Determining the timeliness of an appeal of an administrative decision to an administrative appellate body within the agency

The critical lesson set out in this decision by the Appellate Division is that a request to reconsider a "final administrative determination" does not toll the running of the statute of limitations for initiating litigation challenging the decision.

The Appellate Division said it agreed with the Supreme Court's determination that the commencement of a proceeding pursuant to CPLR Article 78 was untimely as the retiree [Petitioner] did not file the action within four months of receiving the Retirement Systems determination informing her of the effective date of her retirement. Although Petitioner's subsequent asked the Retirement System to reconsider its determination regarding the effective date of her retirement, requests for "administrative reconsideration" do not extend or toll the running of the statute of limitations.

A related question concerns the timeliness of filing an administrative appeal of an agency's determination concerning a matter when a statute authorizes an individual to file an appeal from an administrative determination by mail. Is the controlling date the date the appeal was mailed to the agency's administrative appellate body or the date on which the appeal was received by the administrative appellate body?

In McLaughlin v Saga Corp., NYS Appellate Division, 242 A.D.2d 393, the Appellate Division overturned the traditional view was that the notice of appeal is untimely if it physically received by the appellate body after the Statute of Limitations had passed.

Rather, decided the Appellate Division, if the party is able to submit "proof of mailing within the limitations period," the application or appeal is timely.

The case arose under a provision of the Workers' Compensation Law that allowed a party to "serve" its appeal on the WCB by mailing it to the Board within 30 days. However, the Board took the position that unless it received the application for review on or before the last day of the 30-day limitations period, it was untimely. In Saga's case, although mailed within the 30-day period allowed for filing the application, WCB did not physically receive it until eight days after the statute of limitations had expired.

The rationale underlying the revised ruling is clear. If a person has a statutory right to make a decision, which may be then filed by mail, this period would necessarily be shortened if the appellate body could insist that it physically receive the mailed notice no later than the last day of the period of limitation.

In effect the Appellate Division concluded that the method of service of a notice of appeal, mail or personal delivery, should not determine the time period available to the party to decided whether or not to appeal an administrative ruling.

However, it appears that such a final action must be reduced to writing in order to start the running of the statute of limitations. In McCoy v San Francisco, City and County, 14 F.3d 28 , theU.S. Court of Appeals, 9th Circuit, ruled that a public employee's civil rights suit against his employer accrued when the appointing authority issued a  written statement suspending him from work, rather than from the date of a hearing held earlier at which time McCoy was orally told he was suspended from his position.

The Retirement System decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04177.htm

The McLaughlin v Saga decision is posted on the Internet at:

https://casetext.com/case/matter-of-mclaughlin-v-saga-corporation-1

The McCoy v San Francisco decision is posted on the Internet at:

https://www.leagle.com/decision/19944214f3d28130

School District held not a party to the long-term disability insurance policy issued by the insurer covering certain District employees

Arroyo v Central Islip UFSD

2019 NY Slip Op 04669

Decided on June 12, 2019

Appellate Division, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on June 12, 2019 SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department 
ALAN D. SCHEINKMAN, P.J. 
CHERYL E. CHAMBERS 
LEONARD B. AUSTIN 
COLLEEN D. DUFFY, JJ.

2016-09188 
(Index No. 32465/09) 

Gail Arroyo, appellant, 

v

Central Islip UFSD, et al., respondents, et al., defendants.

Law Offices of Wayne J. Schaefer, LLC, Smithtown, NY, for appellant.

Devitt Spellman Barrett, LLP, Smithtown, NY (John M. Denby of counsel), for respondents.

DECISION & ORDER*

In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Joseph C. Pastoressa, J.), dated June 30, 2016. The order granted the motion of the defendants Central Islip UFSD and Central Islip Union Free School District pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against them.

ORDERED that the order is affirmed, with costs.

The plaintiff was employed as a security guard by the defendants Central Islip UFSD and Central Islip Union Free School District (hereinafter together the District). She sustained injuries in the course of her employment and sought benefits under a long-term disability insurance policy issued by the defendant Sun Life and Health Insurance Company (U.S.) (hereinafter Sun Life), which covered certain employees of the District. The named policyholder was the Trustee of the New York State Group Insurance Trust. The policy provided that a written notice of claim for long-term disability benefits had to be sent to "us," defined as Sun Life, at its home office. The policy further provided that no legal action could be commenced against Sun Life for the claim until 60 days after the filing of the notice of claim.

A handbook which Sun Life provided to employees of the District stated that as participants in an employer benefit plan, employees were entitled to rights and protections under the Employee Retirement Income Security Act of 1974 (29 § USC 1001 et seq.; hereinafter ERISA). The handbook named Sun Life as the claims fiduciary with the obligation, and the discretion, to determine claims in its sole and exclusive discretion and to construe all issues relating to eligibility for benefits. The handbook stated that benefit determinations could be appealed to a named office of Sun Life and that, while the determination was final, an employee could bring an action in federal court under section 502(a) of ERISA (29 USC § 502[a]).

The plaintiff was initially granted long-term disability benefits by Sun Life but, after receiving benefits for almost three years, the plaintiff was notified by Sun Life in a letter dated September 11, 2008, that she was no longer eligible for benefits as she was no longer totally disabled. The plaintiff was given written notice of her right to appeal to a designated Sun Life office [*2](the same one named in the handbook). She was also advised that she may have the right to bring a civil action under ERISA in the event of an adverse appeals determination. The plaintiff exercised her right to appeal the determination to Sun Life; however, her appeal was denied. The plaintiff commenced this action against Sun Life, the District, and others, alleging breach of contract and wrongful denial of benefits under ERISA. The District moved pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against it based, inter alia, on a lack of privity. In an order dated June 30, 2016, the Supreme Court granted the District's motion. The plaintiff appeals.

The plaintiff's arguments on this appeal are predicated largely upon excerpts from a Summary Plan Description which the plaintiff asserts was issued by Sun Life's predecessor as policy issuer. The Summary Plan Description identifies the District as the plan administrator and as the agent for service of legal process. The Summary Plan Description also states that any denial of benefits would be provided by the named plan administrator, which was the District, and that the claimant has 60 days after receipt of a written denial to request review. The Summary Plan Description further states that a decision would be rendered within 60 days of receipt of the request for review and that plan participants have rights under ERISA which may be enforced by a lawsuit in federal court. The Summary Plan Description states that it does not constitute a part of the insurance plan or part of the insurance policy.

The plaintiff acknowledges that ERISA is not applicable to the subject Sun Life plan as it constitutes a governmental plan exempt from ERISA (see 29 USC §§ 1002[32]; 1003[b][1]; Lyndaker v Board of Educ. of W. Can. Val. Cent. Sch. Dist., 129 AD3d 1561, 1562-1563). Nevertheless, the plaintiff contends that, based on the language of portions of the Summary Plan Description, the District subjected itself to ERISA's statutory scheme governing appeals from denials of claims. We disagree.

An insurance policy is a contract to which standard provisions of contract interpretation apply (see Universal Am. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 25 NY3d 675, 680; Omanoff v Rohde, 129 AD3d 510, 510). "Liability for breach of contract does not lie absent proof of a contractual relationship or privity between the parties" (Hamlet at Willow Cr. Dev. Co., LLC v Northeast Land Dev. Corp., 64 AD3d 85, 104; see Siskin v Cassar, 122 AD3d 714, 717; CDJ Bldrs. Corp. v Hudson Group Constr. Corp., 67 AD3d 720, 722). "One cannot be held liable under a contract to which he or she is not a party" (Victory State Bank v EMBA Hylan, LLC, 169 AD3d 963, 965; see Maki v Travelers Cos., Inc., 145 AD3d 1228, 1230; 1911 Richmond Ave. Assoc., LLC v G.L.G. Capitol, LLC, 90 AD3d 627, 627).

Here, the District was not a party to the long-term disability policy issued by Sun Life to a different named policyholder. Even assuming the authenticity of the Summary Plan Description excerpts relied upon by the plaintiff, nothing in the record reflects that the District authored, published, or agreed to be bound by the Summary Plan Description, which, by its terms, did not form part of the insurance policy. Nor do the terms of the insurance policy incorporate the provisions of ERISA (cf. Advanced Refractory Tech. v Power Auth. of State of N.Y., 81 NY2d 670, 678). While portions of the handbook, distributed to District employees by Sun Life, assert the applicability of ERISA to those employees, the record does not indicate that the District issued or agreed to be bound by the provisions of the handbook. Further, the record indicates that the plaintiff followed the claims review and appeal procedures set forth by Sun Life and that the determinations were made by Sun Life without the involvement of the District. The plaintiff's lack of privity with the District is fatal to her breach of contract cause of action against the District (see Siskin v Cassar, 122 AD3d at 717; 1911 Richmond Ave. Assoc., LLC v G.L.G. Capitol, LLC, 90 AD3d at 627).

Additionally, the plaintiff failed to timely serve a notice of claim on the District, which is a condition precedent to the commencement of an action against a school district (see Education Law § 3813[1]; Matter of Zelin v Blind Brook-Rye Union Free Sch. Dist., 164 AD3d 1352, 1352; Santostefano v Middle Country Cent. Sch. Dist., 156 AD3d 926, 927). The plaintiff contends that the District waived the notice of claim requirements by agreeing to an ERISA-based appeal procedure as outlined in Sun Life's September 11, 2008, letter. This argument is without merit as the letter was issued by Sun Life, not by the District (cf. Matter of Geneseo Cent. School [*3][Perfetto & Whalen Constr. Corp.], 53 NY2d 306, 311).

Accordingly, we agree with the Supreme Court's determination granting the District's motion to dismiss the complaint insofar as asserted against it.

In light of this determination, we need not address the parties' remaining contentions.

SCHEINKMAN, P.J., CHAMBERS, AUSTIN and DUFFY, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04669.htm

* N.B. See, also, Matter of Gail Arroyo v Central Islip UFSD, et al., posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04688.htm

Failing to call the trial court's attention to a law, rule or regulation may preclude citing such provisions in an appeal from an adverse decision by the lower court

The New York State Department of Financial Services [DFS] appeal the District Court denial of its post-verdict motion for judgment as a matter of law, or, alternatively, for a new trial, after a jury found DFS liable under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., for unlawfully discriminating against an individual [Petitioner] based on his national origin when it failed to promote him.

On the issue of liability, DFS argued that the jury’s answer to a special interrogatory on the verdict form demonstrated [1] a level of jury confusion that warranted a new trial and that [2] the evidence presented at trial was insufficient to support Petitioner’s claims. After reviewing the record, the Circuit Court of Appeals, Second Circuit, reject DFS' arguments and affirm the judgment substantially for reasons stated in the District Court opinion and order.

Addressing DFS' challenge to the damages awarded by the District Court, the Circuit Court said that DFS contended that the District Court erred in calculating the Petitioner's  damages award when it used "a comparator hired from outside of the civil service," citing for the first time the New York State Department of Civil Service’s State Personnel Management Manual [Manual], which, in pertinent part, states that §131.1-a of the State Civil Service Law* applies only to external candidates hired from outside the New York Civil Service.

Finding that DFS failed to make the District Court aware of these provisions set out in the Manual and relying on §131.1-a for the first time on appeal, the Circuit Court, noting that the District Court had some discretion in using the salaries of comparators to determine back pay in this case, the affirmed the District Court’s damages award.

* Civil Service Law §131.1-a, Appointment above minimum salary in certain cases, provides that "Notwithstanding any other provision of this chapter, with respect to positions allocated to salary grades in section one hundred thirty of this chapter the director of the classification and compensation division, subject to the approval of the director of the budget, may authorize an increased hiring rate, not to exceed the job rate of the salary grade of the position to which a person is to be appointed when the training or experience of such appointee substantially exceeds requirements necessary for appointment. The salaries of other employees serving in the same title in the same geographical area or location having qualifications of training or experience equivalent to those of the person appointed shall be increased by such amount as may be necessary to equal the rate of compensation of the person appointed.

The decision is posted on the Internet at: http://www.ca2.uscourts.gov/decisions/isysquery/ebddfaba-00e1-4235-a653-50e2d8616b95/1/doc/18-2614_so.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/ebddfaba-00e1-4235-a653-50e2d8616b95/1/hilite/

An arbitral awards may vacated, in whole or in part, if it violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on an arbitrator's power

An individual [Petitioner] employed by the Department of Corrections and Community Supervision [DOCCS] was suspended without pay and subsequently served by DOCCS with a notice of suspension charging her with six instances of misconduct and imposing a penalty of dismissal.*

Petitioner waived her right to an agency-level hearing and the matter proceeded directly to arbitration. Following a hearing, the arbitrator, among other things, found Petitioner guilty of two of the charges of misconduct and imposed a one-month suspension as a penalty. The arbitrator also awarded Petitioner back pay for the period of interim suspension prior to the hearing. When DOCCS failed to pay Petitioner back pay for the time of her interim suspension, Petitioner commenced a CPLR Article 75 proceeding to confirm the award. DOCCS cross-moved to vacate the award insofar as it required the payment of back pay for the period of the interim suspension.

Supreme Court confirmed the award, denied DOCCS' cross motion and DOCCS appealed the court's ruling, contending that the arbitrator's award of back pay for the period of interim suspension exceeded his authority.

The Appellate Division overturned the Supreme Court's ruling, pointing out that:

1. "Judicial review of arbitral awards is extremely limited [but] a court may vacate an award when it violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on an arbitrator's power";

2.  "[A]lthough an arbitrator's interpretation of contract language is generally beyond the scope of judicial review, where a benefit not recognized under the governing CBA is granted, the arbitrator will be deemed to have exceeded his or her authority"; and

3. "[I]f the arbitrator imposes requirements not supported by any reasonable construction of the CBA, then the arbitrator's construction[,] in effect, made a new contract for the parties, which is a basis for vacating the award."

Here, the Appellate Division noted, "the arbitrator's award of back pay for the period of interim suspension was based upon a determination that DOCCS lacked probable cause to suspend petitioner." However, said the court, the relevant provision set out in the CBA states that "[s]uspensions without pay . . . shall be reviewable by a disciplinary arbitrator . . . to determine whether the [respondent] had probable cause."

Citing Matter of Livermore-Johnson [New York State Dept. of Corr. & Community Supervision], 155 AD3d at 1394, the court pointed out that it had previously held that hearing evidence should be considered by the arbitrator in determining probable cause." Here, however, the Appellate Division found that the arbitrator "did not rely on the hearing evidence to reach this determination, but instead relied solely on the information contained in the notice of suspension and referenced the Livermore-Johnson decision, which is an earlier decision that he rendered regarding the same CBA but a different employee."

In the words of the Appellate Division, "[i]n Livermore-Johnson, the arbitrator concluded that the suspension notice at issue in and of itself did not establish probable cause [and when reviewed by this Court] we affirmed Supreme Court's judgment vacating the arbitrator's award, holding that the arbitrator exceeded his authority by failing to consider hearing evidence and imposing the new requirement that probable cause be established in the notice of suspension."

Finding the record underlying the instant action "makes clear that the same error occurred here," the Appellate Division said that that portion of the order and judgment that orders back pay for [Petitioner] during the period of interim suspension must be vacated and the matter remitted for a rehearing on that issue."

* The terms of Petitioner's employment were governed by a collective bargaining agreement [CBA] that contained procedures that DOCCS was required to follow when seeking to discipline an employee.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04526.htm

The statute of limitations for filing an Article 78 petition challenging an regulation adopted by a government entity starts to run on the effective date of the regulation

General Municipal Law §209-q(1)(a) requires that individuals satisfactorily complete an approved municipal police basic training program prior to appointment as a police officer on a permanent basis. A certificate of completion issued upon completion of an approved training course remains valid, as relevant in this appeal, during the holder's continuous service as a police officer and during certain specified periods of "interruption" from service (see General Municipal Law §209-q[1][b]).* The State's Division of Criminal Justice Services [DCJS] is required by law to maintain a registry of all full-time and part-time police officers in the State and all agencies employing police officers are required to immediately report to DCJS when any officer it has employed ceases to so serve.

Executive Law §837[13] authorizes DCJS to adopt such regulations "as may be necessary or convenient to the performance of its duties." DCJS had adopted regulations requiring an agency employing police officers immediately notify DCJS when a police officer it had employed ceased to serve as a police officer and to indicate the reason for his or her ceasing to serve as a police officer, including reporting his or her "removal for cause".** 

Removal for cause included, as relevant in this action, resignation while a disciplinary proceeding was pending against the police officer pursuant to Civil Service Law §75 or pursuant to another statute or a contract disciplinary procedure negotiated pursuant to the Taylor Law.***

Among the issues addressed by the Appellate Division in this action was the effective date of a regulation adopted by DCJS for the purposes of determining the statute of limitations for timely filing a CPLR Article 78 petition seeking to annul a determination made by DCJS pursuant to the challenged regulation.

In April 2018, two former police officer [Plaintiffs] initiated proceedings and actions for declaratory judgments seeking to annul DCJS's determinations to invalidate their respective police officer basic training certificates. Supreme Court "converted these proceeding/action to a CPLR Article 78 proceeding upon consent of the parties" and then dismissed the Article 78 action as untimely. Plaintiffs appealed.

The Appellate Division noted that although the parties concede that this proceeding was governed by the four-month statute of limitations set forth in CPLR §217(1), they disagree as to when their respective causes of action arose and, in the words of the court, "their claims for relief are ultimately grounded on challenges to the validity of the regulations that were promulgated by DCJS in 2016 and 2017" in consideration of their status as police officers.

Citing Thrun v Cuomo, 112 AD3d 1038, the Appellate Division opined that as the challenged regulations "were quasi-legislative acts ... challenges to the validity of regulations accrued when the regulations become effective." Accordingly, explained the court, "inasmuch as the regulations became effective more than four months before this proceeding was commenced, Supreme Court properly found that [Plaintiffs' claims are time-barred."

Addressing an argument raised by one of the Plaintiffs whereby the Plaintiff asserted that he had submitted "his irrevocable resignation letter" on September 19, 2016 and that it had expressly provided that his resignation would be effective on October 31, 2016, five days after the regulations were adopted, the Appellate Division observed that the resignation was submitted in settlement of disciplinary charges that could have resulted in Plaintiff's removal.

Thus, said the court, Plaintiff's "arguments that he resigned before the regulations were enacted or, alternatively, that no disciplinary charges were pending on the effective date of his resignation are precluded by his acceptance of the benefits of the settlement, namely, being permitted to resolve the pending disciplinary charges by resigning and his further receipt of employment benefits from September 19, 2016 through the effective resignation date of October 31, 2016." 

* Interruption means separation from employment as a police officer "by reason of such officer's leave of absence, resignation or removal, other than removal for cause" (see General Municipal Law §209-q[1][c]).

** See 9 NYCRR 6056.2(g), employees removed for incompetence or misconduct.

*** 4 NYCRR 5.3(b) provides in pertinent part, "... when charges of incompetency or misconduct have been or are about to be filed against an employee, the appointing authority may elect to disregard a resignation filed by such employee and to prosecute such charges and, in the event that such employee is found guilty of such charges and dismissed from the service, his termination shall be recorded as a dismissal rather than as a resignation." Also, where necessary and appropriate, such disciplinary action may be conducted in absentia [see Mari v Safir, 291 AD2d 298].

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04524.htm

Selection of a medical officer to examine an employee terminated from her position pursuant to §72.5 of the Civil Service Law to determine the individual's "fitness for reinstatement" to the position

An individual [Plaintiff] was placed on "ordinary disability leave" involuntarily by the appointing authority pursuant to Civil Service Law §72(5).* About two years later Plaintiff was terminated from her position by the appointing authority pursuant to Civil Service Law §73.**

When she sought to be reinstated to her position the Department of Citywide Administrative Services (DCAS) designated an outside entity, JurisSolutions, to provide a medical officer to examine Plaintiff to determine her fitness to return to duty. Following the medical examination, Plaintiff filed a CPLR Article 78 petition contending that the physicians that had conducted her fit-for-duty evaluation were unqualified.

The Appellate Division dismissed Plaintiff's cause of action, holding that DCAS did not improperly delegate its duty to select a medical officer to an outside entity, JurisSolutions.

Both Civil Service Law §72(1) and §73 essentially provide that "When in the judgment of an appointing authority an employee is unable to perform the duties of his or her position by reason of a disability . . . the appointing authority may require such employee to undergo a medical examination to be conducted by a medical officer selected by the civil service department or municipal commission having jurisdiction."

The court, noting that neither §72(1) or §73 mandates any method that the "civil service department or municipal commission having jurisdiction" must use to select the medical officer, and nothing in the text prohibits DCAS from employing a procurement process to select the medical officer who will conduct the evaluation.

The Appellate Division then cited Lazzari v Town of Eastchester, 20 NY3d 214, a case involving a public employee on "worker's compensation leave" pursuant to §71 of the Civil Service Law, in which the Court of Appeals opined "Although Civil Service Law §71 does not indicate to whom the certification must be made, read in context, it is clear that the certification is made to the Department of Human Resources acting as a civil service commission, the body that arranges for the examination and to whom the results of such an examination are reported. Indeed, the purpose of section 71 is to involve a neutral agency and a physician, independent of both the employee and the employer, with appropriate oversight."

The Appellate Division, noting that "Although JurisSolutions provides the doctors, DCAS maintains complete control over the selection process," rejected Plaintiff's contention that the doctors that conducted her fit-for-duty evaluation were unqualified as not being supported by the record, and the hearing officer's determinations concerning the doctors' credibility should not be disturbed.

* Civil Service Law §72(5), in pertinent part, provides "Notwithstanding any other provisions of this section, if the appointing authority determines that there is probable cause to believe that the continued presence of the employee on the job represents a potential danger to persons or property or would severely interfere with operations, it  may place such employee on involuntary leave of absence   immediately."

** Civil Service Law §73 of the Civil Service Law provides, in pertinent part, "When an employee has been continuously absent from and unable to perform the duties of his position for one year or more by reason of a disability, other than a disability resulting from occupational injury or disease as defined in the workmen's compensation law, his employment status may be terminated and his position may be filled by a permanent appointment."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04658.htm

Failure to provide a brief adjournment of an administrative disciplinary hearing to permit the attorney for the accused to be present held an abuse of discretion

A State University of New York [SUNY] student [Student] was served with multiple disciplinary charges alleging misconduct. At the commencement of the scheduled administrative disciplinary hearing Student requested a three-hour adjournment of the  hearing so that his attorney could attend the proceeding. SUNY denied Student's request and proceeded with the disciplinary hearing notwithstanding the absence of Student's attorney.

Student ultimately challenged SUNY's decision and the Court of Appeals, reversing a ruling by the Appellate Division to the contrary, annulled SUNY's disciplinary determination and remanded the matter to the Appellate Division, indicating that should SUNY elect to proceed with the disciplinary action, it must hold a new disciplinary hearing.

The Court of Appeals explained that in consideration of "the particular circumstances of this case" it had found that SUNY had abused its discretion, as a matter of law, when it declined to grant the adjournment Student had requested to permit his attorney to be present at the hearing.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04449.htm

Appellate Division reviews an administrative disciplinary determination by the Director of the Administrative Hearings Unit of The New York Justice Center for the Protection of People with Special Needs

While most administrative disciplinary actions involving public sector employees are presently processed in accordance with the terms and conditions set out in a collective bargaining agreement, in some instances other laws, rules and regulations will control. 

The O'Grady decision by the Appellate Division, the full text of which is set out below, illustrates one such type of administrative disciplinary procedure and the individual's appeal from a determination made after hearing by the appointing authority conducted pursuant to Social Services Law §494 and 14 NYCRR 700.6[a]:

Matter of O'Grady v Kiyonaga

2019 NY Slip Op 04170

Decided on May 29, 2019

Appellate Division, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Todd L. Crawford, P.C., Roosevelt, NY, for petitioner.

Letitia James, Attorney General, New York, NY (Judith N. Vale and Linda Fang of counsel), for respondent.

DECISION & JUDGMENT

Proceeding pursuant to CPLR article 78 to review a determination of David Molik, Director of the Administrative Hearings Unit of The New York Justice Center for the Protection of People with Special Needs dated August 5, 2016. The determination adopted the findings of fact and conclusions of law of an Administrative Law Judge dated July 13, 2016, made after a hearing, that the petitioner committed category three neglect as defined by Social Services Law §493(4)(c), and denied the petitioner's request that the subject substantiated report of neglect dated November 25, 2014, be amended and sealed.

ADJUDGED that the determination is confirmed, the petition is denied, and the proceeding is dismissed on the merits, with costs.

The petitioner is a teacher who was employed, at relevant times, by Ferncliff Manor School (hereinafter Ferncliff Manor), a facility that is certified by the Office of People with Developmental Disabilities. In 2013, the New York Justice Center for the Protection of People with Special Needs (hereinafter the Justice Center) received a report alleging that the petitioner committed neglect by, inter alia, failing to properly supervise a service recipient (hereinafter the student) on September 10, 2013. The report alleged that the petitioner failed to properly monitor the actions of the student on a playground on the Ferncliff Manor property and that the student absconded from the property and reached a nearby street, where he was found by a bystander who placed him into a vehicle.

Following an investigation by the staff of Ferncliff Manor, the Justice Center substantiated the allegation of neglect in a report dated November 25, 2014. The petitioner exercised her right to a hearing before an Administrative Law Judge (see Social Services Law §494; 14 NYCRR 700.6[a]). The Administrative Law Judge found, upon the hearing, that a preponderance of the evidence showed that the petitioner committed a category three act of neglect (see Social Services Law §§493[3][a][i]; [4][c]; 494[1][a]; 14 NYCRR 624.5[j][1][i]; 700.4-700.5). David Molnik, Director of the Administrative Hearings Unit of the Justice Center, adopted the Administrative Law Judge's findings and recommended decision and denied the petitioner's request to amend and seal the substantiated report (see 14 NYCRR 700.13[a]). The petitioner commenced this proceeding against Jay Kiyonaga, individually and as Acting Executive Director of the Justice [*2]Center, pursuant to CPLR 78 to review that determination. By order dated June 28, 2017, the Supreme Court, Westchester County, transferred the proceeding to this Court pursuant to CPLR 7804(g).

In this proceeding, the petitioner seeks to annul the determination of the Justice Center, contending that it was not supported by substantial evidence (see CPLR 7804[g]). Social Services Law § 488(1)(h) defines neglect as "any action, inaction or lack of attention that breaches a custodian's duty and that results in or is likely to result in physical injury or serious or protracted impairment of the physical, mental or emotional condition of a service recipient." Social Services Law §493(4) sets forth, as relevant, three categories of reports of abuse or neglect perpetrated by a custodian. The particular category designation depends on the nature and severity of the conduct, and each category carries with it different consequences (see Matter of Anonymous v Molik, 32 NY3d 30, 35-36). Category one is limited to a specified list of "serious physical abuse, sexual abuse or other serious conduct" (Social Services Law §493[4][a]), and category two contains conduct that "seriously endangers the health, safety or welfare of a service recipient" (Social Services Law § 493[4][b]). The third category encompasses all other acts of abuse or neglect that do not rise to the level of conduct as "described in categories one and two" (Social Services Law §493[4][c]).

At an administrative hearing to determine whether a report of category three neglect is substantiated, the Justice Center is required to establish, by a preponderance of the evidence, that the subject committed abuse or neglect (see Matter of Anonymous v Molik, 32 NY3d at 34). Upon review of such an administrative determination made after an evidentiary hearing, the determination of the Justice Center must be upheld if supported by substantial evidence (see CPLR 7803[4]; Matter of Williams v New York State Justice Ctr. for the Protection of People with Special Needs, 151 AD3d 1355, 1356-1357).

Here, the determination of the Justice Center was based on substantial evidence. The hearing evidence showed, inter alia, that prior to this incident, the staff at Ferncliff Manor developed a mandatory Individual Plan of Protective Oversight (hereinafter IPOPO) for the student. That IPOPO, which was developed with input from teachers and other professionals, provided, inter alia, "[l]ine of sight - staff is to be within 3 feet of [the student] due to hyperactivity, impulsivity and running," and indicated that the student was at a "HIGH RISK" for "running/wandering away." The IPOPO defined the term "line of sight" as follows: "Staff will ensure the individual is always within their line of sight. This does not mean the staff member needs to be constantly looking at the student/resident, but rather be able to see the person at any given time."

The hearing evidence showed that at the time of this incident, there were four staff members supervising the student and his five classmates, as was required by the policy of the facility: the petitioner teacher and three aides. The petitioner acknowledged that she was not directly watching the student when he absconded, and that she did not see the student abscond from the playground. The student was not located until after he had crossed the playground, breached a fence, run to a nearby street, and encountered the individual who placed him in a vehicle. Notably, the petitioner did not testify that she had directed any of her aides to specifically supervise the student at the time of the incident.

Under these circumstances, substantial evidence supports the determination of the Justice Center that the petitioner committed category three neglect (see Matter of Williams v New York State Justice Ctr. for the Protection of People with Special Needs, 151 AD3d at 1356-1357; see also Matter of Kelly v New York State Justice Ctr. for the Protection of People with Special Needs, 161 AD3d 1344).

Therefore, the determination should be confirmed, the petition denied, and the proceeding dismissed on the merits.

SCHEINKMAN, P.J., DILLON, MALTESE and LASALLE, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

State Medicaid paid for erectile dysfunction drugs for sex offenders

Lax oversight over erectile dysfunction drugs for sex offenders was not the only problem. The Comptroller also noted that other Medicaid patients get drugs they shouldn't have otherwise obtained.

The state’s Medicaid program paid more than $60,000 for sexual and erectile dysfunction (ED) drugs and treatments for 47 sex offenders, according to an audit released on June 5, 2019 by State Comptroller Thomas P. DiNapoli. In total, Medicaid made more than $930,000 in payments for ED drugs and treatments for recipients, including sex offenders, that are barred under Medicaid.

“There are clear rules about what conditions Medicaid will cover when it comes to erectile dysfunction drugs. And paying for sex offenders who’ve committed terrible crimes to get these drugs should never be lost in the bureaucratic administration of this program,” DiNapoli said. “Nearly two decades ago this office identified this problem, which led to national and state changes. While the state Department of Health immediately followed up to make corrections during the course of our audit, our auditors found that the problem persisted and needed to be fixed.”

In 2005, a review by the Office of the State Comptroller determined that Medicaid paid for the erectile dysfunction drug Viagra on behalf of 198 recipients who were registered sex offenders classified as level-3 (most likely to reoffend). Given the risk to public safety, the review sparked an overhaul of legislation at the federal and state levels to ensure such drugs are not paid for by Medicaid.

Current federal and state laws prohibit Medicaid from paying for drugs to treat sexual or erectile dysfunction for Medicaid recipients, including registered sex offenders. State law additionally prohibits payment for procedures or supplies to treat ED for registered sex offenders.

In 2011, Medicaid pharmacy benefit management for managed care recipients was transferred from DOH to managed care organizations (MCOs). DOH directed MCOs on how to handle ED drug exclusions and indicated uses. Under managed care, MCOs are expected to police the drugs Medicaid recipients enrolled in their plans can get and to determine their medical necessity.

Auditors found that did not always happen. Since the transition of pharmacy benefit management to MCOs, Medicaid continued, primarily under managed care, to fund drugs, procedures, and supplies that enhance sexual and erectile function for recipients, including registered sex offenders.

DiNapoli’s auditors found that from April 1, 2012 to July 1, 2018, Medicaid made $2.8 million in payments for ED drugs approved to also treat Benign Prostatic Hyperplasia (BPH) or Pulmonary Arterial Hypertension (PAH) on behalf of patients who did not have such diagnoses listed on their medical claims submitted up to six months before receiving the prescriptions. These claims indicate an elevated risk that the drugs may have been abused or sold to others. Among those payments, 411 recipients had a diagnosis of ED (but no BPH or PAH diagnosis) on their claims, totaling $207,256 in Medicaid payments.

Similarly, Medicaid paid $285,641 for ED drugs approved to also treat BPH or PAH for 14 sex offenders (see table 3 in audit), 11 of whom were classified as a level-2 or a level-3 sex offender. Auditors reviewed the medical records of 13 of the 14 sex offenders to determine if the records supported a diagnosis of BPH or PAH and found 31 percent, or four of 13 cases, supported only a diagnosis of ED. One case was indeterminate.

DOH did not monitor the use of ED drugs, procedures, and supplies, including payments by MCOs. The audit and the department’s analyses both indicate a large portion of MCO claims for ED drugs approved to treat other medical conditions lack assurance of medical necessity. MCOs made most of the payments the auditors reported on.

DiNapoli’s auditors found some MCO controls are not designed to effectively prevent sex offenders from obtaining treatment for ED. Specifically, after a recipient obtains ED treatment, if an MCO finds out the recipient is a registered sex offender, the MCO merely does not pay for the services when other steps could be taken to prevent sex offenders from obtaining them.

Auditors further found DOH’s eMedNY computer payment system also incompletely incorporated controls to prevent covering ED procedures and supplies for convicted sex offenders. Consequently, Medicaid fee-for-service inappropriately paid $27,288 for 21 excluded ED procedures and supplies provided to 15 sex offenders (at least 6 of the 15 were classified as level-2 or level-3 sex offenders).

DiNapoli recommended DOH:

• Review the payments identified by auditors and ensure recoveries are made from providers, as appropriate;

• Regularly provide MCOs with detailed lists of all ED drugs, procedures, and supplies that are excluded or have limited Medicaid coverage;

• Periodically monitor coverage, utilization, and payment of ED drugs, procedures, and supplies; and take corrective actions to ensure compliance with laws, policies, and procedures; and

• Improve DOH’s eMedNY computer system controls to apply sex offender status in the processing of certain claims and prevent the processing of incomplete electronic Division of Criminal Justice Services sex offender registry files.

In its response to the audit, DOH indicated the actions it would take to correct the issues found. The department’s complete response is included in the audit.

Click report to read the DOH's response to the Comptroller's audit  or go to https://www.osc.state.ny.us/audits/allaudits/093019/sga-2019-18s16.pdf.

To find out how your government money is being spent go to Open Book New York. 

Judicial review of an arbitration award resulting from compulsory arbitration stricter than judicial review of an award resulting from voluntary arbitration

The Appellate Division unanimously affirmed a Supreme Court's granting the petition of the Board of Education to vacate an arbitration award and the penalty imposed by an arbitrator and remanded the matter to different "appropriate arbitrator" on the panel established to hear cases involving allegations of teacher misconduct.

Ruling that the lower court "correctly vacated the arbitration award in this disciplinary action," which was subject to compulsory arbitration, the Appellate Division explained that judicial review is "stricter (for compulsory arbitration) than for a determination rendered (after) ... voluntary arbitration". Here, said the court, the record supports the Supreme Court's conclusion that the arbitrator's opinion and award was not only irrational, but also arbitrary and capricious.

The Appellate Division noted that the administrative record supported the lower court's determination to sustain all charges and specifications filed against the educator, two of which were based the teacher's conduct and statements, "which threatened physical violence and placed at least one child in fear of his physical safety."

The court also sustained the Supreme Court's upholding the specification of misconduct charging certain students who were the target of the teacher's racist comments "could not have been 'unaffected' by the statements, which were far from 'benign' or 'uplifting,' as characterized by the arbitrator."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04297.htm

Setting the terms and conditions of a disciplinary probationary period

Pleading nolo contendere* to criminal charges that he had recklessly operated his personal automobile while off-duty, a New York City police officer and the New York City Police Department "settled" the subsequent disciplinary action taken against the officer by entering into a "stipulated agreement." Under the terms of the settlement agreement the officer was placed on "disciplinary probation" for a specified period. This meant that the tenure he previously enjoyed was suspended for the duration of the disciplinary probationary period agreed upon and he could be summarily dismissed at any time during the probationary period by the appointing authority without notice and hearing.

Prior to the expiration of his disciplinary probationary period the police officer arrested on assault charges and later dismissed from his position. Later still, the assault charges were withdrawn. The officer then sued, seeking a court order directing his reinstatement to his former position, an awarded of back pay and an order directing the Police Department to give him a "name-clearing hearing." Supreme Court dismissed his CPLR Article 78  petition and the officer appealed the ruling to the Appellate Division.**

Addressing the police officer's contention that he was unlawfully terminated and therefore should be reinstated to his former position with back salary and benefits, the Appellate Division said that as a probationary employee the officer could be been dismissed without a hearing or a statement of reasons. Only in the event the officer demonstrated that his dismissal was made in bad faith or was for a constitutionally prohibited reason or was prohibited by statutory or case law could the officer claim wrongful discharge.

In contrast, in the event the stipulation establishing the employee's "disciplinary probation period" sets out the acts or omissions that could trigger the individuals termination, the employee may be summarily terminate without notice and hearing only in the event he or she is found to have violated the specified term or condition stipulated in the disciplinary probationary period agreement.

This point is illustrated in ruling by the Appellate Division in Taylor v Cass, 505 NY2d 929.

Under the terms of a disciplinary settlement, Taylor could be terminated without any hearing if, in the opinion of his superior, his job performance was adversely affected by his consumption of alcohol. Taylorwas subsequently terminated from his position for sleeping on the job.

Although the employer claimed that the termination without a hearing was permitted under the terms of the disciplinary settlement agreement, the Appellate Division disagreed and directed the agency to reinstate Taylor to his position with back pay and benefits.

The court pointed out that the reason given for summarily terminating Taylor -- sleeping on the job -- was not authorized by the settlement agreement. The court ruled that Taylor could only be terminated without a hearing if he was found to have violated the specific reason set out in the settlement agreement: the performance of his duties were unsatisfactory because of his consumption of alcohol.

Agreeing with the Supreme Court justice that Green failed to prove the existence of any basis for granting the relief he sought,  the Appellate Division dismissed his appeal.

* A plea by which a defendant in a criminal prosecution accepts conviction as though a guilty plea had been entered but does not admit guilt. A plea of "nolo contendere," has the same primary legal effects as a guilty plea.

** Robert Green, Jr.  v. New York City Police Department et al., 235 AD2d 475.  Rejecting the police officer demand for "a name-clearing hearing," the Appellate Division explained that a former employee is entitled to a name clearing hearing only if he or she can demonstrate that the employer publicly disclosed false and stigmatizing reasons for his or her termination.

The Taylor decision is posted on the Internet at:

https://www.leagle.com/decision/19861007122ad2d8852320

Rejection of an applicant for appointment as a police officer based on a finding that the applicant was psychologically unfit for the position

Supreme Court granted the appointing authority's [Employer] motion to dismiss a CPLR Article 78 petition filed by an applicant [Plaintiff] for appointment as a police officer seeking to annul the Employer's decision not to certify Plaintiff for appointment dismissed the proceeding.

Plaintiff appealed the Supreme Court's ruling, arguing that the Employer's determination to disqualify him for appointment to the position was arbitrary and capricious.

The Appellate Division disagreed and sustained the Supreme Court's decision. In the words of the Appellate Division, the Employer's determination "was not arbitrary and capricious and had a rational basis." Citing Matter of City of New York v New York City Civ. Serv. Commn., 61 AD3d 584, the court explained the Employer "has wide discretion in determining the fitness of candidates[,] . . . particularly . . . in the hiring of law enforcement officers, to whom high standards may be applied," noting that the Employer had "reasonably relied on the findings of two psychologists, both of whom, after interviewing the Plaintiff, concluded that, for a variety of reasons, Plaintiff "was psychologically unfit for the position of police officer."

As Plaintiff had neither demonstrated [a] the existence of a triable issue of fact but only advanced unsubstantiated allegations and speculation concerning the motives of the psychologists who recommended denial of his application nor [b that further discovery was warranted under the circumstances, the Appellate Division unanimously dismissed Plaintiff's appeal.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_03740.htm