the right of access to the courts
is substantive, rather than procedural, and thus "cannot be
obstructed, regardless of the procedural means applied." Morello
v. James, 810 F.2d 344 (2d Cir. 1987); see Franco v. Kelly,
supra, 854 F.2d at 589. Thus, there is no doubt that plaintiffs'
right to sue OMH is protected by the First Amendment.
The Court will now consider whether OMH's verified claims
against Acevedo and Nunnery had the effect of chilling their
First Amendment right of access to the courts.
It is not enough for Acevedo and Nunnery to prove that OMH
sought to chill the plaintiffs from exercising their First
Amendment rights. Plaintiffs must also prove that their First
Amendment rights were actually chilled. Davis v. Village Park II
Realty Co., 578 F.2d 461, 463-64 (2d Cir. 1978) (citing Laird
v. Tatum, 408 U.S. 1, 13-14 n. 7, 92 S.Ct. 2318, 2325-26 n. 7,
33 L.Ed.2d 154 (1972)).
The facts presented in this case indicate that both plaintiffs
were chilled in seeking access to the courts. In particular, all
parties have stipulated that, after he learned of the State's
verified claim, Acevedo, on the advice of his attorney, withdrew
from the lawsuit because of the unlikelihood of obtaining any
recovery. This was after an assistant attorney general "told
[Acevedo's counsel] that he should be aware that the verified
claim would serve as a lien against any recovery before he spent
a great deal of time in processing the claim." Joint Stipulation
of Facts at ¶ 4. The State not only sought to chill Acevedo, but
also Acevedo's counsel.
In the case of the other plaintiff, "[t]he serving of a
verified claim against Ms. Nunnery resulted in her facing a debt
for [sic] greater than any recovery and because of that she
considered withdrawing her lawsuit." Joint Stipulation of Facts
at ¶ 25. It is not necessary that Nunnery succumb entirely or
even partially to OMH's threat so long as she can show that the
threat had a chilling effect. See Harrison v. Springdale Water &
Sewer Comm'n, supra, 780 F.2d at 1428. The fact that she
"considered withdrawing" is sufficient to establish that OMH's
action had a chilling effect.
Furthermore, OMH was fully aware that its actions chilled the
rights of plaintiffs, as well as other patients and ex-patients,
from seeking redress in court against OMH. As noted above, all
parties stipulated that, "[b]y notifying the patient and his
counsel of the State's ability to set-off, such action saves the
time and resources of State staff in defending a lawsuit which
would serve no good purpose since the State has the ability to
defeat almost any recovery." Joint Stipulation of Facts at ¶ 51.
OMH's policy has an especially chilling effect because OMH does
not tell the patient that it will collect charges only in the
amount of any recovery against the State. For example, while
Nunnery sought to recover $2,796.00 in her lawsuit against OMH,
the agency filed a verified claim against Nunnery for
$128,835.86. Incredibly, OMH did not inform her that it would
collect only in the amount of her recovery against the State.
Faced with such a large verified claim, and not notified that the
State would collect substantially less than $128,835.86, it is
hardly surprising that Nunnery felt chilled in pursuing her
Finally, it is incontrovertible that the filing of plaintiffs'
suits against OMH was a "substantial factor" or "motivating
factor" in OMH's decisions to serve verified claims on plaintiffs
for full hospitalization and treatment charges. In Acevedo's and
Nunnery's cases, in fact, plaintiffs' suits were the only
factor in OMH's decisions. Neither plaintiff had received an
inheritance, nor new Social Security benefits, nor any other
funds which might allow for the payment of previously incurred
charges. Thus, none of the other factors that would cause OMH to
assess verified charges against defendants were present.
Plaintiffs do not object to OMH's policy of assessing charges
against those who inherit assets or receive Social Security
payments. However, this does not prevent plaintiffs from
prevailing in this suit. "`[A]n act in retaliation for the
exercise of a constitutional right is actionable under [s]ection
1983, even if the act, when taken for different reasons, would
have been proper.'" Franco v. Kelly, supra, 854 F.2d at 590
(quoting Buise v. Hudkins, 584 F.2d 223, 229 (7th Cir. 1978),
cert. denied, 440 U.S. 916, 99 S.Ct. 1234, 59 L.Ed.2d 466
Acevedo and Nunnery have met their burden of showing that: (1)
their right to file the original lawsuits for damages against OMH
was protected by the First Amendment; (2) OMH's filing of
verified claims for the full amount of assessed hospitalization
and treatment charges, as a set-off against any recovery, had the
effect of chilling plaintiffs' First Amendment rights; and (3)
OMH's actions are motivated by, or substantially caused by,
plaintiffs' decision to exercise their First Amendment rights.
In order to complete this part of its analysis, the Court must
now determine whether OMH has shown by a preponderance of the
evidence that it would have served a verified claim on each
plaintiff in the absence of each plaintiff's lawsuit against OMH.
From the Joint Stipulations of Fact, it is clear that OMH has not
made this showing. The parties stipulated that, "Acevedo would
not have been assessed full charges if he did not file a lawsuit
in state court." Joint Stipulation of Facts ¶ 8. As for Nunnery,
the parties have stipulated that, "if she withdrew her Court of
Claims action, the OMH would not attempt to collect its bill for
$128,835.86." Joint Stipulation of Facts at ¶ 22.
If the OMH practice were to continue, it is highly unlikely
that patients or ex-patients would bring civil suits seeking
damages for wrongs committed by OMH. Not only might individual
patients remain uncompensated, but the public interest would
suffer, because less light would be shed on conditions within New
York's institutions for mental health. Cf. Sexton v. Ryan,
804 F.2d 26, 27 (2d Cir. 1986) ("A process whereby an arrestee gives
a release to law enforcement authorities of his constitutional
claims against them in exchange for their dropping criminal
charges against him is inherently suspect because of its
potential for use to defeat the public interest in enforcement of
our criminal laws and exposure of police misconduct.").
For the reasons stated above, the Court holds that the OMH
practice of serving a verified claim for the full amount of
hospitalization and treatment costs on those patients who file
lawsuits against OMH violates the First Amendment and
42 U.S.C. § 1983.
Plaintiffs' Equal Protection Claim
Acevedo and Nunnery claim that the decision by OMH to bill them
for the full cost of hospital care in response to the filing of
a damages suit against the State violates the equal protection
clause of the Fourteenth Amendment and 42 U.S.C. § 1983. This
assertion falls squarely into the broad category of selective
prosecution and selective enforcement claims.
In order to prevail on a claim of selective criminal
prosecution, the person asserting the claim bears the burden of
establishing, prima facie:
(1) that, while others similarly situated have not
generally been proceeded against because of conduct
of the type forming the basis of the charge against
him, he has been singled out for prosecution, and (2)
that the government's discriminatory selection of him
for prosecution has been invidious or in bad faith,
i.e., based upon such impermissible considerations as
race, religion, or the desire to prevent his exercise
of constitutional rights.
United States v. Berrios, 501 F.2d 1207, 1211 (2d Cir. 1974)
(citations omitted). This standard also applies to claims of
selective investigation by the Internal Revenue Service. See St.
German of Alaska E. Orthodox Catholic Church v. United States,
840 F.2d 1087, 1095 (2d Cir. 1988).
The Second Circuit has used the Berrios approach to develop a
two-pronged standard for determining whether there is selective
enforcement in the civil context. Liability depends on proof
(1) the person, compared with others similarly
situated, was selectively treated; and (2) . . . such
selective treatment was based on impermissible
considerations such as race, religion, intent to
inhibit or punish the exercise of constitutional
rights, or malicious or bad faith intent to injure a
LeClair v. Saunders, 627 F.2d 606, 609-10 (2d Cir. 1980),
cert. denied, 450 U.S. 959, 101 S.Ct. 1418, 67 L.Ed.2d 383
(1981) (footnote omitted) (emphasis added).
The first prong of this test, as applied to the present matter,
revolves around how those who were "similarly situated" were
treated by OMH. The appropriate group of those "similarly
situated" in this case are other patients or ex-patients who have
pursued a course of action (e.g. a lawsuit or a claim for
government benefits) which may, at some future date, provide them
with assets which would be available to pay OMH claims.
An analogous situation occurs when a patient applies for Social
Security or other government benefits. As discussed above, OMH
assesses charges against such individuals only after they begin
to receive benefits, rather than at the time when the application
for benefits was made. If a patient is entitled to a lump-sum
back payment of government benefits, OMH assesses charges upon
receipt of, rather than application for, the back payment. In
either case the assessment is based on the recipient's ability to
These Social Security situations are similar to Acevedo's and
Nunnery's cases: an individual seeks to recover from the
government assets which could then be used to pay for previous
OMH hospitalization and treatment. Yet in the Social Security
cases, OMH does not file verified claims for the full cost of
charges assessed against the potential beneficiary for that
individual's OMH hospitalization and treatment. Furthermore, in
the Social Security cases, OMH only assesses charges once
patients are in receipt of assets.
OMH seeks to collect hospitalization and treatment charges from
those who are able to pay. This is certainly a laudable goal. Yet
it is only when patients sue the State for damages that the State
assesses charges-in-full prior to the time when patients are in
actual receipt of assets. Thus OMH treats this class of patients
differently form others who are similarly situated, such as those
who receive Social Security benefits or lump-sum payments. For
this reason, plaintiffs have met their burden of proof for the
first prong of the selective enforcement test.*fn5
The Court now turns to whether this selective treatment was
based on an effort by OMH to inhibit or punish plaintiffs'
exercise of their constitutional right of access to the courts.
It is clear from defendant's admissions that he did intend to
inhibit plaintiffs from seeking damages from OMH. In particular,
as indicated above, the parties have stipulated that, "[b]y
notifying the patient and his counsel of the State's ability to
set-off, such action saves the time and resources of State staff
in defending a lawsuit which would serve no good purpose since
the State has the ability to defeat almost any recovery." Joint
Stipulation of Facts at ¶ 51. Plaintiffs have made the requisite
showing that an effort to chill plaintiffs' First Amendment
rights was behind the OMH policy that is the focus of this
OMH argues that, "the fact that the bill collector `goes
hunting where the ducks are' cannot be equated with selective
prosecution." Defendant's Memorandum of Law in Support of
Cross-Motion for Summary Judgment at 8. This may be true, but OMH
is shooting only those ducks that have chosen to "quack" by
exercising their First Amendment right to sue OMH. This violates
the equal protection clause and 42 U.S.C. § 1983.
Plaintiffs' Due Process Claim
Plaintiffs' final claim is that OMH's use of a set-off policy
for collecting on assessed charges fails to give plaintiffs an
adequate opportunity to challenge the validity of their
hospitalization and treatment bill, thereby denying their right
to due process of law under the Fourteenth Amendment and
violating 42 U.S.C. § 1983.
Such a claim requires a two-step inquiry: whether Acevedo and
Nunnery were deprived of protected interests and, if they were,
what process was due. Logan v. Zimmerman Brush Co.,
455 U.S. 422, 428, 102 S.Ct. 1148, 1153, 71 L.Ed.2d 265 (1982).
Both plaintiffs had a significant property interest in their
underlying lawsuits against New York. If successful, each would
have been entitled to recover damages from the State. Because the
State's set-off procedure would reduce or eliminate any recovery
that plaintiffs would receive as a result of their lawsuits, this
procedure deprives plaintiffs of a constitutionally protected
In order to determine what process is due under the
Constitution, the Court must weigh several factors:
`First, the private interest that will be affected by
the official action; second, the risk of an erroneous
deprivation of such interest through the procedures
used, and the probable value, if any, of additional
or substitute procedural safeguards; and finally, the
Government's interest, including the function
involved and the fiscal and administrative burdens
that the additional or substitute procedural
requirement would entail.'
Zinermon v. Burch, 494 U.S. 113, 127, 110 S.Ct. 975, 984, 108
L.Ed.2d 100 (1990) (quoting Mathews v. Eldridge, 424 U.S. 319,
335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976)).
Due process is a flexible concept, Signet Constr. Corp. v.
Borg, 775 F.2d 486, 490 (2d Cir. 1985) ("[e]xperience teaches
that what is fundamentally fair in terms of the form and time of
the notice and hearing must of necessity depend on circumstances
that will vary from case to case").
Nevertheless, "`the root requirement of the Due Process Clause'
is `that an individual be given an opportunity for a hearing
before he is deprived of any significant protected interest.'"
Zinermon v. Burch, supra, 494 U.S. at 127, 110 S.Ct. at 984
(quoting Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532,
542, 105 S.Ct. 1487, 1493, 84 L.Ed.2d 494 (1985)).
There are exceptions to the general rule that a hearing must
precede any deprivation of a constitutionally protected
In particular, under certain circumstances, a postdeprivation
hearing, or a common law tort remedy for erroneous deprivation
will provide due process. Zinermon v. Burch, supra, 494 U.S. at
128, 110 S.Ct. at 984-85. These exceptions to the general rule
fall into two limited categories: (1) cases where a deprivation
occurs "as a result of the unauthorized failure of agents of the
State to follow established state procedure," Parratt v.
Taylor, 451 U.S. 527, 543, 101 S.Ct. 1908, 1917, 68 L.Ed.2d 420
(1981), overruled in part on other grounds, Daniels v.
Williams, 474 U.S. 327, 106 S.Ct. 662, 88 L.Ed.2d 662 (1986),
thereby making a predeprivation hearing virtually impossible,
precisely because the State is not aware that an individual is
being deprived of property before the deprivation takes
place,*fn6 see also Hudson v. Palmer, 468 U.S. 517, 104 S.Ct.
3194, 82 L.Ed.2d 393 (1984), and (2) cases where "some exigency .
. . requires summary action by the state," Patterson v.
Coughlin, 761 F.2d 886, 892 (2d Cir. 1985), cert. denied,
474 U.S. 1100, 106 S.Ct. 879, 88 L.Ed.2d 916 (1986).
Neither of these exceptions is found in the present case.
First, the set-offs against Acevedo and Nunnery are part of an
official OMH policy and thus OMH is fully aware that patients are
being deprived of property as a result of State action. Unlike a
situation where a state employee acts, without authorization, to
deprive an individual of property, in the present case the State
can always arrange for a predeprivation hearing before the
deprivation takes place. Second, no exigencies are presented in
the present case which would require summary action by the State.
Because the patient will not receive any money from the State
unless and until the patient has prevailed in a lawsuit against
the State, OMH would have sufficient time to file a counterclaim
and thereby foreclose the patient from being paid.
This Court now turns to the three-part balancing test required
by Zinermon and Mathews to determine whether due process
under the Fourteenth Amendment was provided. First, there can be
little doubt that the private interest affected by the official
action in this case is significant. Because Acevedo is indigent,
any non-trivial recovery he receives as a result of his lawsuit
against OMH will have a significant impact on his personal
financial condition. If OMH is able to set-off against his
recovery, Acevedo will remain indigent. While the joint
stipulation of facts does not say whether Nunnery is presently
indigent or not, it does indicate that she was unable to pay her
treatment charges at the time of her hospitalization and that
"OMH had no basis for believing that [she] could afford to
satisfy the charges in the amount of $128,835.86 when it served
the verified claim." Joint Stipulation of Facts at ¶ 26. The
Court believes that Nunnery's claim against OMH for $2,796.00,
which, if successful, would be set-off, in its entirety, under
the current OMH policy, is a nontrivial amount, and therefore
represents a significant private interest that is being taken by
The next factor to consider is the risk that the current OMH
set-off procedure will result in an "erroneous deprivation" and
"the probable value, if any, of additional or substitute
procedural safeguards." Mathews v. Eldridge, supra, 424 U.S. at
335, 96 S.Ct. at 903. Under the current procedure, there is a
risk of error, if only because the patient does not have an
to challenge the accuracy of the bill. There may be a dispute,
for example, over the number of days that the patient received
treatment and care, or the per diem rate that should be applied
to those days. Furthermore, the potential for computer error may
add to the overall risk of error. See Memphis Light, Gas & Water
Div. v. Craft, 436 U.S. 1, 18, 98 S.Ct. 1554, 1565, 56 L.Ed.2d
30 (1978) ("[T]he risk of an erroneous deprivation, given the
necessary reliance on computers, is not insubstantial."
(footnotes omitted)). A predeprivation hearing would allow
patients to question and correct any errors made by computers or
humans within OMH.
The final factor is the additional burdens that a
predeprivation hearing would place on the State. Plaintiffs have
argued that, when patients file claims against OMH, the agency
could file a counterclaim seeking to recover care and treatment
charges in an amount no greater than the amount of recovery
sought by the patient. This would certainly provide those who sue
OMH with an opportunity to have a predeprivation hearing on
whether OMH's assessed charges were accurate, valid and legal.
Because OMH would already be involved with litigation against the
patient, the incremental time and cost associated with filing a
counterclaim would be minimal. The State would only have to
establish that the patient received care and treatment for a
certain number of days and that the charges imposed were applied
correctly. This is not a particularly onerous burden.
The filing of a counterclaim is but one mechanism that the
State could use to provide a constitutionally valid
predeprivation hearing. Alternatively, the State might establish
an administrative procedure for ascertaining whether OMH's
assessed charges against those who sue the State are accurate,
valid and legal. This Court will not dictate to the State as to
exactly what sort of hearing the State must provide. The State
may decide how to best provide a predeprivation hearing that
comports with the due process clause of the Fourteenth Amendment
and satisfies other important state interests, such as minimizing
financial and administrative burdens on the State.
New York courts have held that the State's current set-off
procedure complies with New York State law, Carlon v. Regan,
98 A.D.2d 544, 471 N.Y.S.2d 896 (App. Div.), aff'd, 63 N.Y.2d 1011,
484 N.Y.S.2d 506, 473 N.E.2d 734 (1984), and that a
patient's remedy for the Comptroller's set-off is a
postdeprivation Article 78 proceeding against the Comptroller to
review the audit. Id. 471 N.Y.S.2d at 898.
Because of this Court's conclusion that an adequate
predeprivation hearing is required, a postdeprivation proceeding,
such as an action under Article 78 of the New York Civil Practice
Law and Rules or an action for declaratory or injunctive relief
in New York State Supreme Court, is inadequate, by definition, to
meet the due process requirements of the United States
Constitution. Patterson v. Coughlin, supra, 761 F.2d at 893.