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Concerned Home Care Providers, Inc. v. Cuomo

United States District Court, N.D. New York

September 25, 2013

CONCERNED HOME CARE PROVIDERS, INC.; AMERICAN CHORE SERVICES, INC., D/B/A CITY CHOICE HOME CARE SERVICES; COMMUNITY HOME CARE REFERRAL SERVICE, INC.; EAGLE HOME CARE, LLC; PELLA CARE, LLC; PLATINUM HOME HEALTH CARE, INC.; ST. MARY'S HEALTHCARE SYSTEM FOR CHILDREN, Plaintiffs,
v.
ANDREW M. CUOMO, in his capacity as the Governor of the State of New York and NIRAV R. SHAH M.D., M.P.H. in his capacity as the Commissioner of the New York State Department of Health, Defendants

Decided: September 24, 2013.

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[Copyrighted Material Omitted]

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For Plaintiffs: Wilson Elser Moskowitz Edelman & Dicker LLP, Philip Rosenberg, Esq., of counsel, Benjamin F. Neidl, Esq., of counsel, Albany, New York.

For Defendants: Hon. Eric T. Schneiderman, Attorney General of the State of New York, Krista A. Rock, Esq., Assistant New York State Attorney, Albany, New York; New York State Attorney General - Albany Office, Albany, New York and Seth Kupferberg, Esq., Assistant New York State Attorney, New York, New York.

OPINION

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MEMORANDUM-DECISION AND ORDER

Hon. Norman A. Mordue, Senior U.S. District Judge.

INTRODUCTION

Plaintiffs, an association of home care providers and six providers of home health care services, brought this action seeking a judgment declaring the invalidity of New York Public Health Law (" PHL" ) § 3614-c, entitled " Home care worker wage parity" (" Wage Parity Law" ), and a permanent injunction prohibiting defendants from enforcing the statute. Plaintiffs contend that the Wage Parity Law is impliedly preempted by the National Labor Relations

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Act (" NLRA" ), 29 U.S.C. § § 151 et seq., and expressly pre-empted by the pre-emption clause of section 514(a) of the Employee Retirement Income Security Act (" ERISA" ), 29 U.S.C. § 1144(a). Plaintiffs further contend that the Wage Parity Law violates the Equal Protection and Due Process Clauses of the United States Constitution, and deprives them of their civil rights. See 42 U.S.C. § 1983. United States Magistrate Judge Christian F. Hummel " so ordered" a stipulation by plaintiff St. Mary's Healthcare System for Children to discontinue its claims without prejudice (Dkt. No. 24).

Presently before the Court is a motion (Dkt. No. 12) by defendants to dismiss the complaint for lack of subject-matter jurisdiction on the ground that plaintiffs lack standing, Fed.R.Civ.P. 12(b)(1), and for failure to state a claim. Fed.R.Civ.P. 12(b)(6). For the reasons stated below, the Court grants dismissal of all claims against Governor Andrew M. Cuomo; denies dismissal of the second cause of action (ERISA pre-emption) as against defendant New York State Commissioner of Public Health Nirav R. Shah, M.D., M.P.H.; declares that subdivision 4 of the Wage Parity Law is pre-empted by ERISA; severs subdivision 4 from the Wage Parity Law; upholds the remainder of the Wage Parity Law; and grants a permanent injunction enjoining Commissioner Shah from enforcing subdivision 4. In all other respects the Court grants defendants' motion (Dkt. No. 12) to dismiss the complaint. Inasmuch as plaintiffs have received on this motion all the relief to which they are entitled in this action, the Court closes the case.

BACKGROUND

In addition to the instant action challenging the Wage Parity Law, PHL § 3614-c, on federal law grounds, plaintiffs brought a combined Article 78 proceeding and declaratory judgment action in New York State Supreme Court challenging the law on a number of state law grounds. On September 7, 2012, Supreme Court Justice Roger D. McDonough granted defendants-respondents' motion for summary judgment, declared that the Wage Parity Law has not been shown to violate the New York State Constitution, denied all relief requested by plaintiffs-petitioners, and dismissed the action. Concerned Home Care Providers, Inc. v. State of N.Y., Supreme Court, Albany County, Index No. 1145-12.[1] On July 3, 2013, the Appellate Division, Third Department, affirmed. Matter of Concerned Home Care Providers, Inc. v. State of N.Y., 108 A.D.3d 151, 969 N.Y.S.2d 210, 215 (3d Dep't 2013).[2]

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Under the Wage Parity Law, no payments by government agencies shall be made to a home health agency, long term home health care program, or managed care plan in New York City and the counties of Westchester, Suffolk and Nassau for care provided by a home care aide whose compensation is less than the total compensation required by the Wage Parity Law. PHL § 3614-c(2). The minimum rate of total compensation is based primarily on New York City's Living Wage Law. PHL § 3614-c(3); N.Y.C. Admin. Code § 6-109. In the parallel state court action, the Third Department wrote: " By referring to the New York City statute, the Wage Parity Law aims to bring total compensation for Medicaid-reimbursed home care aides in the metropolitan New York area into line with compensation paid to aides who are under contract with New York City, thereby furthering the legislative purpose of stabilizing the workforce, reducing turnover, and enhancing recruitment and retention of home care workers." Concerned Home Care, 969 N.Y.S.2d at 213.

The pertinent portions of the Wage Parity Law, PHL § 3614-c, are as follows:

1. As used in this section, the following terms shall have the following meaning:
(a) " Living wage law" means any law enacted by Nassau, Suffolk or Westchester county or a city with a population of one million or more which establishes a minimum wage for some or all employees who perform work on contracts with such county or city.
(b) " Total compensation" means all wages and other direct compensation paid to or provided on behalf of the employee including, but not limited to, wages, health, education or pension benefits, supplements in lieu of benefits and compensated time off, except that it does not include employer taxes or employer portion of payments for statutory benefits, including but not limited to FICA, disability insurance, unemployment insurance and workers' compensation.
(c) " Prevailing rate of total compensation" means the average hourly amount of total compensation paid to all home care aides covered by whatever collectively bargained agreement covers the greatest number of home care aides in a city with a population of one million or more. For purposes of this definition, any set of collectively bargained agreements in such city with substantially the same terms and conditions relating to total compensation shall be considered as a single collectively bargained agreement.
2. Notwithstanding any inconsistent provision of law, rule or regulation, no payments by government agencies shall be made to certified home health agencies, long term home health care programs or managed care plans for any episode of care furnished, in whole or in part, by any home care aide who is compensated at amounts less than the applicable minimum rate of home care aide total compensation established pursuant to this section.
3. (a) The minimum rate of home care aide total compensation in a city with a population of one million or more shall be:
***
(iii) for all periods on and after March first, two thousand fourteen, no less than the prevailing rate of total compensation as of January first, two thousand eleven, or the total compensation mandated by the

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living wage law of such city, whichever is greater.
(b) The minimum rate of home care aide total compensation in the counties of Nassau, Suffolk and Westchester shall be:
***
(ii) for the period March first, two thousand fourteen through February twenty-eighth, two thousand fifteen, ninety-five percent of the total compensation mandated by the living wage law as set on March first, two thousand fourteen of a city with a population of a million or more;
(iii) for the period March first, two thousand fifteen, through February twenty-eighth, two thousand sixteen, one hundred percent of the total compensation mandated by the living wage law as set on March first, two thousand fifteen of a city with a population of a million or more;
(iv) for all periods on or after March first, two thousand sixteen, the lesser of (i) one hundred and fifteen percent of the total compensation mandated by the living wage law as set on March first of each succeeding year of a city with a population of one million or more or; (ii) the total compensation mandated by the living wage law of Nassau, Suffolk or Westchester county, based on the location of the episode of care.
4. Any portion of the minimum rate of home care aide total compensation attributable to health benefit costs or payments in lieu of health benefits, and paid time off, as established pursuant to subdivision three of this section shall be superseded by the terms of any employer bona fide collective bargaining agreement in effect as of January first, two thousand eleven, or a successor to such agreement, which provides for home care aides' health benefits through payments to jointly administered labor-management funds.
5. The terms of this section shall apply equally to services provided by home care aides who work on episodes of care as direct employees of certified home health agencies, long term home health care programs, or managed care plans, or as employees of licensed home care services agencies, limited licensed home care services agencies, or under any other arrangement.
***
10. Nothing in this section should be construed as applicable to any service provided by certified home health agencies, long term home health care programs, or managed care plans except for all episodes of care reimbursed in whole or in part by the New York Medicaid program.
***

The complaint (Dkt. No. 1) characterizes the Wage Parity Law, N.Y. Public Health Law § 3614-c, as follows:

19. Effective March 1, 2012, the Wage Parity Law, codified at New York Public Health Law § 3614-c, imposes new compensation mandates on home care agencies that directly or indirectly receive Medicaid funds and employ home care aides working in New York City and Nassau, Suffolk and Westchester Counties.
20. Instead of prescribing specific amounts as a compensation mandate, however, the Wage Parity Law provides, in part, that New York City shall dictate the mandate for the home health care agencies operating in New York City and Nassau, Suffolk and Westchester Counties.

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21. Specifically, the Wage Parity Law incorporates by reference a New York City " living wage" law, N.Y.C. Admin. Code § 6-109 (the " NYC Local Law" ). The NYC Local Law provides that vendors performing work on city contracts must pay their employees compensation at specified rates.
22. The Wage Parity Law requires, as a condition of directly or indirectly receiving Medicaid funds, that home care agencies compensate their home care aides at rates that are based on a percentage of the NYC Local Law.
23. New York City is free to amend the NYC Local Law at any time and, by extension, unilaterally alter the responsibilities of home health care agencies not only operating in New York City, but also operating in Nassau, Suffolk and Westchester Counties.
24. Effective March 1, 2014, the Wage Parity Law also provides that covered home care agencies operating in New York City must pay their home care aides compensation no less than: (i) the rate prescribed in the NYC Local Law; or (ii) the average hourly amount of total compensation paid to all home care aides covered by whatever collectively bargained agreement covers the greatest number of home care aides in New York City. For purposes of determining the collectively bargained agreement with the largest number of home care aides, any set of collectively bargained agreements with substantially the same terms and conditions relating to total compensation shall be considered as a single collectively bargained agreement.
25. The collective bargaining agreement that covers the greatest number of home care aides in New York City, within the meaning of the Wage Parity, is the set of Home Attendant Agreements to which SEIU Local 1199 is a party, which cover about 40,000 home attendants working in New York City.
26. The Wage Parity Law also states that, effective March 1, 2016, home care agencies that operate in Nassau, Suffolk and Westchester Counties must compensate their home care aides the lower of 115% of the NYC Local Law or the amount that is mandated by a local law in Nassau, Suffolk or Westchester County, respectively.

In the first cause of action, plaintiffs claim that the Wage Parity Law is impliedly preempted by the National Labor Relations Act (" NLRA" ), 29 U.S.C. § § 151 et seq . In the second cause of action, plaintiffs claim that the law is expressly pre-empted by section 514(a) of the Employee Retirement Income Security Act (" ERISA" ), 29 U.S.C. § 1144(a). The third cause of action asserts that the Wage Parity Law denies plaintiffs equal protection in violation of the Fourteenth Amendment of the United States Constitution. The fourth cause of action asserts that the law violates plaintiffs' due process rights guaranteed by the United States Constitution. The fifth cause of action, under 42 U.S.C. § 1983, alleges deprivation of federal statutory and constitutional rights. Finally, the sixth cause of action seeks a permanent injunction enjoining the state from enforcing the Wage Parity Law.

The complaint requests the following relief: a declaration that the Wage Parity Law is preempted by the NLRA; a declaration that the law is pre-empted by ERISA; a declaration that the law violates the equal protection guarantee of the United States Constitution; a declaration that the law violates the due process guarantee of the United States Constitution; and a permanent injunction prohibiting defendants from enforcing the Wage Parity Law.

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THE MOTION

On this motion (Dkt. No. 12), defendants seek dismissal of the complaint on the following grounds: (1) plaintiffs lack standing; (2) the Court should abstain in light of the state court litigation; (3) Governor Andrew M. Cuomo is not a proper party; (4) the Wage Parity Law is not pre-empted by ERISA; (5) the Wage Parity Law is not pre-empted by the NLRA; (6) the Wage Parity Law does not deny plaintiffs equal protection; (7) the Wage Parity Law does not violate plaintiffs' rights to due process; and (8) even if the court upholds any cause of action in the complaint, plaintiffs should not be granted a permanent injunction.

Plaintiffs oppose defendants' motion in all respects. In addition, plaintiffs argue that, if the Court finds any aspect of the statute unconstitutional, plaintiffs are entitled to a permanent injunction.

As set forth below, the Court holds as follows: plaintiffs have adequately pleaded standing; abstention is not appropriate; Governor Andrew M. Cuomo is not a proper defendant; the Wage Parity Law is not pre-empted by the NLRA; the Wage Parity Law does not deprive plaintiffs of equal protection or due process; and there is no basis for plaintiffs' cause of action under 42 U.S.C. § 1983. The Court further finds that, on its face, subdivision 4 of the Wage Parity Law is pre-empted by ERISA, and that on the face of the entire statute, subdivision 4 is severable. The parties have fully briefed the issues of ERISA pre-emption of subdivision 4, of subdivision 4's severability, and of the appropriateness of injunctive relief. Neither party requests discovery on any issue, nor do they argue that there are material questions of fact. There is no need to engage in further proceedings.

Accordingly, the Court denies dismissal of the second cause of action as against Commissioner Nirav R. Shah; declares that subdivision 4 is pre-empted by ERISA; severs subdivision 4 from the remainder of the Wage Parity Law; and grants a permanent injunction enjoining Commissioner Shah from enforcing subdivision 4. In all other respects the Court grants defendants' motion (Dkt. No. 12) to dismiss the complaint. Inasmuch as plaintiffs have received all the relief to which they are entitled, the Court closes the case.

STANDING

As noted, one plaintiff, St. Mary's Healthcare System for Children, Inc., has discontinued its claims without prejudice (Dkt. No. 24). The remaining plaintiffs are five licensed home care services agencies (" LHCSAs" ), which provide home health care, and an association of home care agencies, Concerned Home Care Providers, Inc. (" Concerned" ).

The Court first considers defendants' contention that plaintiffs lack standing, that is, that plaintiffs are not proper parties to request an adjudication of the particular issues raised in this action. See Flast v. Cohen, 392 U.S. 83, 99-100, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968). The question of standing " focuses on the party seeking to get his complaint before a federal court and not on the issues he wishes to have adjudicated." Id. at 99. The Supreme Court explains:

Over the years, our cases have established that the irreducible constitutional minimum of standing contains three elements. First, the plaintiff must have suffered an injury in fact -- an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of -- the injury

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has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal quotation marks, citations, alterations, and footnote omitted). A proper party is required " so that federal courts will not be asked to decide illdefined controversies over constitutional issues, or a case which is of a hypothetical or abstract ...


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