Selected reports and information published by New York State's Comptroller Thomas P. DiNapoli during the week ending June 7, 2014

Selected reports and information published by New York State's Comptroller Thomas P. DiNapoli during the week ending  June 7, 2014

Click on text highlighted in color  to access the full report

New York State Comptroller Thomas P. DiNapoli announced the following audits have been issued during the week ending June 7, 2014.:

Department of Corrections and Community Supervision, Corcraft's Textile Procurement Practices (2012-S-22) 

 
Corcraft is a major component within the Department of Corrections and Community Supervision. Corcraft's mission is to employ offenders in real work situations to produce quality goods and services at competitive prices. Current procurement practices allow one person, the purchasing supervisor, to control almost all of the process for the procurement of textiles. The inadequate separation of incompatible duties and lack of compensating controls increases the risk of favoritism in the award process. Auditors found Corcraft officials awarded contracts without testing all of the required specifications and instead used their own discretion in deciding whether and which specifications were tested. As a result, they did not adequately ensure open competition, and there was limited assurance that contracts totaling $32.3 million went to the lowest responsive and responsible vendors. 

Department of Health, Medicaid Program: Medicaid Payments Made Pursuant to Medicare Part C  (2012-S-133)

 
During the audit period, auditors found Medicaid could have saved up to $69 million if it limited payments of Medicare Part C cost-sharing liabilities such that the total Medicare and Medicaid payment for a service did not exceed Medicaid's normal service fee. Other states already use this approach and New York uses this approach to limit payments for certain other Medicare cost-sharing liabilities. In addition, auditors determined Medicaid made $1.6 million in overpayments for Medicare Part C cost-sharing because recipients were not enrolled in Part C. 

Department of Health, Medicaid Program: Medicaid Claims Processing Activity October 1, 2012 Through March 31, 2013 (2012-S-131)

Auditors identified about $13 million in inappropriate or questionable Medicaid payments, including:

$6,329,458 in questionable payments for claims that were not subjected to the appropriate edits and pricing logic due to eMedNY's incorrect designation of the claim type being processed; $2,965,300 in overpayments for claims billed with incorrect information pertaining to recipients' other health insurance coverage; $2,689,352 in inappropriate payments for lab services claims submitted well beyond the required time frame for submission; $488,837 in overpayments for claims for duplicate billings; $222,806 in overpayments for claims for a dialysis drug billed at 10 times the number of units actually provided; and claims with improper payments for physician-administered drugs, hospital services, medical equipment and dental services. 

By the end of the audit fieldwork, auditors recovered about $3.8 million of the overpayments identified. 

Department of Health, Selected Employee Travel Expenses (2012-S-94)

 
Travel expenses totaling $466,301 for 14 of the 17 DOH employees selected for review were appropriate and adhered to state travel rules and regulations. However, for three employees, auditors identified numerous problems with travel practices and related expenses attributed to inadequate oversight. Of the $121,727 in travel expenses examined for the three employees, auditors found problems with costs totaling $14,870. 

NYC Human Resources Administration (HRA) NYS Office of Temporary and Disability Assistance, Benefit Eligibility Assessment Process (2012-S-51)

 
Auditors found that HRA employees apply a comprehensive assessment process when determining a client's eligibility, and that process is in compliance with governing regulations and procedures. However, procedural revisions are necessary to reduce the number of hearings held, and to reduce the number of HRA determinations that are reversed at hearings. 

 
Office of Information Technology Services, Procurement and Contracting Practices (Follow-Up) (2013-F-24)

 
In an initial audit report issued in February 2012, auditors found a culture at the Office of Information Technology Services (ITS), emanating from the highest levels of the agency, that disregarded the New York State Finance Law, the state's procurement guidelines and the agency's own procurement policies. This did not result in the best value for the taxpayers, but instead led to a waste of substantial public resources. Moreover, in several notable instances, transgressions appeared to have been motivated by personal gain and may have violated the ethics standards contained in the New York State Public Officers Law. In a follow up, auditors found ITS officials have made some progress and continue to make progress in addressing the problems identified in the initial audit. Of the eight prior audit recommendations, one was implemented and seven were partially implemented. 

Office of Mental Health, Sky Light Center Inc.: Supported Housing Program (2012-S-37)

 
Auditors identified $125,302 in unsupported or inappropriate personal service expenses charged to the housing program. These charges included unsupported salary allocations and inappropriate overtime payments to management. Auditors also identified $295,321 in unsupported or inappropriate non-personal service expense items, including expenses associated with the unrelated program facilities, payments to a contractor to enhance his personal property and rental payments for unoccupied apartments. Sky Light officials cannot account for over $75,000 in contingency funds that were to be used specifically for client housing emergencies. Additionally, Sky Light officials did not make all required visits to client apartments. Auditors identified several potential safety issues, including the lack of smoke and carbon monoxide detectors. 

Port Authority of New York and New Jersey, Inspecting Highway Bridges and Repairing Defects (2012-S-34)

 
Auditors found the authority conducted the required biennial inspection of its highway bridges, but does not follow New York state requirements for classifying, reporting and repairing bridge defects. Instead it follows its own method, but does not always satisfy state requirements. As a result, it did not perform 47 interim inspections for priority conditions open more than one year. The authority also did not inspect a highway bridge with an immediate safety concern for 332 days while it awaited repairs. Ten of the 17 safety concerns sampled were not repaired for more than two years, including three which were open for five years. 

State University of New York SUNY at Albany, Selected Employee Travel Expenses (2012-S-74)

 
Expenses for nine of the 10 University employees selected for review were appropriate. For a track coach, however, officials did not enforce Office of State Comptroller and university guidelines limiting travel advance amounts and requiring unspent balances to be returned on a timely basis. The track coach routinely overestimated the amount of advance funds needed for athletic events. As a result, at one point he had over $87,000 in outstanding advances. Also, the coach consistently returned unused advance funds more than two months later than required by the university. University officials allowed this coach to pay back his travel advances in installments – similar to the payback of a loan. The track coach may have violated the Public Officers Law by employing his daughter as a volunteer coach and using state funds to pay for her travel with him and the team to local and national track events. 

Tuition Assistance Program, Medgar Evers College (2011-T-4)

 
Medgar Evers was overpaid $3,398,205 over three academic years because school officials incorrectly certified students as eligible for Tuition Assistance Program (TAP) awards. Incorrect certifications include 29 students who received awards but did not meet the requirements for full-time status, 14 students who did not maintain good academic standing, four students whose accounts were not credited with the TAP payment, three students who were not properly matriculated, two students who enrolled in programs not approved by the State Education Department, one student who did not meet the citizenship requirement, and one student for whom auditors found insufficient proof that she satisfied the New York state residency requirement. 

Tuition Assistance Program, Pratt Institute (2013-T-3)

 
Auditors determined that Pratt's certification procedures substantially complied with the governing Law and Regulations during the audit period for the transactions tested. There is low risk that a significant number of students certified for TAP were not eligible for awards. Nonetheless, tests did disclose 26 awards totaling $38,236 that school officials certified in error. After reviewing the errors, Pratt officials decertified one award for $2,450 and sent another student a $50 refund check.

Labor Department needs to improve wage theft investigations

The state Department of Labor (DOL) doesn’t complete many of its wage theft investigations in a timely manner, allowing thousands of cases to remain unresolved for a year or more, according to an audit released June 6, 2014 by State Comptroller Thomas P. DiNapoli.

Wage theft is the illegal holding of wages or denial of benefits to a worker by an employer. Examples include failing to pay overtime, not giving workers their last paycheck after they leave a job or not paying for all the hours the employee worked.

DiNapoli’s auditors found that, as of August 26, 2013, DOL had more than 17,000 open cases, an increase of about 150 percent from the 7,000 cases on hand at the start of 2008. The current caseload consists of about 9,300 active investigations and more than 7,800 cases pending payment. Of these, almost 13,000, or 75 percent, were at least one year old from initial claim date.

The increasing backlog stems largely from system and process deficiencies that hinder timely investigations, coupled with a limited number of staff to perform the growing amount of work. As of August 2013, auditors estimate that DOL’s 98 investigators were responsible for an average of 95 active investigations each.  According to the audit, resolving the inefficiencies in DOL’s procedures and its use of resources could significantly improve productivity.

DiNapoli’s auditors also found:
 

1. DOL’s Workforce Protection Management System does not provide management with accurate or useful case management reports;
 

2. Employers may be allowed a payment plan for restitution, but DOL has not established criteria to guide eligibility or payment terms; and
 

3. DOL does not maintain a centralized record of all payment plans in effect, and neither the Division of Labor Standards nor its districts have adequate controls in place to track and monitor employer compliance.

During the audit period the division instituted procedural changes to streamline its work and reduce the backlog.

DiNapoli recommended DOL:

1. Continue efforts to close the oldest wage investigation cases and strive to investigate and resolve newer cases faster;

2. Monitor the newly implemented strategies discussed in this report and continue to pursue additional initiatives to reduce the wage investigation case backlog and complete new wage investigation cases sooner;

3. Correct system flaws and develop capability to create meaningful reports to better manage the current cases and backlog;

4. Establish specific payment plan procedures;

5. Develop criteria for investigators to use to determine if a payment plan should be granted;

6. Ensure that each district office follows the payment plan procedures and keeps similar records; and

7. Develop a centralized payment collection system to effectively separate incompatible duties and to manage all payment plan information and transactions.

“It is imperative that DOL do a better job resolving wage theft cases as workers across New York are often waiting too long for the compensation they rightly deserve,” DiNapoli said. “While wage theft investigations are generally complex and time-intensive, any lags pose a risk that complications, such as lost records, could arise and interfere with an investigation and possible settlement.”

DOL officials responded to the audit’s recommendations and indicated the actions they are taking to address them. For a copy of the report, including DOL’s response, click on http://www.osc.state.ny.us/audits/allaudits/093014/13s38.pdf

Court of Appeals deferred to PERB’s expertise with respect to its holding the employer had engaged in an improper employer practice but ruled its remedy was unreasonable

Court of Appeals deferred to PERB’s expertise with respect to its holding the employer had engaged in an improper employer practice but ruled its remedy was unreasonable

Town of Islip v New York State Pub. Empl. Relations Bd., 2014 NY Slip Op 04043, Court of Appeals

The Town of Islip filed a CPLR Article 78 petition challenging the New York State Public Employment Relations Board's [PERB] ruling that Islip violated Civil Service Law §209-a when it when it unilaterally discontinued the practice of permanently assigning Town-owned vehicles to certain employees. 

The employees in question had been permitted to use these so-called "take home" vehicles to travel from home to work and back — i.e., to commute to work. Section 209-a (1) (d) makes it an improper practice for a public employer to refuse to negotiate in good faith with the bargaining agent for its public employees. Likewise, the Court of Appeals concluded that PERB reasonably applied precedent when making its determination, which determination was supported by substantial evidence.*

PERB’s Administrative Law Judge had held that Islip had violated Civil Service Law §209-a (1) (d) by canceling "take home" vehicle assignments without negotiation -- a clear and unequivocal 20-plus year practice -- and had ordered the Town to:

1. Restore the vehicle assignments for commutation between home and work to those unit members who enjoyed the benefit prior to April 4, 2008.

2. "Make whole unit employees for the extra expenses incurred as a result of the unilateral withdrawal of the vehicle assignment(s), if any, together with interest at the maximum legal rate"; and

3. To sign and post a notice in the workplace to inform employees of the remedies ordered.

PERB ultimately affirmed ALJ's ruling and the remedy ordered.

The Appellate Division held that "substantial evidence supported PERB's determination that the permanent assignment of Town-owned vehicles to the affected employees constituted a past practice as to a term or condition of employment, a mandatory subject of negotiation, which the Public Employees' Fair Employment Act (Civil Service Law Article 14), known as the Taylor Law, barred the Town from unilaterally discontinuing" [see 104 AD3d 778, (2013)].

As to the remedies imposed by PERB the Court of Appeals said that with, deference to its expertise, "a remedy fashioned by PERB for an improper practice should be upheld if reasonable," although "[i]t is for the courts to examine the reasonable application of PERB's remedies." However the Court of Appeals ruled that PERB's remedial order was unreasonable insofar as it requires the Town to restore vehicle assignments to the affected employees.

In this instance the court concluded that PERB's remedial order requires the Town to "[f]orthwith restore the vehicle assignments for commutation between home and work to those unit member who enjoyed the benefit prior to April 4, 2008." However, notes the decision, a PERB injunction was not sought by the employees’ representative to preserve the status quo ante and Islip had sold some or all of the vehicles formerly permanently assigned to blue- and white-collar unit employees, thus forcing Islip to invest “significant taxpayer dollars to replace these vehicles is unduly burdensome under the circumstances, and does not further the goal of reaching a fair negotiated result.” 

Consistent with this view, the Court of Appeals remanded the matter to PERB so that it “may fashion a remedy that grants commensurate, practical relief to the employees subject to the improper practice without requiring the Town to purchase a whole new fleet of vehicles with an uncertain future.”

Judge Pigott dissented, indicating that, in his view, the issue in this appeal was whether a public employer must collectively bargain its way out of a previous policy that is plainly in violation of a duly-enacted local law.

Judge Pigott noted that the relevant Chapter Islip’s Town Code was adopted in December of 1968 and, “apparently, as amended from time to time by the elected Town Board, has functioned without incident ever since.” Section 14-12 of the Town Code provides in its entirety as follows: "No officer or employee shall request or permit the use of Town-owned vehicles, equipment, material or property for personal convenience or profit, except when such services are available to the public generally or are provided as municipal policy for the use of such officer or employee in the conduct of official business" (emphasis supplied in the opinion).

Judge Pigott, concluding that PERB’s determination should be annulled and vacated, said:

1. Essentially, PERB's decision trumps a local law and requires the Town to bargain its way out of an illegal activity;

2. This is contrary to law [as] "Illegal past conduct does not, and should not, evolve into binding terms and conditions of employment”;

3. Were it so, sloppy bookkeeping, lax supervision and perhaps, in some cases, rife favoritism could form the basis of a policy by which PERB could overrule a duly-enacted local law; and

4. The conduct engaged in by the Town and its employees was against the law and PERB's determination could not make it legal.

* The Court of Appeals said that the scope of its review in this case was “limited to whether PERB's determination that Islip had engaged in an improper practice was ‘affected by an error of law’ or was ‘arbitrary and capricious or an abuse of discretion’ (see CPLR 7803 [3]) and PERB is accorded deference in matters falling within its area of expertise" such as in "cases involving the issue of mandatory or prohibited bargaining subjects."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2014/2014_04043.htm

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A disagreement over the penalty assessed by the arbitrator does not constitute a basis for vacating the award

A disagreement over the penalty assessed by the arbitrator does not constitute a basis for vacating the award

2014 NY Slip Op 03627, Appellate Division, First Department

This appeal flows from an arbitration award issued in 2007 that imposed a penalty of six months' unpaid suspension and mandatory counseling on a tenured teacher [Teacher] based on the arbitrator’s finding that Teacher had engaged in inappropriate contact with female students.

Here the New York City Board of Education sought a judgment vacating the award or, in the alternative, modifying the award to impose a penalty terminating Teacher's employment with the New York City School District.

Teacher interposed a motion to dismiss the petition for lack of personal jurisdiction. Teacher’s motion was denied by Supreme Court, which denial was affirmed by the Appellate Division (see 65 AD3d 934).

The Board of Education did not further inquire as to the status of the matter until 2010 when it learned that the assigned Justice had retired. It then asked to have the matter restored to the calendar. A status conference was held in 2011, at which time the Board was directed to retrieve the court file and attempt to reach a settlement with Teacher. No settlement agreement was reached by the parties and ultimately the court issued a sua sponte* order dismissing the proceeding as abandoned in accordance with its earlier order.

The Board next filed a motion, designated as one to “renew and/or reargue,” contending that Supreme Court had "overlooked the entire procedural history of this matter and misapplied the applicable law regarding when a proceeding may be deemed abandoned."

The Board’s motion was dismissed by the Appellate Division as [1] “It is well settled that no appeal lies from an order issued sua sponte; [2] “This Court has repeatedly stated that the proper procedure to be followed to appeal from a sua sponte order is to apply to vacate the order and then appeal from the denial of that motion so that a suitable record may be made and counsel afforded the opportunity to be heard on the issues;” and [3] Alternatively, the aggrieved party may seek permission to appeal.

Here, the Appellate Division noted, nothing in the moving papers identifies the application as one seeking to vacate the Supreme Court's order, nor does it provide the requisite demonstration of the merit of the proceeding.

Significantly the Appellate Division’s decision states that the motion papers do not  indicate that “a disagreement over the penalty assessed by the arbitrator constitutes a basis for vacating the award on a ground specified by statute (see CPLR 7511[b]; [1]) or that there is any ground for modification of the award (see CPLR 7511[c]).”

The bottom line: Noting that the Board had not sought leave to appeal and, given the passage of seven years since the issuance of the arbitration award, the Appellate Division “declined to nostra sponte** grant such relief.”

* The term sua sponteis used to describe the action taken by a court on it’s own motion and not in response to a motion or argument by a party in the matter.

** The term nostra sponte is used to describe an action taken by a panel of judges acting on its own motion and not in response to a motion or argument by a party.
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An alleged ambiguity in the application of a provision in a collective bargaining agreement is to be resolved by the arbitrator

An alleged ambiguity in the application of a provision in a collective bargaining agreement is to be resolved by the arbitrator

New York City Tr. Auth. v Transport Workers Union of Greater N.Y., Local 100, 2014 NY Slip Op 03689, Appellate Division, Second Department

A bus operator [Driver] employed by the New York City Transit Authority for almost 20 years was required to undergo and pass biennial physical examinations which, among other things, required him to have "the ability to recognize the colors of traffic signals and devices showing standard red, green and amber."

An ophthalmic physician examined Driver and determined that Driver "had a history of color-blindness, that Driver identified the color red as black, and that Driver had a "strong red-green color deficit." The physician recommended that Driver undergo a "road test" before it was determined whether he met "the standard required for safe commercial drivers." 

TA decided that Driver should not undergo the road test because it was a non-medical examination that cannot test an individual’s ability to recognize the required colors. Instead it asked the physician to determine whether Driver met the relevant Vehicle and Traffic Law vision requirements.

Driver’s union, the Transport Workers Union of Greater New York, Local 100 (TWU), filed a grievance on behalf of Driver, arguing that the TA's failure to cooperate with the administration of the road test was in violation of the parties' collective bargaining agreement [CBA]. TA denied the grievance and TWU submitted the grievance to binding and final arbitration. The TA then filed a CPLR Article 75 petition seeking a court order permanently staying the arbitration of the grievance. The Supreme Court denied its petition and TA appealed, contending, among other things, that the grievance was not arbitrable.

The Appellate Division affirmed the Supreme Court’s ruling, explaining that in a public sector context, determining whether a grievance is arbitrable requires a court to first determine:

1. Is there is any statutory, constitutional or public policy prohibition against arbitration of the grievance; and

2. If there is no such prohibition against arbitration, then the court must determine "whether the parties in fact agreed to arbitrate the particular dispute by examining their collective bargaining agreement.”

The court held that, in its view, no statute or public policy absolutely prohibited an arbitrator from deciding whether Driver should undergo a road test before it is determined whether he meets the relevant vision requirements for bus drivers. Further, said the Appellate Division, the parties' agreement to arbitrate this dispute is supported by the terms of the CBA.

In the opinion of the Appellate Division, the relevant arbitration provisions of the CBA were broad and there existed a reasonable relationship between the subject matter of the dispute and the general subject matter of the CBA. Accordingly, any TA alleged ambiguity in the CBA as to whether the physician could recommend that Driver undergo a road test "is . . . a matter of contract interpretation for the arbitrator to resolve.”
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An applicant for an accidental or line of duty disability retirement allowance has the burden of establishing that he or she is entitled to such a retirement allowance

An applicant for an accidental or line of duty disability retirement allowance has the burden of establishing that he or she is entitled to such a retirement allowance

The State Comptroller denied a police officer’s application for accidental disability retirement benefits on the ground that he was not permanently incapacitated from the performance of his duties. The Appellate Division sustained the Comptroller’s decision explaining that an applicant for accidental disability retirement benefits bares the burden of establishing that he or she was permanently incapacitated from performing his or her duties as a police officer and in the event there are conflicts in the medical evidence, the Comptroller may credit the opinion of one expert over another, and that determination will not be disturbed when supported by substantial evidence. [Appellate Division, Third Department, 2014 NY Slip Op 02998]

In another case challenging the Comptroller's disapproval of an application for accidental disability retirement benefits submitted by a court officer on the ground that the underlying incident did not constitute an accident within the meaning of the Retirement and Social Security Law, the Appellate Division sustained the Comptroller decision, explaining that substantial evidence supports the determination. In order to qualify for accidental disability retirement benefits, the court officer was obligated to show that his injuries resulted from an accident, i.e., an event that is "a sudden, fortuitous mischance, unexpected, out of the ordinary, and injurious in impact.  To constitute an accident, the event must arise from risks that are not inherent to court officer's regular employment duties. [Appellate Division, Third Department, 2014 NY Slip Op 03003, 2014]

In a third case the Appellate Division sustained the Comptroller’s rejection of a correction officer application for performance of duty disability retirement benefits based upon work-related injuries she suffered in 2010. The Hearing Officer found that the correction officer had not established that the injuries she suffered were the result of an act of an inmate. The court said that the correction officer bore the burden of demonstrating that the incident in which she sustained her injuries was "the natural or proximate result of any act of an inmate," explaining that “based upon [the correction officer’s] testimony and the incident report completed at the time of the incident, there is a rational basis for the conclusion that the incident was not caused by any direct interaction with an inmate.” [Appellate Division, Third Department, 2014 NY Slip Op 03004]

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