The opinion of the court was delivered by: Dora L. Irizarry, U.S. District Judge
Plaintiffs Celeste Green, Marschell Ruggs, and Jonathan and Randi Bolos (collectively, "parent plaintiffs") filed a class action complaint individually and on behalf of their respective children, Alia Green, Ashley Victoria Ruggs, and Lauren Bolos (collectively, "infant plaintiffs") as individual plaintiffs and representatives of a purported class against the City of New York, the City of New York Department of Social Services Human Resources Administration ("HRA"), and Verna Eggleston, the Commissioner of the HRA ("Commissioner Eggleston"). The plaintiffs are disabled children and their parents who have received assistance under the Medicaid program. Plaintiffs claim that Medicaid liens asserted by the City of New York against awards from personal injury actions they instituted improperly included monies paid for federally-mandated educational services that were required to be provided free of charge. Plaintiffs allege violation of (1) their equal protection and due process rights under 42 U.S.C. § 1983, (2) the Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. § 1400 et seq., (3) the New York State Education Act, N.Y. EDUC. LAW § 4000 et seq., (4) the New York State Constitution, (4) N.Y. Social Services Law § 367--a(2)(b), and (5) common law negligence.
Defendants move to dismiss plaintiffs' complaint under Fed. R. Civ. P. 12(b)(1), on grounds that the court lacks subject matter jurisdiction over the instant matter, and under Fed. R. Civ. P. 12(b)(6), arguing that the plaintiffs do not have standing, that there is no private right of action under N.Y. Social Services Law § 367--a(2)(b), and that the parent plaintiffs' claims are barred by the statute of limitations. For the reasons set forth below, defendants' motion to dismiss under Rule 12(b)(1) is denied. Defendants' 12(b)(6) motion to dismiss is denied with respect to lack of standing but granted as to the claim under N.Y. Social Services Law § 367--a(2)(b), which is dismissed. Furthermore, the court finds that the parent plaintiffs' individual claims are barred by the statute of limitations, and the parent plaintiffs will continue in this action solely as representatives of the infant plaintiffs.
The infant plaintiffs are children "with a disability" as defined under the IDEA, see 20 U.S.C. § 1401(3), who have received or are now receiving medical assistance from the City of New York's Medicaid plan,*fn1 established pursuant to Title XIX of the Social Security Act. The IDEA was enacted "to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepare them for further education, employment, and independent living." 20 U.S.C. § 1400(d)(1)(A).*fn2 The infant plaintiffs, since reaching pre-school age, have attended school and received from local school districts certain "special education and related services" under the IDEA (hereinafter "Related Services"). The Related Services provided under each infant plaintiff's "individualized education program" under the IDEA include physical therapy, speech therapy, counseling, occupational therapy, and transportation to and from school on specially-equipped and staffed vehicles. The individualized education programs were ratified and adopted by the school districts responsible for the infant plaintiffs' education. Plaintiffs allege that claims for the payment of some or all of the Related Services provided to the infant plaintiffs were made to the infant plaintiffs' school districts or educational institutions. After paying the claims, the school districts and educational institutions were reimbursed by the HRA.
When the parent plaintiffs filed personal injury actions to recover against the parties that allegedly caused the infant plaintiffs' disabilities, the HRA imposed liens pursuant to N.Y. Social Services Law §104--b to recover the City of New York's Medicaid expenditures. In each case, some or all of the lien amount asserted was satisfied and subtracted from personal injury proceeds pursuant to a settlement approved by an infant compromise order. Plaintiffs claim that HRA included in the lien calculations the amounts paid to reimburse school districts and educational institutions for Related Services. Thus, plaintiffs allege that because they relied on inaccurate lien amounts when negotiating their settlements, and, in other cases, paid the full lien amount, defendants deprived them of the "free appropriate public education" to which they are entitled under the IDEA. Plaintiffs assert this claim on behalf of both a paying subclass, comprised of those who have settled or paid in full the Medicaid liens that included costs for Related Services, and a non-paying subclass, comprised of those who have not yet resolved their personal injury claims but have improperly inflated Medicaid liens asserted against them. As remedy, plaintiffs request that the defendants return all monies the City of New York and HRA collected for Related Services and that the court enter an order enjoining defendants from future attempts to collect funds for Related Services.
Lauren Bolos ("Lauren") was born on May 2, 1990 and suffers from cerebral palsy, brain damage, impaired motor function and coordination, and a seizure disorder that requires medication. Lauren received Medicaid assistance and Related Services. Sometime shortly before January 1992, Lauren's parents and natural guardians, Jonathan and Randi Bolos, instituted a personal injury action in New York State Supreme Court, Richmond County, against several defendants, including Staten Island Hospital and three of the doctors who performed the delivery of Lauren. Prior to the settlement of the action, HRA placed a Medicaid lien on proceeds expected from the personal injury action. According to an affidavit submitted by Jonathan Bolos in support of the Bolos' application for state court approval of the settlement, the lien was for approximately $1,300,000. The Bolos reached a settlement agreement with one of the defendant doctors in the amount of $1,825,000. Pursuant to the settlement, $600,000 was paid to HRA for full reimbursement of the Medicaid lien. On February 23, 2000, the settlement and infant compromise order was entered in state court.
Alia Green ("Alia") was born on July 16, 1993 with severe brain damage affecting her motor and cognitive skills and functions. She suffers from hearing loss, developmental delays, and a seizure disorder that requires medication. Alia received Medicaid assistance and Related Services pursuant to the IDEA. Around January 1995, Alia's parent and natural guardian, Celeste Green, instituted a personal injury action in New York State Supreme Court, Kings County, against Interfaith Hospital and three of the doctors who performed the delivery of Alia. Prior to the settlement of the action, HRA placed a Medicaid lien on expected proceeds in the action in the amount of $7,875.15, covering Medicaid expenses from November 13, 1999 to July 6, 2000. The Greens reached a settlement with the hospital and one of the doctors in the amount of $3,250,000 and with third-party defendant New York City Health and Hospitals Corporation in the amount of $500,000. Payment of $7,875.15 was made to HRA to satisfy the lien. The settlement and infant compromise order was entered in state court on September 26, 2000.
Ashley Victoria Ruggs ("Ashley") was born on November 30, 1993. As a result of complications from birth, she is mentally retarded and physically disabled. She also suffers from a seizure disorder that requires medication. Ashley received Medicaid assistance and Related Services pursuant to the IDEA. Around February 1995, Ashley's parent and natural guardian, Marschell Ruggs, instituted a personal injury action in New York State Supreme Court, Kings County, against several defendants, including New York City Health and Hospitals Corporation and two of the doctors who performed Ashley's delivery. Prior to the settlement of the action, HRA placed a Medicaid lien on any proceeds to be recovered in the personal injury action. According to an affidavit submitted by Marschell Ruggs to seek state court approval of the settlement, the lien was for $600,000. The action was settled on February 24, 2000 for $1,750,000, and HRA accepted $600,000 for full satisfaction of the lien-$200,000 to be paid immediately, and $400,000 to be paid upon Ashley's death. The settlement and infant compromise order was entered in state court on March 28, 2000.
In evaluating a motion to dismiss under Fed. R. Civ. P. 12(b)(1), the court accepts as true all factual allegations in the plaintiff's complaint. Atlantic Mut. Ins. Co. v. Balfour Maclaine Intern. Ltd., 968 F.2d 196, 198 (2d Cir. 1992). However, "inferences favorable to the party asserting jurisdiction should not be drawn." Id. A case is properly dismissed under 12(b)(1) when "the district court lacks statutory or constitutional power to adjudicate it." Makarova v. U.S., 201 F.3d 110, 113 (2d Cir. 2000). It is the plaintiff's burden to prove ...