Appellate Division Strikes Down Part of Governor Cuomo’s Executive Order #38 on Compensation and Administrative Expense

Esq. Stephen B. Hanse and Carl J. Pucci in Legal

On Thursday, June 22, 2017, the Appellate Division, Third Department of State Supreme Court in Albany handed down a decision in a case brought jointly by NYSHFA and LeadingAge. The Court held that the Governor and the Department of Health had exceeded their authority in issuing Executive Order #38 and implementing regulations that imposed a limit on executive compensation paid by health care providers with non-state funds (non-Medicaid funds). The ruling also applies to the cap on administrative expenses paid for with non-State funds. The Court did rule, however, that the Governor and the Department of Health had the authority to prohibit the use of State funds (Medicaid) to pay amounts in excess of the compensation cap ($199,000 / year) and the administrative expense cap (15% of overall operating cost). It is unknown at this time whether either the State or NYSHFA / LeadingAge will appeal. In the meantime, providers are reminded that they must file their Executive Order #38 Disclosure Statements by no later than July 31, 2017 – the same date that cost reports are due to be filed.

Members with questions should contact either Stephen Hanse at shanse@nyshfa.org or Carl Pucci at cpucci@nyshfa.org (NYSHFA) or the Association’s General Counsel, Neil Murray, at 518-462-5601 or cmurray@oalaw.com.