Opinion
128565
10-17-2017
Dr. Joy L. KREEGER, M.D., Claimant, v. The STATE of New York, The New York State Office for People With Developmental Disabilities, and The Western New York Developmental Disabilities State Operations Office, Defendants.
For Claimant: HODGSON RUSS LLP, BY: DANIEL C. OLIVERIO, ESQ. and AARON M. SAYKIN, ESQ. For Defendants: HON. ERIC T. SCHNEIDERMAN, New York State Attorney General, BY: MICHAEL T. FEELEY, ESQ., Assistant Attorney General
For Claimant: HODGSON RUSS LLP, BY: DANIEL C. OLIVERIO, ESQ. and AARON M. SAYKIN, ESQ.
For Defendants: HON. ERIC T. SCHNEIDERMAN, New York State Attorney General, BY: MICHAEL T. FEELEY, ESQ., Assistant Attorney General
Michael E. Hudson, J.
Claimant Dr. Joy L. Kreeger, M.D., seeks to recover for breach of contract and related theories of recovery under four causes of action arising from the nonrenewal of a contract with the State of New York for the supply of professional services. A psychiatrist, Dr. Kreeger provided such services on behalf of the New York State Office for People with Developmental Disabilities (OPWDD) at its Region One office, and with the Western New York Developmental Disabilities State Operations Office (WNYDDSO) located in West Seneca, New York. Prior to the nonrenewal of the agreement Dr. Kreeger had served as a psychiatrist on behalf of the OPWDD for a period of approximately 19 years, under a series of multi-year contracts. The final contract between the parties covered the period from January 1, 2011 through December 31, 2015.
In November of 2015, in anticipation of the expiration of the 2011-2015 contract term, OPWDD sent out an Invitation for Bids (IFB) for the period of 2016-2020. Claimant submitted a bid package on or about November 20, 2015. Dr. Kreeger's bid listed an hourly rate of $190.00. However, following negotiations with Yvonne Smith, the Business Officer of WNYDDSO, Dr. Kreeger agreed to accept an hourly rate of $186.58, and was awarded the bid on December 23, 2015. A contract was then prepared by Ms. Smith's office and forwarded to Claimant. Dr. Kreeger signed and returned the contract on January 22, 2016. According to Defendant, over the months that followed the contract was not executed by WNYDDSO, or submitted to the Attorney General's Office or the Comptroller's office for approval, since the agreement was part of a multi-vendor IFB, and Ms. Smith's office was awaiting paperwork from other vendors before processing the agreements (Affidavit of Michael T. Feeley [Feeley affidavit], sworn to March 29, 2017, exhibit B [Affidavit of Yvonne Smith (Smith affidavit) sworn to March 28, 2017], p 5).
During the first months of 2016 Dr. Kreeger believed that she was providing psychiatric services under the new contract, since she continued to work without interruption, but at the revised contract rate of $186.58 per hour. That routine continued through May 4, 2016. In response Ms. Smith explained that over that period Claimant was instead paid by means of a purchase order system, which was used to compensate vendors while a contract was in the approval process (Smith affidavit, ¶ 17). It appears clear, however, that over the brief period involved Claimant would not have known of that distinction in the manner of payment.
Ms. Smith asserts that she notified Dr. Kreeger of the suspension on April 27, 2016, the same date she herself had been notified by Catherine Johnson, the Deputy Director for OPWDD State Operations Region 1, that a reporting Form 147 had been filed against Claimant. Form 147 is used to file allegations of abuse, neglect, mistreatment or other types of incidents pursuant to mental hygiene regulations set forth within 14 NYCRR part 624. Ms. Smith also reports that on May 5, 2016, she informed Claimant that she was to have no further contact with OPWDD staff, or enter upon the premises.
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On May 5, 2016, Claimant was verbally notified that she was suspended from her position pending an investigation. Dr. Kreeger maintains that she was not informed of the details of the investigation, and was not afforded an opportunity to respond. Thereafter, on May 16, 2016, she did agree to be interviewed by WNYDDSO regarding a particular patient visit, but states that she received no information or documentation regarding the allegations of improper conduct. On June 20, 2016, Dr. Kreeger sent a certified letter to WNYDDSO demanding that she be allowed to review the allegations. By letter dated June 21, 2016, Ms. Smith, in turn, informed Claimant that due to the purported misconduct her status had been changed to "non-responsible," and that WNYDDSO would no longer continue to process the 2016-2020 contract. Ms. Smith also advised the doctor that she had 10 days to respond if she disagreed with the determination that she was non-responsible. Dr. Kreeger notes that she was never provided the 30-day notice of intent to cancel that she would have been entitled to receive under the terms of the 2016-2020 contract.
Dr. Kreeger filed this claim on September 20, 2016, seeking to recover damages under four theories of recovery: breach of contract — improper suspension and termination; breach of contract — failure to pay for services rendered; unjust enrichment; and, a violation of her constitutional rights. In its answer Defendant raised 23 affirmative defenses, including the failure to state a cause of action, the lack of Comptroller approval under State Finance Law § 112, the holding in Parsa v State of New York , (64 NY2d 143 [1984] ), and the doctrine of payment and release.
Claimant now moves for partial summary judgment on the first cause of action for breach of contract— improper suspension and termination. Defendant cross-moves to dismiss the claim under State Finance Law § 112, and to amend the answer to include as affirmative defenses the statute of frauds and General Obligations Law § 15-501. The Court will first address Defendant's cross motion, since it is dispositive of the claim.
State Finance Law § 112 (2) (a) requires that before any contract with a state agency or department providing for the payment in excess of $50,000 becomes effective the approval of the Comptroller must be obtained. "Moreover, the State's acceptance of benefits furnished under a contract made without authority does not estop it from challenging the validity of the contract or from denying liability pursuant to it" ( Parsa, 64 NY2d at 147 ; see also Rosefsky v State of New York , 205 AD2d 120, 123-124 [3d Dept 1994] ). The Court has reviewed Landers v State of New York, (56 AD2d 105 [3d Dept 1977], affd 43 NY2d 784 [1977] ), as urged by Claimant, and finds that decision to be factually distinguishable. In Landers the Comptroller's approval under State Finance Law § 112 of individual payments was not required because those payments were made pursuant to a settlement agreement that previously had been approved by the Comptroller. Here, in contrast, no form of action had been taken by the Comptroller. In any event, Parsa represents a later analysis on the question by the Court of Appeals, and will be followed by this Court.
Ultimately, a fully-executed and approved contract did not exist between the parties for any period after December 31, 2015, and the Court cannot give effect to that document. Moreover, to the extent Dr. Kreeger has urged that an implied-in-fact contract arose between the parties, or that judicial estoppel would apply, once again the absence of Comptroller approval precludes recovery on such bases. As noted above, the State's acceptance of benefits under an unauthorized contract does not estop a challenge to its validity ( Parsa , 64 NY2d at 147 ), and a contract may not be implied to provide rough justice and fasten liability where prohibited under section 112 (id ). A "prudent contracting party" is left with the option of withholding goods or services until the agreement is in fact approved, and filed by the Comptroller, as the statute requires (see Compuware v State of New York, UID No. 2002-001-123 [Ct Cl, Read, P.J., Dec. 31, 2002] ). The claim herein must be dismissed.
The Court notes that the second and third causes of action of the claim are now moot, since it is undisputed that Claimant has been paid for all periods in which she provided services to Defendant.
Lastly, the Court will dismiss the cause of action for the alleged violations of her State and federal constitutional rights. The State is not a "person" amenable to suit within the meaning of 42 USC § 1983 ( Will v Michigan Dept. of State Police , 491 US 58 [1989] ), and recovery against the State under respondeat superior principles is not authorized under that statute (see Monell v New York City Dept. of Social Servs. , 436 US 658, 691-694 [1978] [municipality not vicariously liable as employer for section 1983 violation by employees] ). Dismissal is also warranted with respect to the claimed violation of Dr. Kreeger's State constitutional rights, as this case does not fit into the "narrow remedy" envisioned for such litigation by the Court of Appeals in Brown v State of New York , 89 NY2d 172, 192 (1996). Such a tort claim will only be recognized where it is necessary to effectuate the purpose of the underlying State constitutional protection that a claimant invokes, and there is no other remedy available ( Martinez v City of Schenectady , 97 NY2d 78 [2001] ). Here, Claimant had been pursuing other causes of action in this court, and in Supreme Court, Erie County, which arise from the same matters upon which her State constitutional claim is based. Thus, that cause of action is dismissed.
Based upon the above, it is hereby
ORDERED, that Defendant's cross motion for summary judgment dismissing the claim is granted, and the claim is hereby dismissed; and it is further
ORDERED, that the balance of Defendant's cross motion seeking to amend the answer to add affirmative defenses is denied as moot; and it is further
ORDERED, that Claimant's motion for partial summary judgment in her favor is denied.