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December 11, 2015

Courts must defer to an agency's interpretation of its own regulations in its area of expertise


Courts must defer to an agency's interpretation of its own regulations in its area of expertise
Abramoski v New York State Educ. Dept., 2015 NY Slip Op 08880, Appellate Division, Third Department

Reacting to declining enrollment at West Park Union Free School District Number Two [West Park #2], a special act school district created by special legislation in 1973 for the purpose of educating residents of a facility for adolescent girls with emotional disabilities, the West Park School Board [Board] resolved to begin the process of dissolving West Park #2.

The Board notified the State Education Department [SED] of its decision to cease operation of West Park #2 and SED informed the Board of its various responsibilities during the close-down period, including calculating the District's close-down costs.

These costs included the cost of [1] educating students during the final year of operation and [2] any outstanding financial obligations. In response to a question concerning whether the costs of certain contractual obligations that the Board had to pay employees for their post-retirement health and dental insurance coverage for their respective lifetimes would be included in the tuition rate for the close-down period, SED informed the Board that the cost of such lifetime insurance coverage for the District's retirees would not be included in the close-down tuition rate.

Maureen Abramoski and a number of other employees [Abramoski] challenged SED’s determination with respect to excluding the cost of Abramoski's post-retirement medical and dental insurance in the close-down tuition rate of a special act school district. Abramoski ultimately initiated a “combined CPLR Article 78 proceeding and plenary action against SED and other named defendants seeking, among other things, [1] a review of SED's determination excluding the costs related to Abramoski’s lifetime post-retirement health and dental insurance coverage in the close-down tuition rate, [2] an order directing the reinstatement of such post-retirement health insurance and dental insurance coverage and [3] damages for breach of contract. Supreme Court dismissed Abramoski’s various motions and petitions concerning such benefits and she appealed.

The Appellate Division affirmed the Supreme Court rejection of Abramoski’s claims, explaining that a court's review of an administrative determination such as the one at issue in this action is limited to whether the determination was arbitrary and capricious, lacked a rational basis or was affected by an error of law. Here, said the court, SEC's determination was neither arbitrary nor capricious, was rational and was not affected by an error of law.

Further, said the Appellate Division, “courts must apply deference to an agency's ‘interpretation of its own regulations in its area of expertise,’" noting that 8 NYCRR 200.9(f)(1)(i) provides that the tuition rate at issue "shall include administration and direct care costs and the costs of operation and maintenance of instructional facilities." 

The court’s conclusion: Abramoski’s lifetime post-retirement health and dental insurance coverage should not be considered in the close-down tuition rate, sustaining SED’s interpreting of 8 NYCRR 200.9(f)(1)(i) to exclude long-term outstanding debt obligations "that were largely — if not entirely — unrelated to the costs of providing an education to the students attending the District during the relevant tuition period." SED’s interpretation, said the court, “is reasonable and is consistent with a statutory and regulatory scheme that evinces an intent to tailor tuition rates to those costs reasonably related to the special act school district's provision of services to students during the relevant tuition period.”

The Appellate Division also rejected Abramoski’s contention that SED violated her constitutional rights to due process and equal protection as being without merit, explaining that SED was not a party to the contracts that provided Abramoski’s rights to lifetime post-retirement health and dental insurance coverage. The fact that SED's determination may have incidentally affected Abramoski’s ability to collect such benefits, said the Appellate Division, does not support her allegations of constitutional violations.

The decision is posted on the Internet at:

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