Concerned Home Care Providers, Inc. v. Cuomo

783 F.3d 77

CONCERNED HOME CARE PROVIDERS, INC., American Chore Services, Inc., dba City Choice Home Care Services, Community Home Care Referral Service, Inc., Eagle Home Care, LLC, Pella Care, LLC, and Platinum Home Health Care, Inc., Plaintiffs–AppellantsSt. Mary's Healthcare System for Children, Plaintiff

v.Andrew M. CUOMO, and Nirav R. Shah, Defendants–Appellees.

No. 13–3790–cv.

United States Court of Appeals, Second Circuit.

Argued: Aug. 20, 2014.

Decided: March 27, 2015.

Philip E. Rosenberg, Nixon Peabody LLP, Albany, NY; Benjamin F. Neidl, Wilson Elser Moskowitz, Edelman & Dicker LLP, Albany, NY, for Plaintiffs–Appellants.

Jeffrey W. Lang, Assistant Solicitor General, Andrew D. Bing, Deputy Solicitor General, Barbara D. Underwood, Solicitor General, for Eric T. Schneiderman, Attorney General of the State of New York, Albany, NY, for Defendants–Appellees.

David M. Slutsky, Levy Ratner, P.C., New York, NY, for Amicus Curiae 1199 SEIU United Healthcare Workers East in support of Defendants–Appellees.

Before: WALKER, WESLEY, and LIVINGSTON, Circuit Judges.

Opinion

DEBRA ANN LIVINGSTON, Circuit Judge:

A section of the New York Public Health Law known as the “Wage Parity Law” sets the minimum amount of total compensation that employers must pay home care aides in order to receive Medicaid reimbursements for reimbursable care provided in New York City and Westchester, Suffolk, and Nassau Counties (the “surrounding Counties”). N.Y. Pub. Health Law § 3614–c. The questions presented on appeal are whether the Wage Parity Law is preempted by the National Labor Relations Act (“NLRA”), or the Employee Retirement Income Security Act of 1974 (“ERISA”), or is unconstitutional under the Fourteenth Amendment's Due Process and Equal Protection Clauses. We conclude that the Wage Parity Law is neither preempted nor unconstitutional, and we therefore affirm the judgment of the district court.¹

BACKGROUND

A. The Wage Parity Law

“[T]he provision of high quality home care services to residents of New York state is a priority concern” of the New York Legislature. N.Y. Pub. Health Law § 3600. To that end, the State's Public Health Law establishes a procedure for licensing “home care services agencies” (“LHCSAs”), which employ home care aides. Id. § 3605. Home care aides fall into two main categories: “home health” aides (“HHAs”) and “personal care” aides (“PCAs”). See id.; see also id. § 3614–c(1)(d). Both are qualified to assist patients in daily activities like maintaining personal hygiene and completing household tasks. See id. § 3602(4)-(5). But HHAs must undergo more extensive training than PCAs, which allows them to perform “other related supportive services essential to the patient's health.” 10 N.Y.Code Rules & Regs. § 700.2(c)(15); see also id. § 700.2(b)(9), (14).

Notwithstanding the additional training, by 2010, HHAs in New York City and the surrounding Counties received a lower starting hourly wage than PCAs. See Carol Rodat, New York's Home Care Aide Workforce: A Framing Paper 17 (2010) available at http://www.phinational.org/sites/phinational. org/files/clearinghouse/PHI–486% 20NY% 20Framing.pdf. Known as “wage inversion,” this pay gap arose because many PCAs serve LHCSAs contracting directly with New York City and therefore benefit from the City's Living Wage Law, and because PCAs unionized in greater numbers than HHAs. Id. at 18. A committee created by Governor Andrew Cuomo to recommend changes to New York's Medicaid program proposed that LHCSAs and other home care aide employers should be required to compensate all of their employees at a level commensurate with local living wage laws in order to receive Medicaid reimbursements. See New York State Department of Health, Proposals Approved by the NYS Medicaid Redesign Team Feb. 24, 2011, available at http://www.health.ny.gov/health_ care/medicaid/redesign/docs/approved_proposals.pdf (last visited Feb. 3, 2015). Although ultimately not endorsed by the full committee, the proposal was “intended to address the inconsistency in wages among home care workers” and thereby improve the recruitment and retention of high-quality home care aides. See New York State Department of Health, Proposal Number 61, Proposals Being Rated, available at http://www.health.ny.gov/health_ care/medicaid/redesign/docs/proposals_being_rated.pdf (last visited Feb. 3, 2015).

In 2011, the New York Legislature enacted the “Wage Parity Law” as part of a Medicaid reform package. N.Y. Pub. Health Law § 3614–c. This addition to the New York Public Health Law requires LHCSAs and other employers in New York City and the surrounding Counties to pay all home care aides providing Medicaid-covered care an “applicable minimum rate of home care aide total compensation” in order to receive Medicaid reimbursements for that care. Id. § 3614–c(2) ; see also id. § 3614–c(1)(d) (defining “[h]ome care aide” to include “home health aide[s]” and “personal care aide[s]”). “Total compensation” consists of “all wages and other direct compensation paid to or provided on behalf of the employee,” including “health, education or pension benefits, supplements in lieu of benefits and compensated time off.” Id. § 3614–c(1)(b).

Subdivision three of the Wage Parity Law establishes two “applicable minimum rate[s] of home care aide total compensation”—one for care furnished in New York City,² and the other for care furnished in the surrounding Counties. Each “applicable minimum rate” increases gradually over the course of three or four years. In New York City, employers must pay home care aides at least ninety percent of the rate mandated by the City's Living Wage Law for services performed between March 2012 and February 2013. Id. § 3614–c(3)(a)(i). That proportion increases to ninety-five percent for services furnished between March 2013 and February 2014. Id. § 3614–c(3)(a)(ii). From March 2014 onward, employers must pay the greater of the rate set by the City's Living Wage Law or the “prevailing rate of total compensation as of January [1, 2011],” id. § 3614–c(3)(a)(iii). The “[p]revailing rate of total compensation” is 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].” Id. § 3614–c(1)(c). On January 1, 2011, the collective bargaining agreement that covered the greatest number of home care aides in New York City was the agreement negotiated by Service Employees International Union (“SEIU”) Local 1199. The Wage Parity Law thus references SEIU 1199's collective bargaining agreement as of January 1, 2011 to define the “prevailing rate of total compensation,” but does not reference any subsequent changes to that agreement. Id. § 3614–c(3)(a)(iii).

The “applicable minimum rate of home care aide total compensation” for services furnished in the surrounding Counties follows a different schedule. Id. § 3614–c(3)(b). Beginning in March 2013, employers must pay home care aides in the surrounding Counties at least ninety percent of the rate set by New York City's Living Wage Law. Id. § 3614–c(3)(b)(i). That rate continues until March 2014, when it rises to ninety-five percent of the New York City Living Wage rate. Id. § 3614–c(3)(b)(ii). The statute then requires two additional increases: first to one-hundred percent of the New York City Living Wage rate in March 2015, id. § 3614–c(3)(b)(iii), and then, in March 2016, to the lesser of one hundred-fifteen percent of the rate set by the New York City Living Wage Law or the living wage law of the county in which the care is provided, id. § 3614–c(3)(b)(iv).

Subdivision four of the Wage Parity Law, in relevant part, provides that “[a]ny 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, ... shall be superseded by the terms of any employer bona fide collective bargaining agreement in effect as of January [1, 2011], or a successor to such agreement, which provides for home care aides' health benefits through payments to jointly administered labor-management funds.” Id. § 3614–c(4). A “jointly administered labor-management fund” is also known as a “Taft–Hartley” plan. As the district court noted, it is undisputed that by incorporating New York City's living wage rate, the “total compensation” referred to in subdivision four includes a specific hourly amount attributed to health benefit costs ($1.35 at the time of the district court's opinion). Concerned Home Care Providers v. Cuomo, 979 F.Supp.2d 288, 300 (N.D.N.Y.2013). Subdivision four thus provides that, for the purposes of the Wage Parity Law, any portion of the “minimum rate of home care aide total compensation” attributable to such benefits or wage supplements will be superceded in the case of an applicable Taft–Hartley plan by its relevant terms, and such employers can accordingly compensate their home care aides at a rate below the minimum prescribed in the Wage Parity Law.

B. Procedural History

Plaintiffs–Appellants are five LHCSAs and a not-for-profit trade association of home care agencies (“Plaintiffs”). They filed suit on February 28, 2012 in the United States District Court for the Northern District of New York (Mordue, J. ), seeking to prevent Defendant–Appellee Nirav R. Shah, the Commissioner of the New York State Department of Health, from enforcing the Wage Parity Law.³ The complaint alleges that the Law is either preempted by the National Labor Relations Act (“NLRA”), 29 U.S.C. § 151 et seq., or the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., or is unconstitutional under the Due Process and Equal Protection Clauses of the Fourteenth Amendment.⁴

Defendants moved to dismiss the complaint and, on September 25, 2013, the district court granted the motion in part, denied it in part, and entered final judgment. See Concerned Home Care Providers, 979...