Final order

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

The decision is posted on the Internet at:

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

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

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

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

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

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

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

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

STATE COMPTROLLER DiNAPOLI RELEASES ANALYSIS OF EXECUTIVE BUDGET

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

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

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

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

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

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

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

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

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

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

The Comptroller’s report also finds:

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

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

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

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

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

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

For the full Report click on:

State Fiscal Year 2020-21 Executive Budget Analysis

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