Considering the prior disciplinary record of an employee found guilty of disciplinary charges in determining an appropriate disciplinary penalty to be imposed

The Petitioner [Firefighter] in this CPLR Article 78 proceeding was served with disciplinary charges pursuant to §75 of the Civil Service Law alleging that he had engaged in an act of insubordination when he failed to obey an order while actively engaged in fire suppression operations.

Firefighter denied the charges and at the disciplinary hearing that followed Firefighter and his superior officer [Captain] provided sharply conflicting testimony as to what occurred in the course of his being engaged in a fire suppression operation.

The designated hearing officer credited the Captain's testimony at the hearing, found that a preponderance of the credible evidence supported the conclusion that the Firefighter was guilty of insubordination, and recommended that the Firefighter be:

1. Returned to the payroll without back pay;

2. Suspended for a period of three months without pay; and

3. His employment be on a "last-chance basis" for a period of two years.

City Administrator [Administrator] adopted the findings of the hearing officer that Firefighter was guilty of insubordination but declined to adopt the hearing officer's recommendation with respect to the penalty and sent Firefighter a letter informing him that his prior disciplinary record would be considered in setting the penalty to be imposed and attached the disciplinary records that would be considered. Firefighter responded to Administrator's letter.

Ultimately Administrator found that Firefighter "was incorrigible, based upon that incident, as well as a review of [Firefighter's] prior disciplinary record" determined that the appropriate penalty was termination of [Firefighter's] employment" as a firefighter.

Firefighter commenced this proceeding pursuant to CPLR Article 78 to review the City Administrator's determination, contending, among other things, that the findings of insubordination were not supported by substantial evidence. Supreme Court transferred the proceeding to the Appellate Division pursuant to CPLR 7804(g).

Contrary to Firefighter's contentions, the Appellate Division found that he was provided the appropriate due process in this matter, given access to his disciplinary record and was allowed to submit a written response offering mitigating circumstances. The court noted that the City Administrator did not rely on unestablished allegations when considering the penalty to be imposed on Firefighter as the record indicated that Firefighter "had prior knowledge of all unusual occurrence reports in his disciplinary records and had waived his rights as to the matter that he claimed was never settled or adjudicated."

Noting that in a proceeding pursuant to CPLR Article 78, judicial review of factual findings made by an administrative agency following an evidentiary hearing is limited to consideration of whether the findings are supported by substantial evidence, the court explained that "Substantial evidence means more than a 'mere scintilla of evidence,' and the test of whether substantial evidence exists in a record is one of rationality, taking into account all the evidence on both sides." Further, opined the Appellate Division, "Where there is conflicting testimony and questions of credibility, the reviewing court may not weigh the evidence or reject the administrative agency's determination of credibility."

Citing  Matter of Fernandez v Rodriguez, 180 AD3d 897, the Appellate Division said that the hearing officer resolved the issue of credibility as between the two witnesses, and it discerned "no basis to disturb that determination." Accordingly, the finding that Firefighter was guilty of insubordination was held to be supported by substantial evidence in the record.

Addressing the penalty imposed by the City Administrator, the Appellate Division opined that "A court may set aside an administrative penalty only if it is so disproportionate to the offense as to be shocking to one's sense of fairness."  [A] result is shocking to one's sense of fairness if the sanction imposed is so grave in its impact on the individual subjected to it that it is disproportionate to the misconduct, incompetence, failure or turpitude of the individual, or to the harm or risk of harm to the agency or institution, or to the public generally visited or threatened by the derelictions of the individuals", the so-called Pell Doctrine.*

Further, said the court, "That reasonable minds might disagree over what the proper penalty should have been does not provide a basis for ... refashioning the penalty", concluding with the observation that "[u]nder the circumstances presented here, the penalty of termination of [Firefighter's] employment with the City was not so disproportionate to the offense as to be shocking to one's sense of fairness."

Accordingly, the Appellate Division confirmed the City Administrator's determination, denied Firefighter's petition and dismissed the proceeding "on the merits, with costs."

* Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d at 234.

Click HERE to access the Appellate Division decision in this action. 

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A Reasonable Disciplinary Penalty Under the Circumstances - The text of this publication focuses on determining an appropriate disciplinary penalty to be imposed on an employee in the public service in instances where the employee has been found guilty of misconduct or incompetence. For more information click HERE.

Vacating an arbitration award in a disciplinary action conducted pursuant a disciplinary procedure set out in a collective bargaining agreement

The Appellate Division reversed, on the law, without costs, a Supreme Court ruling that granted an application filed by New York State Correctional Officers and Police Benevolent Association, Inc. [NYSCOPBA] to confirm an arbitration award and [2] granted the motion of the New York State Department of Corrections and Community Supervision's[Corrections] to dismiss [NYSCOPBA's] appeal and remitted the matter to the arbitrator "for further proceedings not inconsistent with [its] decision."

NYSCOPBA is the bargaining representative for all correction officers employed by Corrections. A corrections officer [CO] represented by NYSCOPBA was served with a notice of discipline that sought to terminate CO's employment based on three charges — two related to alleged unauthorized telephone contacts with two former inmates, and one for allegedly making false statements made to investigators.

Pursuant to terms set out in the relevant collective bargaining agreement [CBA] between NYSCOPBA and the Corrections, NYSCOPBA filed a disciplinary grievance on behalf of the CO and demanded arbitration.

In response to NYSCOPBA motion to dismiss the disciplinary charges as untimely and not sufficiently particularized, the arbitrator reserved decision on the motion and proceed to conduct "a full disciplinary hearing." After completing the hearing, the arbitrator dismissed — based on the face of the notice itself, not on the evidence at the hearing — the two charges related to the phone calls. The arbitrator, however, found CO guilty of the charge relating to his false making statements and imposed a 75-day suspension without pay as a penalty.

NYSCOPBA then commenced a CPLR Article 75 proceeding seeking to confirm the arbitration award. Corrections cross-moved to vacate the award with respect to the  two charges dismissed by the arbitrator concerning the alleged unauthorized telephone contacts. Supreme Court denied Correction's cross-motion and granted NYSCOPBA's petition, confirming the award. Corrections appealed.

The Appellate Division commenced it consideration of Correction's appeal by observing:

1. Although courts are generally bound by an arbitrator's factual findings and interpretation of the parties' contract, a court may vacate an award that "violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power;"

2. In view of these narrowly circumscribed exceptions, "courts lack authority to review arbitral decisions, even where an arbitrator has made an error of law or fact"; and

3. If the arbitrator imposes requirements "not supported by any reasonable construction of the CBA, then the arbitrator's construction in effect makes a new contract for the parties and exceeds his or her authority."

Here, said the court, the CBA limits the role and authority of the arbitrator, as it provides that [1] disciplinary arbitrators shall confine themselves to the issues of guilt or innocence and the appropriate penalty; [2] directs that "[d]isciplinary arbitrators shall neither add to, subtract from nor modify the provisions of [the CBA]"; [3] sets a time limitation for disciplinary action"; and [4] provides that "[t]he conduct for which discipline is being imposed and the penalty proposed shall be specified in the notice."

Because it was undisputed that the allegations in charge 1 and portions of charge 2 fall outside the CBA's nine-month time limitation, for those allegations to be timely Corrections was required to invoke the exception that the alleged misconduct "would constitute a crime." 

The arbitrator determined that the bare identification and quoting of a criminal statute did not meet the requirements of "due process" — what the arbitrator defined as, "in essence[,] an underlying requirement that the charge that a crime has been committed must be fully communicated to the maximum possible degree in the 'charging instrument' (here, the [notice of discipline]) at the outset of the [p]roceedings" — as the notice did not provide factual details relating CO's conduct to each element of the cited crime. 

"On that basis," the arbitrator concluded that the notice of discipline did not satisfy the CBA's time exception.

However, the Appellate Division found that "the CBA does not refer to 'due process,' nor does it require that each element of the underlying crime be established in the notice." Citing People v Iannone, 45 NY2d 589, in which the Court of Appeals held that, "[w]hen indicting for statutory crimes, it is usually sufficient to charge the language of the statute unless that language is too broad," the Appellate Division opined that "by requiring [Corrections] to prove the underlying crime in the notice to support [applying] the CBA's time exception," the arbitrator essentially added a term to the CBA and, thus, exceeded his authority.

As the arbitrator dismissed the first two charges as untimely based on what he perceived to be deficiencies in the notice of discipline, he never determined whether Corrections met its burden of proof based on the hearing evidence. Accordingly, the Appellate Division remitted the matter to the arbitrator to determine whether charge 1 and any of the allegations under charge 2 were timely, i.e., "whether [Corrections] proved at the hearing that [CO's] conduct would constitute the crime of official misconduct" within the meaning of the State's Penal Law §195.00.

Further, said the court, "[e]ven if the arbitrator determines that those allegations are untimely ... some of the allegations in charge 2 occurred less than nine months prior to service of the notice of discipline; thus, the arbitrator must address those timely allegations.

As the arbitrator also based his dismissal of the first two charges on NYSCOPBA's argument that the charges lacked particularization with respect to the date of the alleged misconduct, the Appellate Division opined that, in general, "in the administrative forum, the charges need only be reasonably specific, in light of all the relevant circumstances, to apprise the party whose rights are being determined of the charges against him [or her] and to allow for the preparation of an adequate defense." Here, however, the CBA requires somewhat more, a "detailed description" of the misconduct with "references to dates." The arbitrator found it significant that neither charge at issue "specif[ied] the specific dates on which the alleged wrongful acts occurred, nor any other substantive facts relevant to the occurrences of those phone conversations."

NYSCOPBA, said the court, focused their challenge to the notice on the absence of specific dates for each phone call. In the words of the Appellate Division, "[B]oth charges at issue listed dates, albeit as date ranges. Nothing in the CBA required respondent to list each phone call as a separate charge, nor to list the exact date of each call, especially for a continuing pattern of misconduct.... Charge 1 stated a range of only three days. For the second charge, the notice stated that [CO] engaged in 36 unapproved phone calls over a time period spanning six months. This comports with the CBA's requirement of "a detailed description of the alleged acts and conduct including references to dates" (emphasis in the decision).

Thus the Appellate Division concluded that the arbitrator modified the CBA and exceeded his authority by dismissing the first two charges as facially deficient due to an alleged lack of particularization in the notice of discipline. Rather, said the court, "the arbitrator should have rendered a determination as to [CO's] guilt based on the evidence presented at the hearing."

Accordingly, because the arbitrator exceeded his authority, the Appellate Division vacated the portion of the arbitration award dismissing the first two charges.

Click HERE to access the Appellate Division's ruling.

Failure to exhaust administrative remedies bars judicial review

In this CPLR Article 78 action, the Plaintiff [Petitioner] sought judicial review of two determinations of the New York State Workers' Compensation Board [Board] involving FOIL requests Petitioner had submitted to the Board seeking the production of certain documents from the Board. 

The Board promptly responded to Petitioner's requests, granting in part and denying in part the request. Petitioner then submitted an administrative appeal concerning the "denial in part" elements in his FOIL response. The Board denied the appeal on  the ground that it was untimely. Supreme Court agreed, dismissing Petitioner's Article 78 appeal. 

Subsequently Supreme Court considered Petitioner's application for reargument concerning the matter but adhered to its prior determination, in effect denying the petition and dismissing the proceeding. Petitioner next appealed the lower court's decisions to the Appellate Division.

The Appellate Division affirmed the Supreme Court's rulings, explaining "Public Officers Law §89(4)(a) provides that a person denied access to requested information under New York States Freedom of Information Law [FOIL] must appeal the denial in writing to the head of the entity or other designated person within 30 days."

As Petitioner failed to submit an appeal of the determination within 30 days, "he failed to exhaust his administrative remedies and, thus, could not resort to a judicial forum to gain relief."

Click HERE to access the Appellate Divisions decision.

Appeal to the Commissioner of Education involving a school board election, an alleged denial of "free speech," and failure to agree to a new collective bargaining agreement dismissed for procedural reasons

Noting that the petitioner has the burden of demonstrating a clear legal right to the relief requested and establishing the facts upon which he or she seeks relief, the Commissioner of Education dismissed an appeal involving challenges to a school board election for a number of reasons, including:

1. Failure to establish any grounds for relief: The Commissioner opined that the Petitioner failed to submit a reply or otherwise addressed certain assertions advance by the school district and thus failed to establish any basis for relief in connection with this claim.

2. Standing to assert rights on behalf of another: To the extent that the Petitioner sought to assert the individual rights of another person or his “surrogate” with respect such person serving as a poll watcher for Petitioner, the Commissioner held that Petitioner lacked standing to do so.

3. Free speech: The Commissioner, noting that Courts have held that a school board meeting is a limited public forum for purposes of the First Amendment and a school board's placing “Reasonable time, place and manner restrictions on speech in limited public fora comport with the Constitution ... [if] they are content-neutral, serve a significant government interest and leave open alternative channels for expression”, held that Petitioner failed to establish that the school board violated his right to free speech in connection with a board meeting. Here, said the Commissioner, "the district clerk asserts that “[Petitioner] has been prohibited from publicly speaking at regular board meetings only to the extent that he has commented on matters outside the agenda, has gone beyond the time allotted for comment, or has made pejorative and/or repetitive comments.”

4. Lack of Jurisdiction to consider a matter: Addressing Petitioners assertions concerning the school board failing to agree to a new collective bargaining agreement, the Commissioner, citing Civil Service Law §205 [5] [d], held that this issue "must be dismissed for lack of jurisdiction," explaining that the Civil Service Law vests exclusive jurisdiction over complaints involving collective bargaining in the Public Employment Relations Board [“PERB”].*

* See, also, Matter of New York City Transit Authority v. New York StatePublic Employment Relations Board, et al., 19 NY3d 876.

Click HEREto access the full text of the Commissioner's decision in the appeal. 

Government Technology lists live webinars available during the week of August 23, 2021

Tuesday, August 24 | 1:00pm Eastern
Getting Up to Speed on Cyber: Why Application Security is More Critical Than Ever
Rampant cyber-attacks. A rapidly shifting hybrid work environment. Increasingly complex open-source software solutions. Those are just a few of the reasons why it’s never been more important for IT leaders to prioritize application security. For state and local government and education organizations, application security must be made a focus throughout the entire development life cycle, protecting against breaches from end to end.
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Wednesday, August 25 | 2:00pm Eastern
Why Governments May Need to Reevaluate Their Enterprise Search Capabilities
Search engine usage has skyrocketed among constituents and government employees during the pandemic, as the need for timely health information and announcements are crucial. But traditional search capabilities have been a roadblock to quickly finding and accessing what is needed. Modern search platforms based on AI and machine learning can eliminate this frustration, helping the public and agency employees find the answers they need and improving the user experience. Join us to learn the latest innovations in enterprise search capabilities and how they can help the public get the information they need, faster.
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Thursday, August 26 | 1:00pm Eastern
Reimagining the State & Local Workforce through Data
It’s more important than ever for state and local governments to invest in their workforce. New hybrid work models have brought a drastic change to the public sector workforce and agencies still face the same challenges of looming retirements and finding people with the right skillsets. Join us to hear how agencies can use data analytics to overcome these obstacles and better recruit, deploy, train, motivate and retain their employees. You don’t want to miss this webcast that will cover the latest strategies to help agency and HR leaders keep pace with the evolving government workforce and workplace.
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The New York City Teachers Retirement System's rejection of a member's application for accidental disability retirement trumps the Social Security Administration's finding that member was disabled

The genesis of this Article 78 action was New York City Teachers Retirement System [NYCTRS] disapproval of a member's [Plaintiff] application for accidental disability retirement notwithstanding the fact that the Social Security Administration had earlier found that the Plaintiff was disabled.

Supreme Court dismissed Plaintiff's petition, which ruling was unanimously affirmed by the Appellate Division.

Citing Matter of Merlino v Teachers' Retirement Sys. of the City of N.Y., 177 AD3d 430, the Appellate Division opined that NYCTRS' determination to deny Petitioner's application for accident disability retirement was not arbitrary and capricious, and was supported by some credible evidence. The court, noting that NYCTRS' Medical Board determination the Petitioner was not disabled was supported by its physical examination and interview of the Petitioner.

The Board, said the court, found upon examination, Petitioner was able to move around unassisted, had normal strength and range of motion in his shoulders, elbows, wrists, and hips, and had little or no tenderness in his neck and back. Further, the Medical Board noted that Petitioner had not had standard of care epidural injections, trigger point injections, or any other procedures to improve his current complaints.

Although Petitioner claimed that the Medical Board had ignored his medical history, the Appellate Division said that any conflicting evidence was for the Medical Board to resolve.

Addressing Petitioner's reliance on the disability finding of the Social Security Administration that Petitioner was disabled, the court said the Social Security Administration's finding was not dispositive of the Medical Board's disability determination nor did the finding of a medical arbitrator, who examined Petitioner after the Medical Board made its determination, "warrant Article 78 relief." 

CLICK HEREto access the full text of the Appellate Division in this action.

Claiming the public-interest privilege in an effort to prevent the disclosure of communications between public officials alleged to be confidential

In this appeal, the Appellate Division considered the so-called "public-interest privilege," a common-law rule that "attaches to confidential communications between public officers, and to public officers, in the performance of their duties."

The rule may be applied where it can be shown that the public interest requires that such confidential communications or its sources should not be divulged because "the public interest would be harmed if the material were to lose its cloak of confidentiality".

The genesis of this action was a New York City Charter §93(b) investigation of the City of New York's preparation for, planning for, and response to the COVID-19 pandemic initiated by New York City's Comptroller. The Comptroller sought to identify how those actions impacted the City, its finances, residents and businesses. In connection with the investigation, the Comptroller issued a "request for information" to the City seeking information and communications related to the COVID-19 pandemic. When the City did not fully comply with the request for information, the Comptroller served a subpoena seeking the City's production of certain documents received, created or issued by the City. Additionally, over the course of the investigation, the Comptroller issued subpoenas seeking the testimony of certain City officials concerning the pandemic. 

Ultimately the matter was considered in the course of a special proceeding in which the City filed an answer and cross petition seeking a court order "dismissing the special proceeding and quashing, modifying or fixing conditions on the City's compliance with the subpoena."

Citing Matter of World Trade Ctr. Bombing Litig., 93 NY2d 1, the Appellate Division said that the governmental body asserting the public-interest privilege must offer specific support as to the potential harm to the public from disclosure of the information and, in the rare case, that this may require an in camera* examinations of the communications involved. Further, said the court, the privilege will be applied in the event the entity objecting to disclosing the information demonstrates that the public interest in confidentiality outweighs the public interest in disclosure.

The Appellate Division concluded that, based on the affidavits presented in the course of the special proceeding, in this particular situation the interest in protecting the City's pre-decisional and deliberative communications is stronger than the interest in allowing the Comptroller "to review, and possibly publish, the communications as part of his investigation."

In the words of the Appellate Division: "Given the ongoing threat of the pandemic, the Mayor and his leadership team needed access to information and unvarnished advice from all sources. This required that the sources have some assurance that their advice would remain confidential and free from fear of reprisal. The public disclosure of the requested documents involving confidential, deliberative communications among an inner circle of decision-makers concerning an emergency response to a pandemic could chill future deliberations about pressing matters, potentially to the public's harm."

Noting that Supreme Court did not make a ruling whether a privilege log or in camera review is necessary in this instance because the only issue litigated was the applicability of the privilege, the Appellate Division ruled that the Comptroller's request for a privilege log and in camera review of the documents over which the City claims privilege should be made to Supreme Court.

Click HERE to access the full text of the Appellate Division's ruling.

A collective bargaining agreement's silence with respect to a claim for certain benefits defeats a claim for such benefits pursuant to such collective bargaining agreement

The plaintiffs in three appeals from Supreme Court rulings decided on the same day by the Appellate Division, Caldara v County of Westchester, 2021 NY Slip Op 04693, [Caldara], Westchester County Corr. Officers Benevolent Assn., Inc. v County of Westchester, 2021 NY Slip Op 04733, [04733] and Westchester County Corr. Officers Benevolent Assn., Inc. v County of Westchester, 2021 NY Slip Op 04734 [04734], commenced their respective actions seeking to recover damages for the Westchester County's alleged breach of a collective bargaining agreement [CBA] based on Westchester's failure to pay certain benefits to the plaintiffs.

In Caldara the plaintiffs allege that any police officer who has been receiving disability benefits pursuant to General Municipal Law §207-c and who then receives a disability retirement pension upon the County of Westchester's application is entitled, upon retirement, to benefits equivalent to those provided by the Workers' Compensation Law for loss of earning capacity due to permanent partial or total disability.

Similarly, in 04733, theplaintiffs alleged that any correction officer who has been receiving disability benefits pursuant to General Municipal Law §207-c and who then receives a disability retirement pension upon the County of Westchester's application is entitled, upon retirement, to benefits equivalent to those provided by the Workers' Compensation Law for loss of earning capacity due to permanent partial disability while in 04074 plaintiffs argued that any correction officer who has been receiving disability benefits pursuant to General Municipal Law §207-c and who then receives a disability retirement pension upon the County of Westchester's application is entitled, upon retirement, to benefits equivalent to those provided by the Workers' Compensation Law for loss of earning capacity due to permanent total or partial disability.

In each action Westchester Countyrelied on its argument that the relevant collective bargaining agreement was silent as to such awards, and, as such, the relevant plaintiffs were not entitled, upon retirement, to benefits equivalent to those provided by the Workers' Compensation Law for loss of earning capacity due to permanent partial or total disability. In each action Westchester Countymoved to dismiss the complaints, and those plaintiffs' cross-moved pursuant to CPLR 3025(b) for leave to amend their complaint. The Supreme Court granted the County's motions and denied the plaintiffs' cross motions, and the respective plaintiffs appealed.

The Appellate Division, affirming the lower court ruling in each action, said that "When a party moves to dismiss a complaint pursuant to CPLR 3211(a)(7), the standard is whether the pleading states a cause of action, not whether the proponent of the pleading has a cause of action," citing Sokol v Leader, 74 AD3d 1180. Further, said the court, "In considering such a motion, the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory", noting the Court of Appeals ruling in Leon v Martinez, 84 NY2d 83.

Here, opined the Appellate Division, the relevant plaintiffs failed to identify a specific provision in the relevant CBA that requires the Westchesterto pay benefits equivalent to those provided by the Workers' Compensation Law for loss of earning capacity due to permanent partial or total disability. Accordingly, the court held that Supreme Court properly granted Westchester's motion to dismiss the complaint.

Click the text in blue to access the text of that Appellate Division decision in  Caldara.

Click in blueto access the text of that Appellate Division decision in 07433.

Click on blueto access the text of the Appellate Divisions decision in 07434.

 

Involuntary placement on disability leave pursuant to Civil Service Law §72

In a proceeding brought pursuant to §72.5 of the Civil Service Law, OATH of Administrative Law Judge Ingrid M. Addison recommended that the New York City Police Department [NYPD] place a Traffic Enforcement Agent [TEA] on an involuntary leave of absence, finding the TEA was unfit to perform her job duties due to a medical disability not incurred in the performance of the duties of her position.

The TEA did not dispute the fact that she could not stand or walk for long periods, conceding that effects of an earlier surgery prevented her from performing the duties required of a TEA.

Although the TEA had been temporarily assigned to a clerical job as a reasonable accommodation, the NYPD determined that she was unfit to perform the duties of a TEA. Judge Addison agreed, finding that the NYPD proved the employee was currently unfit to perform the essential duties a TEA due to her disability and recommended the TEA be placed on involuntary leave consistent with the provisions of Civil Service Law §72.5.

The appointing authority of the NYPD adopted the ALJ’s recommendation subject to the approval of NYPD’s pending application for a change in title of the TEA's position to Clerical Associate, presumably as the result of the reclassification of the TEA position then encumbered by the employee to "Clerical Associate."

On a similar note, General Municipal Law §207-c, providing for the payment of salary, wages, medical and hospital expenses of police officers disabled as the result of injuries or illness incurred in the performance of duty, authorizes appropriate municipal officials to transfer a police officer on disability leave pursuant §207-c to another position, including a position with another agency or department where he is able to perform the duties of such position consistent with [1] the applicable civil service law requirements, [2] provided the police officer consents to the change and [3] the agency to which the employee will transfer approves the transfer.

General Municipal Law §207-a, applicable to firefighters on disability leave as the result of suffering an injury or illness incurred in performance of official duties, similarly authorizes the appointment of the disabled firefighter to another position or title in the same or another agency with the consent of the injured firefighter and the approval of the department or agency involved.

Click HERE to access Judge Addison's decision and recommendation.

New York State's Comptroller finds Medicaid billing errors cost State more than $1.5 billion

The state Department of Health (DOH) allowed more than $1.5 billion in improper Medicaid payments over the course of several years due to errors in its billing system and may have exposed patients to unqualified and uncredentialed health care providers, according to three reports released today by State Comptroller Thomas P. DiNapoli. This, said the Comptroller,

“Troubling errors like the ones routinely identified by my auditors are extremely costly. They can also put patients at risk,” DiNapoli said. “By not fixing problems with the Department of Health’s eMedNY system and other issues, hundreds of millions of dollars more in taxpayer dollars could be misspent and unqualified providers could continue to treat Medicaid patients. The department must act on our recommendations and address these shortfalls, so Medicaid recipients receive the level of care they deserve, and taxpayers’ dollars are spent effectively.”  

Click on the text below highlighted in color to access the complete audit report.

For the state fiscal year that ended March 31, 2020, New York’s Medicaid program had approximately 7.3 million recipients and Medicaid claim costs totaled $69.8 billion.

The Affordable Care Act and federal regulations mandate that state Medicaid agencies require all ordering and referring physicians and other professionals providing services through the Medicaid fee-for-service program to be enrolled as participating providers and their National Provider Identifiers (NPIs) to be included on Medicaid claims. This screening and provider enrollment process improves the efficiency of the health care system and helps to reduce fraud and abuse. It also helps to ensure the quality of services and protects public health by validating that providers have the appropriate credentials to provide services and are not prohibited from participating in the Medicaid program by the federal government.

In the first report, DiNapoli’s auditors found that a significant number of claims were paid even though they did not have a proper NPI to ensure the ordering, prescribing, referring, or attending provider was properly qualified or credentialed, creating a risk for patients. Processing weaknesses in eMedNY, the Medicaid claims processing and payment system, allowed $1.5 billion in payments for Medicaid clinic and professional claims without an appropriate NPI.

For example, some claims contained NPIs of providers who were not enrolled in Medicaid, while other claims did not contain an NPI at all.

Auditors also found $57.3 million in payments for pharmacy claims that did not contain an appropriate prescriber NPI and $19.4 million in payments for claims that contained an NPI but, according to regulations, should not be included on Medicaid claims or that should be further reviewed by DOH due to past misconduct.

Auditors recommended DOH:

• Review the Medicaid payments for claims not containing an appropriate NPI identified by the audit and determine an appropriate course of action.
• Enhance system controls to prevent improper Medicaid payments for claims not containing an appropriate NPI.

The department’s full response to the findings and recommendations is included in the audit.

A second report found that from Jan. 1, 2015 through Dec. 31, 2019, claims totaling $28.5 million were paid for Medicaid recipients who were reported as discharged from a hospital, but then admitted to a different hospital less than 24 hours later. These claims raise the possibility that the first hospital wrongly recorded a patient’s transfer as a discharge, which is a red flag that the claims are at a high risk of overpayment.  

In fact, auditors found nearly half of the claims that they sampled (15 of 31) were incorrectly coded as discharges in the eMedNY system. The result of those errors was overpayment of $252,107, or 55% of the total value of the 31 sampled claims. This high error rate raised concerns about the extent of overpayment in the $28 million of high-risk claims. Auditors also found that DOH has no process to identify and recover such improper Medicaid payments.

Auditors recommended DOH:

• Develop a process to identify and recover Medicaid overpayments for fee-for-service inpatient claims that have a high risk of incorrect patient status codes such as those identified by the audit.
• Review the $252,107 in overpayments and recover as appropriate.
• Review the remaining 2,017 high-risk claims totaling $28 million and recover overpayments as appropriate. Ensure prompt attention is paid to those providers that received the highest amounts of payments.

In their response, department officials agreed with the audit recommendations and said actions will and have been taken. Their response is included in the report.

An audit released in July 2019 identified more than $102.1 million in improper managed care premium payments on behalf of 65,961 recipients who had multiple identification numbers in the eMedNY system. In a follow-up report released today, auditors found DOH made progress addressing the problems identified in the initial audit report and the Office of the Medicaid Inspector General recovered $50.8 million of the $102.1 million identified. Another $51.3 million still needs to be recovered.

Since the 2019 audit, auditors identified another $14.3 million in managed care premium payments for 14,293 potentially inappropriate identification numbers for the period July 1, 2018, to Aug. 31, 2020. According to department officials, many of these cases have been resolved or are currently being reviewed.

Audits

Improper Medicaid Payments for Claims Not in Compliance With Ordering, Prescribing, Referring, and Attending Requirements (2019-S-2)

Improper Medicaid Payments for Misclassified Patient Discharges (2020-S-8)

Improper Managed Care Premium Payments for Recipients With Duplicate Client Identification Numbers (2020-F-22)

 

Employees sue their employer alleging it breached its fiduciary duty in its administration of their retirement plans

The complaints [Plaintiffs] in this class action represent New York University and New York University School of Medicine employees who are suing the for their respective employers' alleged breach of its fiduciary duty in its administration of their retirement plans within the meaning of the federal Employment Retirement Income Savings Act of 1974, [ERISA], 88 Stat. 829.*

As described by the Second Circuit of Appeals, "[t]he Plaintiffs participate in either the NYU Retirement Plan for Members of the Faculty, Professional Research Staff, and Administration [the Faculty Plan] or the NYU School of Medicine Retirement Plan for Members of the Faculty, Professional Research Staff, and Administration [the Medical Plan]."

The Faculty Plan covers most of NYU’s faculty, research staff, and administrative staff, while the Medical Plan serves employees of the School of Medicine.

In the words of the Circuit Court, "The NYU Retirement Plan Committee [the Committee] is the nine-member fiduciary entity responsible for administering both plans, having been designated as the Plan Administrator by NYU’s Board of Trustees. The Committee is made up of senior University and Medical Center administrators, including NYU’s Chief Investment Officer, the Senior Vice Presidents of Finance of NYU and the Medical Center, the Medical Center’s Controller, the Vice Presidents of Human Resources of NYU and the Medical Center, the Directors of Benefits of NYU and the Medical Center, and NYU’s Provost (or its designee)."

Both the Faculty Plan and Medical Plan [the Plans] are defined contribution plans, as set forth in 29 U.S.C. §1002(34), and are tax-qualified under 26 U.S.C. §403(b). Defined contribution plans are retirement plans in which "the employee contributes directly to her individual account, and the benefits that will ultimately accrue to the employee are a function of the amount she contributes to investments in the plan and the market performance of those investments, minus the expenses of plan administration."** 

The Circuit Court, Circuit Judge Menashi dissenting in part, held:

1. Plaintiffs adequately pled a breach of the fiduciary duty of prudence in Count V’s share-class claim, opining that it could not find "the district court’s dismissal of this claim harmless on the present record" and reinstated that claim for further proceeding;

2. The district court erred in denying Plaintiffs’ motion to amend to name individual Committee members as defendants, and vacated the district court's denial of Plaintiffs' leave to amend; but

3. Rejected the remainder of Plaintiffs’ arguments on appeal, affirming [a] the trial of their claims without a jury, [b] the use of written direct testimony at that trial, [c]  the entry of judgment for NYU on the tried claims, and [d] the denial of their motion for a new trial based upon the alleged disqualification of the Federal District Court judge.

In contrast, in a case decided by the Appellate Division, Meirowitz v Bayport-Bluepoint Union Free School Dist., 57 AD3d 858, a save harmless clause was held to bar employees and retirees from recouping Tax Deferred Plan investment losses from the employer. A teacher had sued the Bayport-Bluepoint Union Free School District after losing her contributions that the District transmitted to Horizon Benefits Administration, Inc., its third-party administrator of its retirement savings plan - a Tax Deferred Annuity Plan. The “retirement savings plan” was made available to Bayport-Bluepoint's employees pursuant to Internal Revenue Code §403(b).***  

Horizon, however, also acted as a vendor of investment products and provided two investment options, Choices Unlimited and Choices Select.

Employees electing to participate in the retirement savings plan were required to enter into a written salary reduction agreement [SRA] with Bayport-Bluepoint. The SRA provided that Bayport-Bluepoint would deduct money from the participant's paycheck and transfer it to Horizon's custodial bank, where the funds would then be distributed by Horizon to the vendor selected by the employee-participant. Significantly, the SRA contains a "Hold Harmless Provision" which provided that "[t]he Employee agrees that the Employer shall have no liability whatsoever for any loss suffered by the Employee with regard to his selection of an insurance company or mutual fund, or the solvency of, operation of, or benefits provided by said insurance company or mutual fund company."

The events leading to this lawsuit involved an investigation by the Attorney General of the State of Ohio that resulted in Horizon's assets being frozen and Horizon was eventually liquidated. Retired and active Bayport-Bluepoint employees who participated in the retirement savings plan and opted to have their salary reductions deposited in Horizon's Choices Unlimited product lost their money when Horizon was liquidated. They sued the District, alleging “breach of contract.” The Appellate Division said that Bayport-Bluepoint established a prima facieentitlement to summary judgment dismissing the lawsuit based upon the clear and unambiguous language of the SRA's Hold Harmless Provision. The Hold Harmless Provision said the court, "was clearly intended to encompass a situation like the one at hand."

The Appellate Division also observed that only retirement savings plan employee-participants selecting the Choices Unlimited investment option offered by Horizon lost money. Employee-participants selecting Horizon's Choices Selectinvestment option or having their money deposited in funds offered by other vendors did not suffer losses as a result of Horizon's liquidation.

* The Trustees of Columbia University in the City of New York is an Intervenor in this action.

** The court noted that "Plans that operate under §403(b)’s beneficial tax scheme are retirement plans administered by certain qualifying non-profits, including universities, that offer mutual fund and annuity investment options to participants."

*** See also Education Law Section 114 that provides for reduction of salaries for investment in custodial accounts for employees of the State Department of Education and Education Law Article 8-C, authorizing a Tax Deferred Annuity Plan for employees of the State University, the City University and the community colleges.  

Click here to access the full text of the New York University decision. 

Webinar update for the week of August 16, 2021

GOVERNMENT TECHNOLOGY's live webinar update for the week of August 16, 2021.

 

Building a Future-Proof Cybersecurity Practice Part 4: Adapting the Strategy - Tuesday, August 17 | 1:00pm Eastern
During this four-part Master Class series, you will learn how to develop and deploy a future-proof cybersecurity strategy in state and local government. In this fourth session, Center for Digital Government Senior Fellow Deb Snyder and Tanium CISO Chris Hallenbeck will discuss how to adapt and sustain a cybersecurity strategy.

Click here to Register to attend 

 

Closing the Gaps in Your Security Posture - Wednesday, August 18 | 2:00pm Eastern
Like other states, Georgia has worked tirelessly to implement an advanced cybersecurity strategy, to ensure its networks and data are protected and secure. And like other states, Georgia nonetheless still faced a major gap in its security posture: User authentication. Georgia IT leaders in recent years have worked to close that gap by adopting hardware security keys for multifactor authentication. To hear Georgia’s story – and to learn more about how hardware security keys are and how they work.

Click here to Register to attend

 

Next-Gen Engagement: Why Your Contact Center Should be Cloud-Native and AI Enabled - Thursday, August 19 | 2:00pmEastern
The pandemic exposed the limitations of legacy contact center technology. On-premises systems struggled to respond to rapidly changing requirements like spiking call volumes and the transition of contact-center agents to remote work. As a result, constituents often faced long delays in getting the help they desperately needed. Find out how a cloud-native contact center platform can help your organization address these shortcomings, while delivering a better customer experience and improving internal operations.

Click here to Register to attend

 

For assistance with registration, contact:
Jeremy Smith, jsmith@erepublic.com(916) 932-1402 direct