ARTIFICIAL INTELLIGENCE [AI] IS NOT USED, IN WHOLE OR IN PART, IN PREPARING NYPPL SUMMARIES OF JUDICIAL AND QUASI-JUDICIAL DECISIONS

January 15, 2019

New York State pays drug treatment center nearly $4 million for ineligible expenses


New York State pays drug treatment center nearly $4 million for ineligible expenses
Source: Office of the State Comptroller

A national drug and alcohol treatment provider was able to collect $3.9 million in ineligible payments due to the processing of invalid claims and inadequate oversight by the state Office of Alcoholism and Substance Abuse Services (OASAS), according to an auditreleased on January 13, 2019 by New York State Comptroller Thomas P. DiNapoli.

"Phoenix House is contracted to provide services to New Yorkers who are trying to overcome substance abuse problems, but it requested and received funding it was not entitled to,” said DiNapoli. “Our audit revealed that millions of dollars were claimed and spent on ineligible costs. Officials from the Office of Alcoholism and Substance Abuse Services must recoup this money, which should have been used for cost-effective addiction services to New Yorkers.”

OASAS, which oversees one of the nation’s largest programs for the prevention and treatment of alcohol and substance abuse, signed a five-year $47.6 million contract with Phoenix House New York (PHNY) in 2009 to provide outpatient, inpatient, and residential drug and alcohol addiction treatment services at several facilities in the New York metropolitan area. The state’s contract with PHNY was renewed in 2014 for another five-year term (July 1, 2014through June 30, 2019) at a total cost of $51.4 million.

Auditors examined a three-year period ending June 30, 2016 and determined that PHNY received reimbursement for expenses that did not comply with the contract. This included approximately $2.9 million in unallowable or unsupported parent organization administrative expenses.

For example, PHNY's parent organization periodically allocates its administrative costs to its affiliates throughout the country. When an affiliate in one state did not have the revenue to fund their share of these costs, the parent organization reallocated a portion to PHNY and New York was billed for the other state's share. All told, New York was billed $850,000 for these costs.

In addition, PHNY received reimbursement from OASAS for expenses deemed to be ineligible under the contract. This included:

● Equipment and property depreciation of about $700,000;

● Unsupported employee salaries and raises totaling about $500,000;

● Fundraising costs of about $400,000;

● More than $200,000 paid to the foundation's public policy office and outside lobbyists; and

● Entertainment and party expenses of about $12,700.

DiNapoli recommended OASAS take steps to recoup the $3.9 million from PHNY and take steps to establish better monitoring to ensure that only properly supported claims that are for contractually-approved expenses are approved.

The response from OASAS officials, who requested the audit by OSC, is included in the final report. The audit can be found on the Internet at:


CAUTION

Subsequent court and administrative rulings, or changes to laws, rules and regulations may have modified or clarified or vacated or reversed the decisions summarized here. Accordingly, these summaries should be Shepardized® or otherwise checked to make certain that the most recent information is being considered by the reader.
THE MATERIAL ON THIS WEBSITE IS FOR INFORMATION ONLY. AGAIN, CHANGES IN LAWS, RULES, REGULATIONS AND NEW COURT AND ADMINISTRATIVE DECISIONS MAY AFFECT THE ACCURACY OF THE INFORMATION PROVIDED IN THIS LAWBLOG. THE MATERIAL PRESENTED IS NOT LEGAL ADVICE AND THE USE OF ANY MATERIAL POSTED ON THIS WEBSITE, OR CORRESPONDENCE CONCERNING SUCH MATERIAL, DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP.
NYPPL Blogger Harvey Randall served as Principal Attorney, New York State Department of Civil Service; Director of Personnel, SUNY Central Administration; Director of Research, Governor’s Office of Employee Relations; and Staff Judge Advocate General, New York Guard. Consistent with the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations, the material posted to this blog is presented with the understanding that neither the publisher nor NYPPL and, or, its staff and contributors are providing legal advice to the reader and in the event legal or other expert assistance is needed, the reader is urged to seek such advice from a knowledgeable professional.
New York Public Personnel Law. Email: publications@nycap.rr.com