Seeking indemnification for legal expenses pursuant to Public Officers Law §18

Seeking indemnification for legal expenses pursuant to Public Officers Law §18

Paul W. Mossman as Commissioner of Social Services of Columbia County v County of Columbia (Two Proceeding), 2015 NY Slip Op 03005, Appellate Division, Third Department

In Proceeding No. 1 pursuant to CPLR Article 78 Commissioner Mossman [Mossman], among other things, sought a court order annulling the County’s determination that he was not entitled to a legal defense pursuant to Public Officers Law §18 “in connection with a certain grand jury proceeding.”

In Proceeding No. 2 pursuant to CPLR Article 78 Mossman sought a court order directing the County “to provide such a legal defense in connection with a subsequent grand jury proceeding.”

In March 2013 the Columbia County District Attorney issued a subpoena demanding that Mossman appear before a grand jury with various documents related to the official actions of Columbia County Department of Social Services employees. Mossman thereafter sought to retain outside counsel and requested that the County indemnify him pursuant to Public Officers Law §18 and Columbia County Code §36-1. The County denied Mossman’s request stating that those provisions of law did not apply to "potential criminal matters."

Mossman challenged the County’s decision and a Supreme Court granted his petition in a December 2013 judgment.

In March 2014 the Columbia County District Attorney served a similar subpoena on Mossman and the County again denied Mossman request to be indemnified for his legal expenses. Mossman initiated an second CPLR Article 78 proceeding and Supreme Court, relying upon its rationale in Proceeding No. 1, issued a judgment in April 2014 granting Mossman‘s petition.

The County appealed both the December 2013 and April 2014 Supreme Court judgments. The Appellate Division, however, affirmed both Supreme Court rulings, explaining:

1. The County had adopted Public Officers Law §18, and was thus obliged to "provide for the defense of [an] employee in any civil action or proceeding, state or federal, arising out of any alleged act or omission which occurred or allegedly occurred while the employee was acting within the scope of his [or her] public employment or duties," citing Public Officers Law §18[3][a]). 

2.      As “a conflict of interest” prevented the Columbia County Attorney from representing Mossman, Mossman was entitled to representation "by private counsel of his choice."

  

3.      Mossman satisfied the notice requirements of Public Officers Law §18 and is an employee of the County, and the subpoenas clearly stem from actions undertaken in the course of his public duties.

The Appellate Division rejected the County’s argument that the grand jury proceeding did not constitute a "civil action or proceeding" for the purposes of Public Officers Law §18 as the County “failed to demonstrate" what was the objective of the grand jury proceeding and admitted that the District Attorney had not made his "intentions [known] in relation to the potential for criminal charges." The court also noted that although grand juries may indict a person for a criminal offense “they are also empowered to make presentments as to noncriminal misconduct or neglect by public officers and employees."*

The court said that because there was no indication that criminal charges are actually being contemplated, Supreme Court properly "reject[ed] [the County’s] claim that because the [g]rand [j]ury proceeding[s] could have resulted in criminal charges against [Mossman ], the proceeding[s] [were] not civil in nature" and that any other holding “would defeat the clear intent of the statute, which insulates public employees from litigation expenses arising out of their employment."**

* The Appellate Division said that the subpoenas served on Mossman sought information regarding "all of [Mossman] employees and subordinates." Contrary to the County’s contention, the Appellate Division said that the statutory power to report on the noncriminal misconduct of any public servant bears no connection to the separate constitutional right of a grand jury to investigate and indict public officers.

** Public Officers Law §19.2, which applies to employees of the State as the employer, provides, in pertinent part, "it shall be the duty of the   state to pay reasonable attorneys' fees and litigation expenses incurred by or on behalf of an employee in his  or  her  defense  of  a  criminal   proceeding in  a  state  or  federal court arising out of any act which   occurred while such employee was acting within the scope of  his  public   employment  or  duties  upon  his acquittal or upon the dismissal of the criminal charges against him or reasonable attorneys' fees  incurred  in   connection  with an appearance before a grand jury which returns no true   bill against the employee where such appearance was required as a result of any act which occurred while such  employee  was  acting within  the   scope  of  his public employment or duties unless such appearance occurs   in the normal course  of  the  public employment  or  duties  of  such   employee.

The decision is posted on the Internet at: 

http://www.nycourts.gov/reporter/3dseries/2015/2015_03005.htm

Asking an administrative body to reconsider its earlier decision does not revive an expired statute of limitation without a fresh examination of the matter based on newly presented evidence

Asking an administrative body to reconsider its earlier decision does not revive an expired statute of limitation without a fresh examination of the matter based on newly presented evidence

The Board of Education denied a teacher’s request for family health insurance benefits in May 2008, explaining that she was not eligible for coverage under the terms of the relevant collective bargaining agreement.

In May 2012, the teacher submitted another request for family health insurance benefits. This request was, again, denied by the School District in August 2012. In November 2012 the teacher commenced a CPLR Article 78 proceeding challenging the School District’s decision.

In its answer to the teacher's petition the School District contended that the proceeding was untimely, arguing that the second request for family health insurance benefits did not renew or revive the statute of limitations. Supreme Court disagreed, holding that the teacher’s Article 78 petition was timely and the School District appealed.

The Appellate Division, contrary to the Supreme Court's determination, ruled that the School District was correct.

The court explained that as a general rule, a proceeding pursuant to CPLR Article 78 must be commenced within four months after the determination to be reviewed becomes final and binding on the petitioner and that the initial determination controls "unless the agency conducts a fresh and complete examination of the matter based on newly presented evidence.” The Appellate Division concluded that the August 2012 determination did not serve to revive the limitations period, as the School District adhered to its initial determination without a fresh examination based on newly presented evidence.

Accordingly, the Appellate Division ruled that “this proceeding is barred by the four-month statute of limitations set forth in CPLR 217(1).”

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2015/2015_02977.htm

New York State Comptroller Thomas P. DiNapoli proposes legislation to assist State and local governments pay for retiree health care premiums

New York State Comptroller Thomas P. DiNapoli proposes legislation to assist State and local governments pay for retiree health care premiums

Source: Office of the State Comptroller

State Comptroller Thomas P. DiNapoli today announced legislation to create an optional investment pool to help the state and local governments fund retiree health insurance and other post employment benefits (OPEB). DiNapoli estimates the unfunded OPEB liability of New York state to be $68.2 billion and an additional $68.3 billion for local governments outside of New York City that have reported data.

When a public employee retires, the individual is often eligible for benefits including a pension and health insurance. While pension costs are pre-funded and invested to help pay for these future benefits, most governments, including New York state, do not set aside funds for retiree health insurance and instead fund it on a “pay-as-you-go” basis or out of pocket. The funding mechanism DiNapoli is proposing would give public employers another option to help fund these benefits for present day employees.

“New York is behind the eight ball on this issue. More than thirty states have already put rules in place that allow public employers to set aside money today to pay for these benefits,” DiNapoli said. “The numbers are daunting, but there is a real cost to doing nothing and leaving the bill for future generations of taxpayers to cover. The legislation would establish the legal structure for creating trusts that the state and local governments could use to start saving the funds needed to pay for these benefits. The responsible, good government thing to do is to start preparing for the future and plugging the hole before we reach a crisis moment.”

In state fiscal year (SFY) 2013-14, the state’s total unfunded OPEB liability is estimated at $54.3 billion for state agencies and $13.9 billion for the State University of New York (SUNY). Together, New York state and SUNY paid $1.5 billion for retiree health insurance in SFY 2013-14, which is half of what is needed to fully fund the OPEB liability. Costs for retiree health insurance are expected to grow as the workforce ages, people live longer and health care costs continue to increase. Current estimates project at least 6 percent annual increases for health insurance premiums – which means OPEB costs will double within 12 years.

If the state were to begin making regular annual contributions to a trust and earn a return on investments, it would potentially save billions of dollars in future OPEB cash payments.

The unfunded OPEB liability for the 837 of 2,293 local governments that reported it to DiNapoli’s office totaled $68.3 billion.

Moody’s Investors Service estimates the total national unfunded liability at $530 billion for states alone. New York is second to California in highest total OPEB liability, but it lags other states in starting to address this problem. Thirty-three states already have funding mechanisms to set aside funds to pay for OPEB costs.

DiNapoli’s proposal (Assembly 5525/Abbate) would:

1. Authorize the creation of irrevocable OPEB trusts, not part of the New York State Common Retirement Fund, so that New York state and its local governments can, at their option, help fund their OPEB liabilities;

2. Establish an OPEB investment fund in the sole custody of the State Comptroller for the investment of OPEB assets of the state and participating eligible local governments;

3. Designate the president of the Civil Service Commission as the trustee of the state’s OPEB trust and the governing boards as trustee for local governments; and

4. Allow school districts to transfer excess reserve balances to an OPEB trust once it is established.

Under DiNapoli’s proposal, there is no limit on how much or how little a government can deposit into the trust.

New York City, which has already begun funding its $89.5 Billion OPEB liabilities would be grandfathered in under its own statute. In 2006, the city established the Retiree Health Benefits Trust (RHBT), which currently has a balance of $2.4 billion. New York City Councilman Daniel Garodnick has proposed a City Charter amendment that would require the city to put at least 5 percent of its annual retiree health insurance expenses into a reserve fund under certain circumstances.

Since 2004, the Governmental Accounting Standards Board (GASB) has required state and some local governments to report their OPEB liabilities on their financial statements as obligations accrued during an employee’s entire period of service.

In 2015, GASB is finalizing additional accounting and financial reporting requirements, which will standardize how local governments report their OPEB liabilities.

DiNapoli notes that governments with no plan to deal with their large OPEB liabilities could see their bond ratings suffer and borrowing costs increase down the road.

Information concerning the proposed legislation is posted on the Internet at:

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