## Facts

- New York provided free psychiatric care to indigent patients in state facilities and generally did not bill or sue them unless they later had the ability to pay.
- The New York State Office of Mental Health (OMH) adopted a policy triggered when an indigent patient (or former patient) sued the State in the New York Court of Claims over injuries arising from psychiatric treatment.
- Under the policy, OMH assessed “full care and treatment” charges and asserted (or threatened) a counterclaim limited to any amount the plaintiff recovered in that same lawsuit.
- Limoni Brown, as administrator of Evelyn Hasson’s estate, sued over alleged negligent treatment and over-medication causing Hasson’s death; OMH assessed charges and asserted or threatened a contingent counterclaim.
- Jed Rothstein sued OMH employees over forced medication; after suit was filed, OMH assessed charges against him in connection with the litigation.
- Plaintiffs brought a § 1983 action alleging the policy chilled access to courts and discriminatorily burdened indigent, mentally disabled litigants; they also asserted federal statutory/preemption theories and sought injunctive, declaratory, and damages relief.
- Defendants moved to dismiss for failure to state a claim and lack of standing and asserted qualified immunity for individual defendants.

## Issues

1. Whether New York law permits OMH to assert a counterclaim for treatment costs contingent on the plaintiff’s success and limited to the plaintiff’s recovery.
2. Whether assessing full treatment charges and asserting (or threatening) such counterclaims only after indigent patients sue violates the First Amendment right of access to the courts.
3. Whether the policy violates the Equal Protection Clause by treating indigent psychiatric patients who sue differently from similarly situated indigent patients who do not sue.
4. Whether § 1983 or the Protection and Advocacy for Mentally Ill Individuals Act preempts state efforts to seek reimbursement of treatment costs from tort recoveries.
5. Whether individual defendants were entitled to qualified immunity on the damages claims.

## Decision

- The court held OMH’s contingent counterclaim was impermissible under New York law and could not be maintained as pled.
- The court held Brown and Rothstein stated plausible First Amendment access-to-courts claims based on allegations that OMH imposed a financial burden triggered by the act of suing.
- The court held plaintiffs stated a plausible equal protection claim based on allegations of selective charging aimed at indigent psychiatric patients who pursued litigation.
- The court rejected federal preemption theories, holding § 1983 and PAMII did not categorically bar the State from seeking reimbursement from tort recoveries if done through lawful means.
- The court denied qualified immunity at the motion-to-dismiss stage, finding the complaint alleged conduct that could violate clearly established rights.

## Legal Principles

- A counterclaim that is contingent on the plaintiff’s success in the underlying action may be barred under New York procedural law.
- Government action that imposes a targeted financial penalty on indigent persons because they seek judicial relief can state a First Amendment claim for unconstitutional chilling of access to courts.
- Selective imposition of financial liability on a subset of indigent persons—based on their decision to sue—can state an equal protection claim where the differential treatment lacks an adequate justification.
- Federal statutes protecting civil rights and advocacy for mentally ill persons do not automatically preempt state cost-recovery schemes; the legality of recoupment depends on consistency with applicable state law and constitutional limits.
- Qualified immunity may be unavailable at the pleading stage where alleged retaliatory or discriminatory conduct, if proved, would violate clearly established constitutional rights.

## Conclusion

The court struck OMH’s contingent counterclaim under New York law and allowed § 1983 claims to proceed alleging that OMH’s litigation-triggered billing policy chilled access to courts and denied equal protection, while rejecting the argument that federal statutes categorically preempted state reimbursement efforts and declining to grant qualified immunity on the pleadings.


Brown v. Stone, 66 F. Supp. 2d 412 (E.D.N.Y. 1999)