On July 1, 1999, while Plaintiffs' motion was still under advisement, the fiscal assessment laws expired. See N.Y.S.S.L. § 367-j note (2001). The next day, the New York State Department of Health notified all of its local social services districts that the fiscal assessment laws had expired and directed the districts to "discontinue all fiscal assessment activities until further notice." Plaintiffs, however, believing that the New York legislature would soon reinstate the laws, urged the court to rule on the motion despite their expiration.

The court granted Plaintiffs' motion in part and denied it in part. Catanzano v. Wing, 189 F.R.D. 66, 73 (W.D.N.Y. 1999) ("Catanzano VII").

With respect to Plaintiffs' Notice Adequacy Claim, the court stated that it had already "found the notices to be constitutionally sufficient as a matter of law," and found "no basis upon which to revisit that issue or allow plaintiffs to relitigate it." Id. at 71. The court therefore denied the relief Plaintiffs sought and entered final judgment on that claim. Id. at 70, 73.

With respect to Plaintiffs' Physician's Order Claim, the court denied Plaintiffs' requested relief and reaffirmed its earlier determination that "a change directed by the patient's treating physician is not the kind of change or alteration that requires notice and a fair hearing." Id. at 71 (quoting Catanzano v. Dowling, No. 89-CV-1127L, at 14 (W.D.N.Y. July 28, 1994) (internal quotation marks omitted)). Furthermore, the court ruled, the class had never "been so broadly defined as to include recipients whose services have been reduced by their own physician," and the court found that the risk of physician or CHHA error was not "high enough to warrant mandating the full panoply of notice and hearing rights to health care recipients whose own physicians direct some change in their care." Id. at 72.

In addition, the court concluded that rather than rendering the case moot, the expiration of the fiscal assessment laws merely provided further justification for its decision to enter final judgment and to close the case:

[T]he statute's demise is an additional reason to dispose of all of plaintiffs' claims, whether by entry of a final judgment or by dismissal. Since one of the central sources of controversy between the parties has, for the time being at least, ceased to exist, final resolution of this action is appropriate.... [S]hould the fiscal assessment procedures be reimplemented in the same format, defendants will continue to be bound by this Court's prior rulings concerning those procedures.

Id. at 73.

Whereupon the court converted its preliminary injunction into a permanent injunction and ordered the parties to comply with the injunction, the Implementation Plan, and "all other prior rulings" issued in this action by both the district court and this Court. Id. The district court also entered final judgment in Plaintiffs' favor on the second cause of action in their amended complaint, in which Plaintiffs alleged that Defendants' failure to provide notice, a hearing, and aid-continuing when actions were taken affecting Plaintiffs' home health services violated due process and the Medicaid Act. Id.3

In December 1999, shortly after Plaintiffs had commenced their appeal to this Court, the New York legislature met and declined to renew the fiscal assessment laws. Yacknin Decl. in Supp. of Mot. to Dismiss the Appeal as Moot and To Vacate the Adverse Rulings of the Decision Below ("Yacknin Decl.") ¶¶ 65-66. Plaintiffs then moved to dismiss the appeal as moot and to vacate the adverse rulings of the decision below. Plaintiffs contended that in light of the legislature's December 1999 decision not to reinstate the fiscal assessment laws, their Notice Adequacy and Treating Physician's Order Claims are moot because the statutes left in place after the laws' expiration provide them with sufficient due process protections. See Yacknin Decl. ¶ 71, 77; Appellants' Br. at 46. A Panel of this Court denied the motion without prejudice to its renewal before this Panel. Catanzano v. Wing, No. 99- 9197(L) (2d Cir. Feb. 29, 2000) (order denying Plaintiffs' Motion for Dismissal of Appeal, and Vacatur of Adverse Rulings).

On appeal, in addition to challenging the district court's substantive conclusions regarding their Notice Adequacy Claim and their Physician's Order Claim, Plaintiffs reassert their argument that the fiscal assessment laws' expiration renders moot both of the claims they have raised on appeal. They ask this Court either: (1) to reverse the district court's decision with respect to Plaintiffs' Notice Adequacy Claim and Physician's Order Claim, and direct the district court either to dismiss these claims without prejudice or to restrict its judgment by "enter[ing] a judgment that expressly provides that its ruling[s] on these claims were made for [the] sole purpose of preliminary, but not final, injunctive relief," Appellants' Br. at 47; (2) to dismiss the appeal as moot and vacate the judgment of the district court; or (3) to reverse the court's rulings on these two issues.

Defendants agree that the expiration of the fiscal assessment laws renders the Notice Adequacy Claim moot, but argue that the Physician's Order Claim is not moot because it is not affected by the expiration of the amendments. Defendants further argue that CHHA actions in implementing physicians' orders do not require the procedural protections Plaintiffs seek because such actions are not those of the state.

The district court's Preliminary Injunction Implementation Plan requires that local social services districts issue specific notices whenever a Medicaid recipient's (or a Medicaid applicant's) home health services are denied, discontinued, or reduced contrary to the recipient's physician's orders due, inter alia, to a fiscal assessment.4 See N.Y.C.R.R. tit. 18, § 505.23(f) app. A-G; Catanzano IV, 900 F. Supp. at 654-61. Plaintiffs argue that these notices are legally and constitutionally inadequate because they do not provide individualized reasons for the action being taken, and because they are printed in a type that is too small to read using language too difficult to understand.

We review questions of mootness de novo because they are questions of law. See Fund for Animals v. Babbitt, 89 F.3d 128, 132 (2d Cir. 1996) (citing Comer v. Cisneros, 37 F.3d 775, 787 (2d Cir. 1994)).

The mootness doctrine, which is mandated by the "case or controversy" requirement in Article III of the United States Constitution, requires that federal courts may not adjudicate matters that no longer present an actual dispute between parties. See Lewis v. Cont'l Bank Corp., 494 U.S. 472, 477-78 (1990). Thus, "when the issues presented are no longer 'live' or the parties lack a legally cognizable interest in the outcome," Powell v. McCormack, 395 U.S. 486, 496 (1969), a case is moot and the federal court is divested of jurisdiction over it, see County of Los Angeles v. Davis, 440 U.S. 625, 631 (1979). For example, when "it can be said with assurance that there is no reasonable expectation that the alleged violation will recur, [and] interim relief or events have completely and irrevocably eradicated the effects of the alleged violation," the issue is moot. Id. (internal citations, quotations, and alterations omitted). "The central question... is constant -- whether decision of a once living dispute continues to be justified by a sufficient prospect that the decision will have an impact on the parties." Charles Alan Wright et al., 13A Federal Practice & Procedure § 3533 (2d ed. 1984).

Since both Plaintiffs and Defendants agree that the State is no longer implementing the fiscal assessment laws, and there is no reason to expect that fiscal assessments are now occurring or that the legislature will re-enact the laws, no controversy now exists with respect to this claim and it is therefore moot. See Burke v. Barnes, 479 U.S. 361, 363- 64 (1987) (holding that, when a challenged statute "by its own terms [becomes] a dead letter," the case becomes moot); cf. Assoc. Gen. Contractors of Conn., Inc. v. City of New Haven, 41 F.3d 62, 66-67 (2d Cir. 1994) (finding case moot where challenged city ordinance setting aside percentage of municipal contracts for minority businesses expired and Court could not reasonably expect city to re-enact ordinance on same terms).

Although the fiscal assessment laws expired before the district court ruled on Plaintiffs' Notice Adequacy Claim, the district court did not err in declining to dismiss that claim even though at the time of its decision the amendments had already expired. "Expiration will not moot an attack... if there is a reasonably concrete basis to anticipate that the expired rule will be reenacted in a form that will raise the same questions." 13A Federal Practice & Procedure § 3533.6; cf. City of Mesquite v. Alladin's Castle, Inc., 455 U.S. 283, 289 & n.11 (1982) (declining to dismiss case as moot where city repealed challenged portion of ordinance upon order of district court but where city had announced that it would re-enact ordinance upon vacatur of district court's order). In the face of Plaintiffs' counsel's suggestion that the State legislature was likely to re-enact the fiscal assessment laws, a "reasonable expectation... that the alleged violation w[ould] recur" existed, Davis, 440 U.S. at 631 (internal quotation marks omitted), and the court therefore did not err in maintaining the injunction "should the fiscal assessment procedures be reimplemented in the same format," Catanzano VII, 189 F.R.D. at 73. Now, in contrast, both parties contend that the fiscal assessment laws have been permanently laid to rest.

It is well-established that, when a matter becomes moot on appeal, federal appellate courts will generally vacate the lower court's judgment except where "'actions attributable to one of the parties' rendered the appeal moot or the district court judgment 'had already been subjected to appellate scrutiny to which the losing party was entitled'" in order to avoid the negative preclusive effects that would result from letting the district court's judgment stand. Assoc. Gen. Contractors of Conn., 41 F.3d at 67 (quoting Bragger v. Trinity Capital Enter. Corp., 30 F.3d 14, 17 (2d Cir. 1994)); accord United States v. Munsingwear, Inc., 340 U.S. 36, 40 (1950)). Neither of these exceptions apply with respect to Plaintiffs' Notice Adequacy Claim, since the adequacy of the notices has not been decided by this Court and neither party caused the fiscal assessment laws to expire.

We therefore vacate the district court's final judgment and permanent injunction with respect to Plaintiffs' Notice Adequacy Claim, and order the district court to dismiss Plaintiffs' Notice Adequacy Claim, without prejudice, as moot.

Plaintiffs claim that they are entitled to notice, a hearing, and aid- continuing when a CHHA reduces, denies or discontinues their home health services, even when such actions comport or ostensibly comport with the orders of the treating physician. This claim arises from Plaintiffs' concern that the CHHAs will mislead or manipulate physicians into ordering less-than-optimal levels of care, or that either the CHHA or the physician will make mistakes in ordering or providing services.

Plaintiffs argue that in light of their evidentiary submissions in support of allegations of improper care being assigned by the treating physician due to error and CHHA misinformation, and in light of Plaintiffs' outstanding discovery requests, the court should have either dismissed this claim without prejudice, limited its ruling to the preliminary injunction, or allowed Plaintiffs to proceed with discovery. Plaintiffs also argue that the appeal is moot with respect to this claim because this claim was brought against the State Defendants only after the fiscal assessment laws had been enacted. We need not address the merits of this claim, because we hold that it should have been dismissed without prejudice.

Plaintiffs contend that they added the State Defendants in direct response to "the Legislature's adoption, and the state defendants' implementation, of the 1991 and 1992 home care 'fiscal assessment' laws." Br. in Support of Plaintiffs-Appellants' Mot. to Dismiss the Appeal as Moot and to Vacate the Adverse Rulings of the Dec. Below at 7. Therefore, Plaintiffs argue, they "no longer have a dispute with the state defendants regarding their implementation of those laws." Id. at 8.

It is true that there is no longer a dispute regarding the implementation of the fiscal assessment laws, but we agree with Defendants' argument that the laws' expiration does not moot Plaintiffs' Physician's Order Claim. In fact, Defendants argue that "Physicians continue to order changes in the level of care, and those changes are implemented by CHHAs, even after the expiration of the fiscal assessment statute." Moreover, one of the factual bases for the claim -- miscommunication and mistake on the part of both physicians and CHHAs -- has nothing to do with the fiscal assessment laws.

It is clear that the parties still sharply disagree as to whether the district court erred when it ruled that "a change directed by the patient's treating physician is not the kind of change or alteration that requires notice and a fair hearing" and declined to order Defendants to provide notice, hearing, and aid-continuing rights in such instances. Catanzano VII, 189 F.R.D. at 71 (internal quotation marks and citation omitted). The parties possess "a legally cognizable interest in the outcome" of that question, Powell, 395 U.S. at 496, since the district court's final judgment on the claim has preclusive effect on the parties, see Allen v. McCurry, 449 U.S. 90, 95 (1980). We therefore hold that Plaintiffs' Physician's Order Claim is not moot. See Davis, 440 U.S. at 631.5

2. Plaintiffs' Motion to Dismiss Without Prejudice

The district court denied Plaintiffs' Rule 41(a)(2) motion to dismiss without prejudice, reiterating "that changes directed by the treating physician do not require notice or a fair hearing." Catanzano VII, 189 F.R.D. at 72.

Rule 41(a)(2) provides that except where all parties agree to a stipulation of dismissal, "an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper." Fed.R.Civ.P. 41(a)(2). It is within the district court's sound discretion to deny a Rule 41(a)(2) motion to dismiss. Zagano v. Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990). Generally, however, a voluntary dismissal without prejudice under Rule 41(a)(2) will be allowed "if the defendant will not be prejudiced thereby." Wakefield v. N. Telecom, Inc., 769 F.2d 109, 114 (2d Cir. 1985). Factors relevant to a court's decision whether or not to grant a motion to dismiss without prejudice include:

[1] the plaintiff's diligence in bringing the motion; [2] any "undue vexatiousness" on plaintiff's part; [3] the extent to which the suit has progressed, including the defendant's effort and expense in preparation for trial; [4] the duplicative expense of relitigation; and [5] the adequacy of plaintiff's explanation for the need to dismiss.

Zagano, 900 F.2d at 14.

None of these factors warrant denying Plaintiffs' motion: (1) plaintiffs were not dilatory in bringing the motion, but did so in order to facilitate an end to the litigation; (2) the motion was not made to harass or annoy; (3) although the litigation has gone on for years, this claim has thus far not been litigated and only halting discovery has taken place; (4) relitigation of this claim would not be duplicative since it has barely been litigated at all; and (5) Plaintiffs' explanation, that they have brought the motion in order to facilitate an end to the litigation but that they wish to avoid preclusive effects of the district court's ruling on this claim, is adequate. In addition, we note that the district court granted Plaintiff's Rule 41(a)(2) motion with respect to several other claims and that the court's rationale for denying the motion seems primarily to have been that this claim had never been part of the litigation. Catanzano VII, 189 F.R.D. at 72 ("Physician-ordered changes were not at issue [after the fiscal assessment laws' enactment] and were not the basis for expansion of the class."; "It seems that plaintiffs have attempted to imagine every conceivable circumstance in which a recipient's level of care is affected in any way.... I decline to expand the scope of the injunction or the Plan to include the[se matters].").

Nor do we agree with the district court's decision to deny the motion based on its earlier determination that "a change directed by the patient's treating physician is not the kind of change or alteration that requires notice and a fair hearing." Id. at 71 (internal quotation marks and citation omitted). Whether this is the case depends on what is actually transpiring between physicians and CHHAs, and the role of the CHHAs in the aftermath of the fiscal assessment laws' expiration -- issues not ready for final judgment on the record before us or before the district court.

In sum, we conclude that Defendant will not be prejudiced by this claim because it has been litigated to such a limited extent and we hold that the district court abused its discretion in denying Plaintiffs' Rule 41(a)(2)motion to dismiss their Physician's Order Claim. We therefore vacate the court's entry of a permanent injunction and final judgment and direct the court to dismiss Plaintiffs' Physician's Order claim without prejudice.6

For the reasons set forth above, the district court's entry of a permanent injunction and final judgment is vacated with respect to both Plaintiffs' Notice Adequacy Claim and their Physician's Order Claim. The case is remanded to the district court and the court is directed to dismiss Plaintiffs' Notice Adequacy Claim without prejudice as moot. The court is further directed to dismiss Plaintiffs' Physician's Order Claim without prejudice.