Termination of a public employee based on conduct that, if proven in a court of law, would have constituted a felony.

Supreme Court denied the petition to annul an arbitration award that sustained the employee's [Petitioner] termination from employment and dismissed the proceeding brought pursuant to CPLR Article 75. The Appellate Division sustained the lower court's determination.

The termination of the Petitioner was based on conduct that, if proven in court, would have constituted a felony but was not against public policy. The Appellate Division explained that although Correction Law Article 23-A provides that "no employment . . . held by an individual . . . shall be . . . acted upon adversely by reason of the individual's having been previously convicted of one or more criminal offenses. here observed the court, the conviction at issue occurred during Petitioner's employment and was not within the ambit of Article 23-A of the Correction Law.

Further, said the court, New York City's Human Rights Law (NYCHRL)* provides that it an unlawful discriminatory practice to "take adverse action against any employee by reason of such ... employee having been convicted of one or more criminal offenses" as that provision only applies in situations were the adverse employment actions based on arrests or criminal accusations are "in violation of subdivision 16 of section 296 [of the Correction Law]. Nor should an individual suffer adverse consequences "merely on the basis of an accusation, unless the charges were ultimately sustained in a court of law." Significantly, the Appellate Division noted that the Petitioner had pled guilty to the offending acts and thus they were more than accusations.

Citing Peckham v Calogero, 12 NY3d 424, the Appellate Division concluding that the denial of Petitioner's request for reinstatement to his employment was not arbitrary and capricious as under the governing regulations** the appointing authority "may consider such application but is not required to do so, and any approval thereof is discretionary."

The court then opined "It was not irrational for [the appointing authority] to conclude that in seeking reinstatement [P]etitioner merely sought to relitigate issues presented approximately six weeks before his reinstatement request, and decided three weeks beforehand by a neutral arbitrator in the grievance proceeding pursuant to a collective bargaining agreement, which resulted in his termination."

* See Administrative Code of City of NY §8-107[10][a].

** Personnel Rules and Regulations of City of NY [55 RCNY Appendix A] §6.2.6[a]-[b].

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_01008.htm

The Steel Bar: Pittsburgh Lawyers and the Making of America

Author Ron Schuler accurately characterizes his book, The Steel Bar: Pittsburgh Lawyers and the Making of America, as sounding like modern America. Indeed, each of the issues addressed in this work explore the historical drama of a developing United States "[f]rom the Whiskey Rebellion through the bloody Homestead Strike, to the Johnstown Flood, the creation of the world’s largest corporation, the witch hunts against anarchists in the 1910s and Communists in the 1950s, to a seminal constitutional battle over the rights of workers, a 20-year long federal antitrust prosecution, and the suspicious suicide of a district attorney accused of graft.

"The Steel Bar is the epic story of the rise and fall and rebirth of the Pittsburgh lawyer, from the earliest days of the Pittsburgh bar to the modern era, against the backdrop of American history." 

More at https://www.steelbarpittsburgh.com/book.

Among the reviews of this book posted on the Internet are the following: 

https://www.booktopia.com.au/the-steel-bar-ron-schuler/book/9781733184113.html

https://triblive.com/local/pittsburgh-allegheny/book-details-history-of-allegheny-countys-legal-community/

An employee suffering an injury on his way to work is not in service for the purposes of qualifying for accidental or performance of duty disability retirement benefits

The New York State and Local Police and Fire Retirement System [LPRFS] denied a state park police officer's [Officer] application for performance of duty disability retirement benefits. Officer had alleged that he was permanently incapacitated from the performance of his duties as a result of a slip and fall on his employer's premises. 

Officer requested and was granted a hearing. The Hearing Officer sustained the LPRFS denial, find that Officer was not in service at the time he suffered his injuries. The State Comptroller accepted the findings and conclusions of the Hearing Officer, and Officer filed a CPLR Article 78 challenging the Comptrollers decision.

The Appellate Division, noting that the claimant bears the burden of proving that he was [1] "[p]hysically or mentally incapacitated [from] performance of duty as the natural and proximate result of a disability . . . sustained in such service"; and [2] whether he actually "was in service turns on whether he . . . was performing job duties at the time of the injury," said that the Comptroller is vested with the exclusive authority to determine all applications for retirement benefits, including whether an injury was sustained while in service, and that determination will be upheld if supported by substantial evidence.

Officer's testimony at the hearing, said the court, made it apparent that he was actually on his way into work at the time he suffered his injury rather than being "on duty and at work" as he stated in his application for benefits. Further, citing a number of decisions, the Appellate Division pointed out that it had upheld findings that an employee who is injured before reporting for work and commencing his duties is not "in service" when the injuries were sustained within the meaning of the Retirement and Social Security Law.

Opining that the Comptroller's determination that Officer was not in service at the time he sustained his injury was "supported by substantial evidence," the Appellate Division said it declined to disturb it.

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2019/2019_09079.htm

Retired police officer seeking a special pistol carrying permit denied “retiree service letter”

Petitioner in this CPLR Article 78 action had asked his former employer [Respondent] for a “retiree service letter” that would assist Petitioner in obtaining a special pistol carrying permit. His former employer denied Petitioner’s request.

Supreme Court found that Respondent’s denial of Petitioner’s request for a retiree service letter was neither arbitrary or capricious, which ruling was unanimously  affirmed by the Appellate Division, which noted that Petitioner “had no right to issuance of" the retiree service letter "since his authority to carry firearms had been revoked … and had not been restored at the time he retired."*

Petitioner concedes that he was not authorized to carry a firearm under Respondent's policy at the time of his separation from employment, as he surrendered his firearm beforehand due to an injury and he failed to seek  reinstatement of such authorization. 

Further, opined the Appellate Division, Petitioner cannot demonstrate a violation of the Americans with Disabilities Act based on Defendant's refusal to issue the retiree service letter as Petitioner concedes that his injury rendered him unable to perform his duties as a law enforcement officer and there is no factual basis to conclude that Defendant’s decision was made in bad faith rather than as part of an across-the-board policy.

Nor, said the court, did Respondent’s denial of Petitioner’s request violate Petitioner's Second Amendment rights as such denial did not preclude him from applying for a permit under normal legal procedures.

* The Appellate Division’s decision notes that even assuming Petitioner had a private right of action under the Law Enforcement Officers Safety Act of 2004, Public Law 108-277, Petitioner cannot demonstrate that he met the qualification standards within one year of Petitioner’s retirement.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_01240.htm

Procedures concerning serving a second probationary period as an alternative to termination from the position

A Teaching and Research Center Nurse [Plaintiff] was permanently appointed to his position subject to the satisfactory completion of a one year probationary period. Plaintiff's initial period of probationary "was extended for six months" but he was ultimately terminated from his employment. 

Plaintiff brought a proceeding pursuant to CPLR Article 78 challenging this action by the appointing authority contending: 

[a] the six-month extension of his initial probationary term was not authorized under 4 NYCRR 4.5(b)(5)(ii) and thus he had attained tenure in his position and thus 

[b] he was entitled to certain protections pursuant to §75 of the Civil Service Law which were not provided to him.

Supreme Court denied Plaintiff's petition and dismissed the proceeding whereupon Plaintiff appealed the Supreme Court's ruling to the Appellate Division.  The Appellate Division affirmed the lower court's ruling, explaining, as relevant in this action:

1. The appointing authority was authorized to impose an initial probationary period of no more than 52 weeks, citing 4 NYCRR 4.5[b][2]).

2. 4 NYCRR 4.5[b][5][ii] provides that "[i]f the conduct or performance of a probationer is not satisfactory, his or her employment may be terminated at any time after eight weeks and before completion of the maximum period of service" but the he appointing officer may, as a matter of discretion, offer the probationer an opportunity "to serve a second probationary term . . . in a different assignment," which second probationary term may not be "less than 12 nor more than 26 weeks."

The Appellate Division then noted that the Court of Appeals in its decision in Palmer v Merges, 37 NY2d 177, observed that the rule authorizing a second probationary term, "if properly executed, is largely beneficial to the employee" and "[i]n determining whether another probationary term is necessary as the only alternative to dismissal, the administrator should be given latitude in defining a different assignment for purposes of fresh evaluation."

In this action, said the Appellate Division, the record demonstrates that the Plaintiff's initial probationary period was extended by "a second probationary term . . . in a different assignment" and Plaintiff failed to demonstrate that he did not actually serve the second probationary term in a "different assignment" or that the appointing authority's definition of that term was contrary to law.

Thus, opined the Appellate Division, Plaintiff's termination occurred while he was "still a probationary employee" and a probation employee who has completed the minimum period of probation may terminated "without a hearing and without a statement of reasons in the absence of a demonstration that the termination was in bad faith, for a constitutionally impermissible or an illegal purpose, or in violation of statutory or decisional law."

As  Plaintiff failed to demonstrate that he was terminated in bad faith, for a constitutionally impermissible or illegal purpose, or in violation of statutory or decisional law, the Appellate Division said that "we agree with the Supreme Court's determination denying the petition and dismissing the proceeding."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_01059.htm

Appointing authority's application for disability retirement filed on behalf of an employee injured on the job rejected

In this action to review a determination of New York State Employees’ Retirement System [NYSERS] denying an appointing authority’s [Petitioner] application for disability retirement benefits Petitioner filed on behalf of a Correction Officer [Officer] injured in the line of duty, the Appellate Division concluded that the NYSLERS determination “finding that [Officer] was not permanently incapacitated from performing the duties of a light-duty assignment” was supported by substantial evidence and thus “it will not be disturbed.”

Officer had sustained various injuries while attempting to subdue an inmate and underwent various surgical procedures. With the exception of performing light-duty work for one year, Officer remained out of work since the date of the incident, during which time Officer collected benefits pursuant to General Municipal Law §207-c. 

Ultimately Petitioner filed an application for disability retirement benefits upon the Officer's behalf.* Although NYSLERS had initially evaluated Petitioners' application based upon whether Officer was permanently incapacitated from performing the full duties of a Correction Officer, following receipt of additional documentation from Petitioners, NYSLERS concluded that Petitioners' application should be assessed under the light-duty standard set forth in 2 NYCRR 364.3 (b). A Hearing Officer reached a similar conclusion, finding, among other things, that denial of petitioners' application was warranted because Officer was capable of performing light-duty work. The Comptroller adopted the Hearing Officer's findings and conclusions, resulting in Petitioner’s filing a CPLR Article 78 proceeding to challenge the Comptroller's determination.

Citing 2 NYCRR 364.3 [b] which provides that in the event an employee "has been continuously assigned to light, limited or restricted duties for at least two years prior to the date [upon which the] application for disability retirement benefits was filed with the Comptroller . . ., the Retirement System shall render its determination on the issue of permanent incapacity on the basis of such light, limited or restricted duty assignment." the Appellate Division rejectected Petitioners argument that application of the cited regulation is arbitrary and capricious given that Officer actually worked in her light-duty assignment for less than one year and “did not work in any capacity after September 21, 2010,” the Comptroller has held that the phrase "continuously assigned" — as applied in the context of 2 NYCRR 364.3 (b) — "does not mean continuous performance and is not interrupted by absence[s] from work while on sick leave."

In other words, said the Appellate Division, “the dispositive inquiry is whether the employee has been continuously assigned to light-duty work — not, as [Petitioners] argue, whether such employee has in fact continuously performed the light duties to which he or she was assigned”.

As the record reflected that Officer was continuously assigned to a light-duty position beginning in October 2009 — even though Officer concededly did not work at all after September 2010 and given the continuous nature of Officer's assignment, the Appellate Division held that the light-duty standard set forth in 2 NYCRR 364.3 (b) was properly applied to Petitioners' application for disability retirement benefits filed on behalf of Officer.

* Petitioners were authorized to file such an application pursuant to General Municipal Law §207-c (2) and Retirement and Social Security Law §605(a)(2).

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_00904.htm

_____________

Disability Benefits for fire, police and other public sector personnel - Addresses retirement for disability under the NYS Employees' Retirement System, the NYS Teachers' Retirement System, General Municipal Law Sections 207-a/207-c and similar statutes providing benefits to employees injured both "on-the-job" and "off-the-job." For more information click on:
 http://booklocker.com/books/3916.html

Pension boosting offered to encourage retirement or to encourage an individual not to retire may not be “pensionable compensation” for the purposes of the Retirement and Social Security Law

The Court of Appeals sustained the New York State Comptroller’s decision that a New York - New Jersey Port Authority [Authority] compensation adjustment program [Program] that “artificially enhanced certain employees' final average salaries”* were not “pensionable compensation” under Retirement and Social Security Law §431(3).** The Authority’s Program served “to increase ... retirement benefits” for employees and thus, said the Court, "any additional compensation paid in anticipation of retirement" must be excluded from final average salary calculations.”

The Court opined that “[g]overnment pensions are based on employees' regular average salaries. All New York State employees rely on the integrity of the pension system. The protection against its manipulation is one of the Comptroller's primary responsibilities.

The genesis of the Program was a statutory retirement incentive program*** that offered additional pension benefits to certain public employees if they retired before the end of the 2002. The purpose of the retirement incentive was "to achieve cost-savings for public employers and to avoid layoffs of public employees in th[e] time of fiscal need" following the September 11 attacks. However the Authority employees [Petitioners] in this CPLR Article 78 action were key executives of the Authority and  exempted from the Program. As an alternative, the Authority’s Chief Administrative Officer [CAO] recommended "a compensation adjustment program" that would "achieve [an] equivalent level of pension benefit for" employees, including [the CAO] who would be exempted from the retirement incentive.”

A Retirement System member's pension benefit depends upon their final average salary, i.e., "the average salary earned by … a member during any three consecutive years which provide the highest average salary" (Retirement and Social Security Law §443 [a]). The CAO suggested a salary increase to replicate the level of pension benefit that the executive employees would not otherwise be able to receive and the CAO’s proposal was adopted as a "retention program" the Petitioners signed letter agreements acknowledging their exemption from the retirement incentive and their acceptance of the "retention program," which was described as being "designed to provide a limited number of staff members with a parity' benefit" and received “the promised pay raises, which ranged from 4.5% to 11% of salary and were included in biweekly payroll checks, for periods ranging from nine months to ten years.”

Subsequently all Petitioners received determination letters from the New York State and Local Employees Retirement System [ERS], stating that the compensation adjustment payments should have been, or (in the case of the last three) would be, excluded from final average salaries for pension calculation purposes. ERS explained that the allowances were "retention payments made to delay retirement," and constituted "compensation paid in anticipation of eventual retirement." RSSL §431, however, provides that "[i]n any retirement or pension plan to which the state or municipality thereof contributes, the salary base for the computation of retirement benefits shall in no event include … any additional compensation paid in anticipation of retirement" (Retirement and Social Security Law §431 [3].”

The Hearing Officer found that the Authority had given "each of the applicants additional compensation to increase their final average salaries so that their pensions would equal what their pensions would have been had they been eligible for the retirement incentive and taken it in December 2002" and ruled that the ERS had acted reasonably in excluding the allowance payments from final average salary, concluding that ERS "had the authority to determine what payments were excludable as . . . made in anticipation of eventual retirement . . . , whether the applicant joined ERS before or after the effective date of § 431." The Executive Deputy Comptroller adopted these findings and conclusions and denied petitioner employees' applications for reconsideration.

The Appellate Division annulled the Comptroller's determination, granted the petition, and remitted the matter to the Retirement System (164 AD3d 1038 [3d Dept 2018]). The Court concluded that the "payments are more appropriately characterized as . . . made to delay petitioners' retirements, not to artificially inflate their final average salary in anticipation of retirement."****

RSSL §431 provides that "retirement benefits are to be computed on the basis of an employee's regular salary and not on any kind of termination pay or other form of additional compensation paid in anticipation of retirement." The salary base for the computation of retirement benefits “shall in no event include any of the following earned or received, on or after April first, nineteen hundred seventy-two:”

1. Lump sum payments for deferred compensation, sick leave, accumulated vacation or other credits for time not worked;

2. Any form of termination pay;

3. Any additional compensation paid in anticipation of retirement; or

4. That portion of compensation earned during any twelve months included in such salary base period which exceeds that of the preceding twelve months by more than twenty per centum."

However “pension boosting” may be made available to encourage individuals “to retire early” by promising an enhanced pension or may be offered in other contexts, including in exchange for a promise not to retire, as demonstrated by the decision in Thompson v New York State Teachers' Retirement Sys., 78 AD3d 1456.

Finding that the record contains substantial evidence supporting the Comptroller's determination that the Authority provided the compensation adjustments “to artificially increase the executive employees' final average salaries so that, upon retirement, they would receive pension increases roughly equivalent to those they would have received under the retirement incentive program” and supports the conclusion that the compensation, by design, was made in anticipation of petitioner employees' retirement within the meaning of the statute, the Court of Appeals reversed the ruling of by the Appellate Division and dismissed the petition.

* The decision characterizes such employees as “ executive employees” of the Authority.

** The Authority is a participating employer in the New York State and Local Employees Retirement System.

*** See Chapter 69 of the Laws of  2002.

**** See 164 AD3d at 1040.

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2020/2020_00997.htm

Employee alleges employer ignored her sexually hostile work environment and the negligent supervision claims

Plaintiff's claim of negligent supervision was based on, among other things, Office for People with Developmental Disabilities, an agency of  State of New York [collectively "Defendants"]  alleged failure to properly supervise its employees by allowing acts and words of retaliation against her following her report of patient abuse by another supervisor and her assistance in the investigation of that abuse.

Following a trial, a jury found in plaintiff's favor on the sexually hostile work environment and the negligent supervision claims against Defendants and dismissed the sexual harassment claim against a named individual defendant. Plaintiff was awarded $300,000 in damages on her sexually hostile work environment claims and $200,000 in damages on her negligent supervision claim.

Supreme Court denied Defendants' subsequent motion to set aside the jury verdict or, in the alternative, to order a new trial, and partially granted plaintiff's request for counsel fees. Defendants appeals from the judgment entered upon the jury verdict and from the order denying its postverdict motion. Plaintiff cross-appeals from that part of the order as partially denied her request for counsel fees.

Considering Defendants' argument that the jury verdict was unsupported by legally sufficient evidence and against the weight of the evidence the Appellate Division said that "A verdict may be set aside as unsupported by legally sufficient evidence where 'there is simply no valid line of reasoning and permissible inferences which could possibly lead rational [people] to the conclusion reached by the jury on the basis of the evidence presented at trial.'" In contrast, citing Matter of Grancaric, 68 AD3d 1279 the court explained that a jury verdict will be stricken as against the weight of the evidence "where the proof so preponderated in favor of the unsuccessful party that the verdict could not have been reached on any fair interpretation of the evidence."

Addressing Plaintiff's sexually hostile work environment claims, the decision noted that "an individual plaintiff must show that his or her workplace was permeated with discriminatory intimidation, ridicule, and insult that is sufficiently severe or pervasive to alter the conditions of [his or her] employment and create an abusive working environment" and all circumstances must be considered, including the frequency of the alleged discriminatory conduct; its severity; whether it was physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interfered with [an employee's] work performance.

In addition, the Appellate Division, citing Forrest v Jewish Guild for the Blind, 3 NY3d 298, opined that "the workplace must be both subjectively and objectively hostile" whereby a plaintiff must not only perceive that the conditions of his or her employment were altered because of discriminatory conduct, but the conduct must also "have created an objectively hostile or abusive environment — one that a reasonable person would find to be so."

However, as the Court of Appeals held in State Div. of Human Rights v St. Elizabeth's Hosp., 66 NY2d 684, "An employer cannot be held liable for an employee's discriminatory act unless the employer became a party to it by encouraging, condoning, or approving it." Further, "An employer's calculated inaction in response to discriminatory conduct may, as readily as affirmative conduct, indicate condonation," while an employer may "disprove condonation by a showing that it reasonably investigated complaints of discriminatory conduct and took corrective action.

Rejecting Defendants' argument that the verdict on the hostile work environment claims should have been set aside because it was not based on legally sufficient evidence and was contrary to the weight of the evidence, the Appellate Division held that "the evidence clearly supports the finding that Defendants knew or should have known of [the Plaintiff's coworker's] harassing conduct and failed to take appropriate action" and reached the same conclusion with regard to Plaintiff's negligent supervision claim.

Addressing Defendants' challenge to the amount of damages awarded by the jury, the Appellate Division opined that "a court may set aside a jury award of damages when that award 'deviates materially from what would be reasonable compensation' ... [and a] "A challenge to damages will only be successful where the record evidence preponderates in favor of the moving party to such a degree that the verdict could not have been reached on any fair interpretation of the evidence."

The Appellate Division, considering the jury awarding Plaintiff $300,000 on the hostile work environment claims and $200,000 on the claim against Defendants for negligent supervision, ruled that considering "limited evidence of Plaintiff's psychological trauma and the lack of medical proof as to the effects of the sexual harassment and coworker retaliation upon her" said that the award for damages on the hostile work environment claims should be reduced to $150,000 and the award on the negligent supervision claim should be reduced to $100,000, for a total award of $250,000.

Addressing Petitioner's objection to Supreme Court's reduction of counsel fees to 60% of the $344,067.94 of amount requested in fees and expenses, the Appellate Division concluded that there was no basis upon which to disturb the award made by the lower court. However, the Appellate Division's order included a provision for new trial on the issue of damages "unless, within 20 days after service of a copy of the order herein, Plaintiff stipulates to reduce the total award for said claims to $250,000, in which event said judgment and order, as so modified, are affirmed."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_00897.htm

Final order

Addressing Petitioner's objection to Supreme Court's reduction of counsel fees to 60% of the $344,067.94 of amount requested in fees and expenses, the Appellate Division concluded that there was no basis upon which to disturb the award made by the lower court. However, the Appellate Division's order included a provision for new trial on the issue of damages "unless, within 20 days after service of a copy of the order herein, Plaintiff stipulates to reduce the total award for said claims to $250,000, in which event said judgment and order, as so modified, are affirmed."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_00897.htm

Arbitration award challenged on the grounds the arbitrator exceed his authority and it violated strong public policy

Plaintiff in this CPLR Article 75 appealed of a Supreme Court's denial of her petition to vacate an arbitration award, contending [1] the award violates strong public policy and [2] the arbitrator exceeded his authority as limited by the Demand to Arbitrate.

The Appellate Division, pointing out that CPLR §7511(b) sets forth the statutory grounds for vacating an arbitration award, noted that such statutory grounds an arbitrator exceeded or imperfectly executed his power. However, opined the court, “an award will not be overturned unless the award violates a strong public policy, is totally irrational or exceeds a specifically enumerated limitation on the arbitrator's power” and that the grounds for vacating an arbitration award are narrowly construed.

With respect to vacating an arbitration award on the grounds that it violates strong public policy, the Appellate Division, citing Matter of Reddy v Schaffer, 123 AD3d 935, said that a court will do so "only where [the] court can conclude, without engaging in any extended fact finding or legal analysis, that a law prohibits the particular matters to be decided by arbitration, or where the award itself violates a well defined constitutional, statutory or common law of this state."

Further, the Appellate Division explained that exceeding expressly enumerated limits on an arbitrator's authority “is a separate basis to invalidate an award as an excess of authority” and which authority is typically set out in the arbitration clause of an agreement, in a statute, or in a notice or demand for arbitration. Significantly, the court noted that “[e]ven where a claim is otherwise arbitrable, the scope of the arbitration is still limited to the specific issues presented and may not extend to those that are materially different or legally distinct.

In addition, the decision cited Matter of United Fedn. of Teachers, Local 2, AFT, AFL-CIO v Bd. of Educ. of City School Dist. of City of N.Y., 1 NY3d 72, in which the Court of Appeals held that “[a] public policy argument may be raised for the first time on a motion to vacate, and should be considered by the court.”

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2020/2020_00923.htm

STATE COMPTROLLER DiNAPOLI RELEASES ANALYSIS OF EXECUTIVE BUDGET

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New York's State Comptroller encourages transparency during Medicaid redesign team's deliberations, raises concerns about accounting changes.

Despite projections for healthy gains in tax receipts and continued growth in the economy, the State Fiscal Year (SFY) 2020-21 Executive Budget reflects significant fiscal challenges related, in part, to higher than expected spending in the Medicaid program, according to an analysis released today by New York State Comptroller Thomas P. DiNapoli. With a budget deadline soon approaching, more than a third of the Executive’s proposed nearly $7 billion gap-closing plan remains to be identified by the Medicaid Redesign Team (MRT), creating uncertainty for Medicaid beneficiaries, providers, local governments and the state budget.

DiNapoli also raised concerns about transparency and accountability, including proposed statutory changes that could distort the reporting of revenue and spending in the state’s financial statements and allow the Executive to spend beyond the amounts approved by the legislature. Other proposals would weaken oversight.

“New York’s economy is expanding but the state is still facing a serious budget gap. It’s imperative the Medicaid Redesign Team seek broad input on the root causes and options for addressing rising Medicaid costs,” DiNapoli said. “There is limited time for deliberations before the budget deadline. The state needs to identify long-term solutions for the millions of New Yorkers that rely on Medicaid and the taxpayers who will be footing the bill. Failure to effectively solve the Medicaid problem may result in harmful impacts in other areas of the budget this year and going forward.”

The MRT is charged with identifying savings that can lead to financial sustainability of the program, including meeting the goal of having “zero impact on local governments and zero impact on beneficiaries.” The budget also proposes linking state funding of the local share of certain Medicaid costs to the property tax cap. It is unclear how the budget proposals or any recommendations by the MRT will achieve these potentially conflicting goals.

The Executive budget assumes a second consecutive deferral across fiscal years of $1.7 billion in Medicaid costs. DiNapoli said the deferrals are troubling reminders of historical practices that resulted in a large accumulated structural deficit.

DiNapoli’s analysis also raised concerns about the Medicaid Global Cap. The cap was established in 2011 to promote cost containment efforts, but actions since then have moved various elements of Medicaid spending into or out of the cap. The shifting of the $1.7 billion into SFY 2019-2020, an effort to avoid exceeding the cap, contributed to the ongoing delay in addressing the program’s increasing fiscal challenges.

The financial plan projects SFY 2020-21 total spending at $178 billion, up 1.2 percent. Spending from State Operating Funds is estimated to increase by 1.9 percent. DiNapoli said after adjusting for prepayments and other identifiable budgetary actions, the increase is estimated at 3.1 percent.

The Comptroller urged the Executive to remove language in the 30-day amendment period that seeks to require the comptroller’s cash-basis reports to classify receipts and disbursements in accordance with provisions established by budget legislation. This proposal raises a potential conflict with Article V, Section 1 of the State Constitution, which grants the Comptroller the power to determine accounting methods, and is troubling with respect to transparency and accuracy in financial reporting. Related to this issue, proposed new language would broadly authorize netting of certain revenue against disbursements. Among other concerns, this would cloud the picture of true spending growth and potentially results in significant expenditures beyond the appropriations approved by the legislature.

DiNapoli called the Division of Budget’s plan to deposit $428 million into the Rainy Day Reserve Fund at the end of the current fiscal year a positive step. However, the report noted New York’s rainy day reserves are less than half their authorized levels and no additional deposits are planned. The Comptroller has advanced a proposal to provide a disciplined, consistent approach to building these reserves. This would help ensure that more robust reserves will be available in the event an economic downturn or catastrophic event merits their use. 

The Comptroller’s report also finds:

● School Aid would increase by $826 million, or 3 percent, to $28.5 billion in the coming school year. This increase is less than the 4 percent growth allowable under a statutory limit related to personal income in the state;

● Funding for most local governments aid programs would be held flat, continuing a trend in recent years of decreases or level funding in such areas. These include Aid and Incentives for Municipalities, also known as AIM, the largest unrestricted aid program for local governments, as well as major funding for streets, highways and bridges;

● Total capital spending over the current and next four years is projected at $66.7 billion, little changed from the estimate based on the SFY 2019-20 Enacted Budget. Projected transportation spending is increased $3.3 billion, partly offset by certain unspecified reductions from the previous plan. The budget would appropriate $3 billion for the Metropolitan Transportation Authority’s 2020-2024 capital program, although funding sources are not identified;

● The budget recommends presenting a $3 billion Restore Mother Nature General Obligation (GO) Bond Act to the voters that, if approved, would provide funding to restore habitats, reduce flood risks, improve water quality, protect open space, expand the use of renewable energy and support other environmental projects. DiNapoli said that having voters weigh in on new state debt is a sound approach;

● The budget would authorize an additional $10.3 billion in new state-supported debt, all to be issued by public authorities except the proposed $3 billion Restore Mother Nature GO Bond Act. Outstanding state-supported debt is projected to rise 20.3 percent, and annual debt service 48.4 percent, by SFY 2024-25; and

● The Executive anticipates elimination of 2,500 state prison beds in the coming fiscal year, and a $181.5 million reduction in spending for the Department of Corrections and Community Supervision, partly reflecting budget language that would authorize additional prison closures.

For the full Report click on:

State Fiscal Year 2020-21 Executive Budget Analysis

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Determining if benefits set out in a collective bargaining agreement survive the expiration of the agreement

Seven villages entered into "Joint Police Protection Contract" [SVC] establishing a joint police protective service. The SVC was valid for a five-year period and provided that, upon its expiration or upon a village's withdrawal therefrom, each village "remain[ed] obligated to pay its respective pro rata share ... after expiration or withdrawal." It was further provided that such "costs, liabilities and obligations shall include earned termination benefits as described in relevant sections of collective bargaining agreements [CBA] ...."  that provided for certain retiree health insurance benefits, hereinafter referred to as the "2006 agreement." 

Subsequently one village [Respondent] withdrew from the arrangement effective May 31, 2012 and formed its own police force while the remaining six villages [Plaintiffs] extended the SVC for one year, and then executed a new Six Village SVC.

Plaintiffs commenced this action against Respondent to recover damages for an alleged breach of contract, seeking, as its first cause of action, to recover the present value of Respondent's pro rata share of future retiree health care benefits incurred prior to the SVC expiration date, but paid or becoming due after the CBA's expiration date. Plaintiffs moved for summary judgment but Supreme Court granted Respondent's cross motion for summary judgment dismissing that portion of Plaintiff's first cause of action that involved future retiree health care benefits for any time period after May 31, 2012. 

The Appellate Division said the Respondent's met its prima facie burden for summary judgment, dismissing so much of Plaintiff's first cause of action as sought to recover future retiree health care benefits "to the extent such costs are attributable for any time period after its withdrawal from the SVC." The court explained that "As a general rule, contractual rights and obligations do not survive beyond the termination of a collective bargaining agreement." In contrast, opined the Appellate Division, "[r]ights which accrued or vested under the collective bargaining agreement will, as a general rule, survive termination of the agreement".

Further, said the court, although a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms, in determining whether a CBA creates a vested right to future benefits, "courts should not construe ambiguous writings to create lifetime promises" and when a contract is silent as to the duration of retiree benefits, "a court may not infer that the parties intended those benefits to vest for life."

Here, said the Appellate Division, the primary question was whether, by the terms of the controlling SVC, Respondent obligated itself to contribute to the cost of providing health benefits for retired police officers pursuant to the 2006 CBA. As the 2006 CBA is silent as to the duration of the health benefits promised therein, it must be assumed that those benefits were promised only until the expiration of the 2006 agreement. In the words of the Appellate Division, "[a]lthough the parties and the PBA were certainly free to negotiate for continued, enhanced, or reduced benefits in future CBAs," nothing contained in the text of the subsequent CBAs commits Respondent to the payment of any of the benefits in question upon the termination of the 2006 CBA."

Citing Kolbe v Tibbetts, 22 NY3d at page 353, the Appellate Division noted that CBA language in Kolbe provided for retiree benefits "that continued beyond the expiration of the CBA", explaining that the relevant language in the Kolbe CBA provided that "[t]he coverage provided [in retirement] shall be the coverage which is in effect for the unit at such time as the employee retires". 

As there is no comparable language guaranteeing the same level of benefits beyond the expiration of the 2006 CBA, the health care benefits at issue in the instant litigation did not survive beyond the expiration of the 2006 CBA. Further, the fact that Plaintiffs and the PBA may have bargained for equivalent benefits in future CBAs is irrelevant to the discrete issue of Respondent's liability to Plaintiffs under any subsequent SVC. 

Finding that Respondent established, prima facie, that it was not liable for health care benefits beyond the expiration of the 2006 CBA, the Appellate Division sustained Supreme Court's ruling dismissing so much of Petitioner's first cause of action as sought to recover future retiree health care benefits for any time period commencing after May 31, 2012.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_00453.htm

Appointing authority adopts the recommendation of the hearing officer in part

A volunteer member [Petitioner] of a fire department [Department] was served with disciplinary charges alleging gross misconduct and conduct unbecoming a member of the Department as the result of a physical confrontation between Petitioner and another member of the Department.

Following a disciplinary hearing conducted pursuant to §209-l of the General Municipal Law, the hearing officer found Petitioner not guilty of gross misconduct but guilty of conduct unbecoming a member of the Department. The hearing officer then recommended Petitioner be suspended for 60-days. The Board of Fire Commissioners [Board] determined that Petitioner was guilty of both charges and imposed the penalty of expulsion from the Department and "disqualified [Petitioner] from membership for life." 

Supreme Court dismissed Petitioner's appeal of the Board's determination, which decision was sustained by the Appellate Division after it rejected Petitioner's argument that the sanction of expulsion and disqualification from membership for life was an abuse of discretion by the Board. 

Citing DeStefano v Incorporated Vil. of Mineola, 167 AD3d 740, and other decisions, the Appellate Division turned to a procedural issue, noting that Petitioner had  raised the question of whether the Board's determination was supported by substantial evidence. Accordingly, said the court, the lower tribunal should have transferred the proceeding to it without deciding that issue. Notwithstanding this procedural defect, "because the complete record" was now before it, the Appellate Division elected to treat the matter as one that had been transferred to it and reviewed the determination de novo. 

The Appellate Division then explained the "Upon judicial review of a determination rendered by an administrative body following a hearing, [the Appellate Division's] function is limited to consideration of whether the determination is supported by substantial evidence". Noting that "substantial evidence" means such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact," Appellate Division opined that the Board's determination sustaining the charges of gross misconduct and conduct unbecoming a member of the Department was supported by substantial evidence. 

Although Petitioner argued that the confrontation between himself and the other member of the Department constituted "harmless horseplay," it is undisputed that Petitioner causing an injury to that member, in violation of Department policy.

Noting the "judicial review of an administrative penalty" is limited to whether the measure or mode of penalty or discipline imposed constitutes an abuse of discretion as a matter of law" the Appellate Division, citing Pell v Board of Educ. of Union Free School Dist. No. 1, 34 NY2d 222, concluded that the penalty of expulsion from the Department and disqualification from membership for life is not so disproportionate to the offenses as to be shocking to one's sense of fairness.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_00413.htm

Standing to maintain a proceeding alleging a violation of the Open Meetings Law

Noting that case law addressing the issue of standing to commence a proceeding/action to enforce the provisions of the Open Meetings Law [OML]* is sparse, the Appellate Division, citing Matter of Sanna v Lindenhurst Bd. of Educ., 85 AD2d 157, said in fashioning a remedy for a violation of the OML the reviewing court must focus solely upon the public injury," noting than in Sanna the Appellate Division "expressly centered on the 'public injury' or injury to the 'citizenry' of which Sanna was a member, not on her status as the subject of the board's deliberation.** 

In Friends of Pine Bush v Planning Bd. of City of Albany (71 AD2d 780), Appellate Division, Third Department, found that "[a]s residents of the city, the individual petitioners are persons aggrieved by a decision of the planning board and thus have standing to bring this proceeding", while in Zehner v Board of Educ. of the Jordan-Elbridge Cent. School Dist., 29 Misc 3d 1206[A], the court determined that, as a lawful attendee of the meeting in question, the Zehner was an aggrieved party and had standing to challenge the school board's activities.

Guided by the settled principle that "[w]hen presented with a question of statutory interpretation, a court's primary consideration is to ascertain and give effect to the intention of the Legislature," the Appellate Division opined that the purpose of the OML and the intent of the Legislature in enacting that law dictate that the harm or injury is the alleged unlawful exclusion of the public from a municipal meeting. Citing Public Officers Law § 100, The court said that the OML "plainly confers upon the public the right to attend certain meetings of public bodies."

Accordingly, the harm or injury of being excluded from municipal meetings that should be open to the public is sufficient to establish standing in cases based upon alleged violations of the OML. To require a petitioner to demonstrate an additional personal damage or injury to his or her civil, personal, or property rights in order to assert a violation of the OML would, in effect, interject a counter-intuitive restriction upon the general citizenry's access and participatory freedoms to attend certain meetings of a public body. 

Such a requirement or condition, said the Appellate Division, "would undermine, erode, and emasculate the stated objective of this statute, which was designed to benefit the citizens of this state and the general commonweal, assure the public's right to be informed, and prevent secrecy by governmental bodies."

The Appellate Division the held that the branch of the Village Board's motion to dismiss the Appellants' petition/complaint in this action for lack of standing should be denied. 

The Appellate Division then noted that it found "only that the Appellants established their standing to maintain this proceeding/action" and took no position on the merits of the remaining allegations asserted by the parties, "including whether the Village Board, in fact, violated the Open Meetings Law by excluding the appellants or whether the Village Board properly conducted executive sessions."

* Public Officers Law, Article 7.

** The Court of Appeals later affirmed Appellate Division's decision and order in Sanna, without expressly addressing the issue of standing (Matter of Sanna v Lindenhurst Bd. of Educ., 58 NY2d 626).

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2020/2020_00864.htm

Portions of an arbitration award challenged as moot, exceeding the authority of the arbitrator and "nonfinal and indefinite"

In compliance with an arbitration award, the school district [District] appointed 16 teachers' aides. The District subsequently announced its intention to eliminate 5½ teaching positions for the 2017-2018 school year in order to offset the cost of employing these teachers' aides. 

The Teacher Federation [Union] filed a grievance in an effort to prevent the elimination of the teaching positions on the ground that District's intended conduct was retaliatory. An arbitrator issued an opinion which directed the District to "rescind its decision to eliminate . . . teaching positions . . . for the 2017-2018 school year." 

Citing Hearst Corp. v Clyne, 50 NY2d 707, the Appellate Division vacated this portion of the arbitrator's award explaining that it "is well established that an appeal will be considered moot unless the rights of the parties will be directly affected by the determination of the appeal and the interest of the parties is an immediate consequence of the judgment."

Because the 2017-2018 school year had concluded, said the court, a determination in this appeal would have no effect on the parties' rights.

The court also agreed with the District that the arbitrator had exceeded his authority by requiring it to make the elimination of teaching positions in accordance with the "School Based Development Guide", opining that an arbitration award may be vacated where an arbitrator, 'in effect, made a new contract for the parties in contravention of [an] explicit provision of [the] arbitration agreement which denied [the] arbitrator power to alter, add to or detract from" the collective bargaining agreement (CBA). Noting that the CBA does not require the District to make its staffing or budgetary decisions in accordance with the Guide,  the Appellate Division ruled that the arbitrator contravened an express provision in the CBA that denied him the "authority to modify or amend it." 

Finally, the District contended that a paragraph of the arbitration award was nonfinal and indefinite insofar as it directed that "[a]ny future elimination of teaching positions at [the affected school] as a result of hiring teacher aides must be narrowly tailored to meet the economic needs of [the District] and be applied in a Union membership neutral manner." 

The Appellate Division agreed, indicating that an award is nonfinal and indefinite if "it leaves the parties unable to determine their rights and obligations." The court said that here  the language in the award was "nonfinal and indefinite" except to the extent that it prohibited the District from discriminating on the basis of "Union membership status." 

Concluding that the Supreme Court had erred in confirming these parts of the arbitration award challenged by the District, the Appellate Division modified the order and judgment accordingly.

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2020/2020_00794.htm