Supreme Court Rules in EO #38 Case

Acting State Supreme Court Justice Denise Hartman has just issued a decision in the matter of LeadingAge New York et al v. Shah, a case we brought with other groups challenging Executive Order (EO) #38 and the associated regulatory limits on executive compensation and administrative costs. The decision partially upholds our contention that the regulations inappropriately limit executive compensation.

The Court’s Nov. 13 decision invalidates the regulations in part. The essence of Justice Hartman’s ruling is to uphold the limitations as they apply to State funds or State authorized payments, but to annul provisions that apply such limits to executive compensation paid from other sources of funding:

“…the Court concludes that the Department of Health did not usurp the Legislature’s prerogative by establishing caps on administrative costs and executive compensation that will be reimbursed by State funds or State-authorized funds. The Court concludes, however, that the Department of Health overstepped its statutory authority by setting a “soft cap” on executive salaries paid from all sources and defining the criteria and decision-making processes that must be applied before corporate entities may exceed the “soft cap”.

Legal counsels for LeadingAge New York and other groups challenging Executive Order #38 are carefully analyzing the decision and will consider next steps. In the meantime, the regulations and filing requirements associated with EO#38 remain in effect throughout the State, with the exception of Nassau County where an earlier Supreme Court decision stayed their implementation.

Contact: Dan Heim (dheim@leadingageny.org), 518-867-8866