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August 19, 2013

School district must offer its Medicare-eligible retirees the same health insurance benefits the district offers to its active employees

School district must offer its Medicare-eligible retirees the same health insurance benefits the district offers to its active employees
Anderson v Niagara Falls City Sch. Dist., 2013 NY Slip Op 23274, Supreme Court, Niagara County, State Supreme Court Justice Ralph A. Boniello, III

Medicare-eligible retirees of the Niagara Falls City School District [Plaintiffs] sued the school district alleging that the School District had diminished their health insurance benefits by placing them in the "Blue Cross/Blue Shield Forever Blue Medicare PPO 799 Plan" (Forever Blue Plan) without making a similar change in the health insurance plan in which the school district's active employees participated.

This, contended Plaintiffs, constituted a unilateral diminution of their benefits – i.e., additional or higher co-payment costs and medication costs -- as the result of the School District requiring that its Medicare-eligible retirees switch from the “Traditional Blue Plan” to the “Forever Blue Plan.”* In contrast, there was no corresponding diminution in the health insurance benefits provided the active employees. Indeed, said the court, it is undisputed that at the same time Plaintiffs were placed in Forever Blue, the active employees employed by the School District were placed in the NY-44 Health Benefits Trust Plan and as a result the active employees were provided with an increase or improvement of their overall health insurance benefits.

Plaintiffs alleged that this change violated the School District’s obligations under Chapter 504, Part B, §14 of the Laws of 2009 [The Moratorium provision]:

§14 addressed health insurance benefits available to retired employees of school districts and certain boards and, in pertinent part, provides that “a school district … shall be prohibited from diminishing the health insurance benefits provided to retirees and their dependents or the contributions such … district makes for such health insurance coverage … unless a corresponding diminution of benefits or contributions is effected from the present level during this period by such district or board [for] the corresponding group of active employees ….

Among the differences noted by Justice Boniello: the Traditional Blue Plan did not require co-payments for nearly all medical services that took place in-network while the Forever Blue Plan requires co-payments for medical services that occur, both in and out-of-network, and required significantly higher co-payments for prescription medications.

While the School District claimed that it had “offset the additional out of pocket expenses” incurred by the Plaintiffs resulting from their enrollment in Forever Blue by creating a medical reimbursement account for each Medicare-eligible [retiree]," this account was capped at $600.00. Justice Boniello found that “while in some cases the $600.00 may be sufficient, it is entirely possible, and indeed probable, that in most cases it will not be enough.”

Justice Boniello concluded that the School District’s actions violated the mandates set out in Chapter 504, Part B, §14 of the Laws of 2009 and that the School District’s actions were arbitrary, capricious and unlawful.

Justice Boniello then directed the School District[1] to pay each of the Petitioners the amounts, together with interest, "that each has incurred and/or will incur" by reason of the School District’s action to the date of its compliance with the Moratorium provision; and further ordered the school district [2] “to cover the costs and/or provide health insurance coverage that will place the Petitioners in the same position that they would have been in but for the actions of the [School District].”

* A number of school districts, rather then unilaterally imposing such a change upon its Medicare-eligible retirees, have offered its Medicare-eligible retirees the option of either [1] remaining in the district's health insurance plan available to its active employees or [2] electing to switch to different health insurance plan.

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2013/2013_23274.htm
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The Moreland Commission recently established by Governor Cuomo to investigate corruption in the public service issues its first subpoenas


The Moreland Commission recently established by Governor Cuomo to investigate corruption in the public service issues its first subpoenas

The editorial team of the NYMUNIBLOG, published by the Harris Beach law firm as a public service, has posted a new item, "Moreland Commission Issues First Subpoenas." The post reports that the Moreland Commission recently appointed by Governor Cuomo to investigate corruption in the public service has issued its “first wave of subpoenas” and that more subpoenas are expected to be issued in the near future. The Commission has scheduled initial public hearings to be held in September. 

The Moreland Act, now §6 of Executive Law, was passed by the New York State Legislature and signed into law in 1907. The Act authorizes the governor, in person or through one or more persons appointed by the governor, to examine the management and affairs of any department, board, bureau or commission of the State. Commission investigators have the power to interview witnesses, administer oaths, hold hearings, and seize any material deemed relevant to the Commission's investigation.

The Commission is expected to releasing an interim report by the end of 2013 and its final report in mid-2014. 

Additional information on the scope of investigations undertaken by a Moreland Commission is posted on the Harris Beach Legal Alert website at  “Insights into the history and intricacies of a Moreland Commission investigation.”
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August 18, 2013

Reports and audits issued by the New York State Comptroller


Reports and audits issued by the New York State Comptroller during the week ending August 19, 2013. [Click on text highlighted in bold to access the full report.] 

State Recovers $46 Million in Medicaid Payments Following DiNapoli Audit

New York state was able to recover $46 million in overpayments to nursing homes after an audit by State Comptroller Thomas P. DiNapoli found the Department of Health’s computer system failed to deduct payments some nursing home residents are required to pay for their care, according to a follow–up reportissued August 17, 2013 by DiNapoli. The new report, however, notes that deficiencies in the computer system still exist.


Contractor Charged in Federal Court for Defrauding NYS Health Department of Over $700,000

State Comptroller Thomas P. DiNapoli and United States Attorney for the Southern District of New York Preet Bharara Wednesday announced chargesagainst JOSEPH L. JUNKOVIC for allegedly engaging in a scheme to defraud the New York State Department of Health (NYSDOH) out of more than $700,000 dedicated to providing cancer screening services to low–income New Yorkers. JUNKOVIC allegedly used a not–for–profit corporation that he controlled, Cancer Service Network, Inc. to obtain more than $25 million in federal and state funding to administer cancer screening services, and then billed the NYSDOH for thousands of hours that he did not in fact work. He was arrested at his Bronx home Wednesday morning and presented in Manhattan federal court before U.S. Magistrate Judge Ronald L. Ellis.


DiNapoli: State Fiscal Picture Stable

Tax collections were $18 million below updated projections during July, but receipts since the start of the fiscal year were 13.3 percent higher than last year because of strong personal income tax (PIT) receipts in April, according to the July cash report released Friday by New York State Comptroller Thomas P. DiNapoli. July tax collections were 5.2 percent higher than last year, largely from an additional collection day for PIT withholding this month.


DiNapoli: New Medicaid Reimbursement Method Leads to $31 Million in Overpayments

The state Department of Health made as much as $31 million in excessive Medicaid payments for patients who died within 24 hours of being admitted to a hospital after a new method of calculating hospital payments went into effect, according to an auditreleased August 16, 2013 by New York State Comptroller Thomas P. DiNapoli.


DiNapoli: Long Island Pharmacy Swindled State Out Of $235,000

A Long Island pharmacy improperly collected at least $235,000 from Medicaid and the New York State Health Insurance Program over a four–year period, primarily through payments for phony prescriptions that were never delivered to patients, according to audits released Tuesday by New York State Comptroller Thomas P. DiNapoli.


Audit Finds New York City Property Owners Underreported $20 Million in Billboard Income

Hundreds of New York City property owners failed to report an estimated $20 million of taxable income from billboards according to an auditreleased Thursday by New York State Comptroller Thomas P. DiNapoli which was coordinated with New York City Comptroller John C. Liu. Auditors found the New York City Department of Finance failed to follow up on whether property owners were reporting income and did not impose penalties for late or inaccurate information.


NYS Common Retirement Fund Announces First Quarter Results

The New York State Common Retirement Fund’s (Fund) overall rate of return for the first quarter ending June 30, 2013, was 0.29 percent, according to New York State Comptroller Thomas P. DiNapoli. The Fund’s estimated value at the end of the first quarter of its fiscal year was $158.7 billion.









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August 17, 2013

Audit reports released by State Comptroller DiNapoli on August 16, 2013

Audit reports released by State Comptroller DiNapoli on August 16, 2013

On August 16, 2013, New York State Comptroller Thomas P. DiNapoli announced that the following audits were issued. . [Click on text highlighted in bold to access the full report.] 

Department of Agriculture and Markets, Uncollected Penalties (2012-S-69)
Auditors found outstanding accounts routinely have no collection activity for two years or more and are often eventually deemed uncollectible. Between April 2007 and October 2012, more than 6,000 penalized establishments went out of business resulting in the withdrawal and write off of more than $3.5 million of accounts receivable. Critical but incompatible duties associated with collection are all assigned to one employee. An absence of management oversight has increased the risk that errors, omissions and even irregularities can occur and not be detected.


Department of Motor Vehicles, Oversight and Collection of Snowmobile Registration Fees (2011-S-54)
DMV practices have allowed snowmobile registration discounts to registrants who are ineligible for them, resulting in less revenue to the trail fund for trail services. As a result, 31 of the 50 discounted registrations (62 percent) auditors sampled were for registrants for whom neither DMV nor the New York State Snowmobile Association could confirm eligibility. Given the weaknesses identified, auditors estimate lost revenues to the trail fund may be significant.


Metropolitan Transportation Authority, Selected Aspects of Bus Fleet Maintenance Report (2013-F-8)
An initial audit report in 2010 examined whether the MTA has standards and procedures for the maintenance of its bus fleet, performs bus maintenance in compliance with these standards and procedures, and has a comprehensive maintenance plan for its bus fleet. Auditors found that a number of improvements were needed. In a follow-up report, auditors found the MTA made significant progress in correcting the problems identified.

The MTA has implemented four recommendations and partially implemented three recommendations.

Also, as part of a statewide initiative to determine whether the use of travel money by selected government employees was appropriate, auditors looked at travel expenses for the highest-cost travelers in the state for the following state entities:

State University of New York System Administration Office, Selected Employee Travel Expenses (2012-S-100)
Auditors selected to audit one State University of New York System Administration Office employee whose expenses ranked among the highest in the state in the area of lodging. In total, they examined $188,074 in travel costs associated with this employee. Most of the expenses examined were appropriate. However, the employee selected for audit had charges totaling $5,021 that were either for non-reimbursable expenses ($200 hotel room smoking charge) or lacked adequate assurance that the charges were for the most reasonable and economical method of travel ($4,821 in car service charges).


State University of New York College at Buffalo, Selected Employee Travel Expenses (2012-S-136)
Auditors were only able to examine two years and nine months of the three years of travel expenditures totaling $127,095 because the college was not required to and did not maintain records prior to July 1, 2008. The travel expenses for the one employee selected for audit were documented and adhered to state travel rules and regulations. This employee was an athletic coach who was responsible for team travel expenses. This coach also incurred expenses for recruiting trips.


State University of New York at Stony Brook, Selected Employee Travel Expenses (2012-S-102)

Auditors examined the travel costs of eight university employees whose expenses exceeded $100,000 or had outliers in the area of train fare. In total, auditors examined $1,313,845 in travel costs associated with these eight employees. Most of the expenses auditors examined were appropriate. However, two employees had charges totaling $2,529 that were either not for legitimate business purposes or lacked adequate assurance the charge was solely for legitimate business purposes.

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August 16, 2013

Hearsay evidence coupled with nonhearsay evidence held to constitute substantial evidence sufficient to support the appointing authority’s disciplinary decision


Hearsay evidence coupled with nonhearsay evidence held to constitute substantial evidence sufficient to support the appointing authority’s disciplinary decision
2013 NY Slip Op 05630, Appellate Division, Second Department

The appointing authority terminated the employee [Petitioner] following a Civil Service Law §75 disciplinary hearing. Petitioner was found guilty of “misconduct and/or incompetence” and was terminated from her position. Petitioner appealed.

The Appellate confirmed the appointing authority’s determination, explaining that the review of administrative determinations in employee disciplinary cases made after a hearing pursuant to Civil Service Law §75 is limited to a consideration of whether the appointing authority's determination was supported by substantial evidence.

Although much of the evidence against Petitioner offered by the employer was hearsay, the Appellate Division said that this hearsay evidence, in conjunction with the nonhearsay evidence presented at the hearing, constituted substantial evidence sufficient to support the determination that Petitioner was guilty of the charges brought against her.

As to the penalty imposed, termination, the court said that the penalty was “not so disproportionate to the offense committed as to be shocking to one's sense of fairness,” citing Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222.

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2013/2013_05630.htm
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Subsequent court and administrative rulings, or changes to laws, rules and regulations may have modified or clarified or vacated or reversed the information and, or, decisions summarized in NYPPL. For example, New York State Department of Civil Service's Advisory Memorandum 24-08 reflects changes required as the result of certain amendments to §72 of the New York State Civil Service Law to take effect January 1, 2025 [See Chapter 306 of the Laws of 2024]. Advisory Memorandum 24-08 in PDF format is posted on the Internet at https://www.cs.ny.gov/ssd/pdf/AM24-08Combined.pdf. Accordingly, the information and case summaries should be Shepardized® or otherwise checked to make certain that the most recent information is being considered by the reader.
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NYPPL Blogger Harvey Randall served as Principal Attorney, New York State Department of Civil Service; Director of Personnel, SUNY Central Administration; Director of Research, Governor’s Office of Employee Relations; and Staff Judge Advocate General, New York Guard. Consistent with the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations, the material posted to this blog is presented with the understanding that neither the publisher nor NYPPL and, or, its staff and contributors are providing legal advice to the reader and in the event legal or other expert assistance is needed, the reader is urged to seek such advice from a knowledgeable professional.
New York Public Personnel Law. Email: publications@nycap.rr.com