A death benefit payable by a New York Employees’ Retirement System is a testamentary substitute that may permit a non-designated spouse to exercise his or her “right of election”

A death benefit payable by a New York Employees’ Retirement System is a testamentary substitute that may permit a non-designated spouse to exercise his or her “right of election”

Gopaul v New York City Employees' Retirement Sys., 2014 NY Slip Op 08020, Appellate Division, Second Department

Shakuntala Devi Tika Gopaul, the widow of a member of the New York City Employees' Retirement System (NYCERS), sued NYCERS after it refused to accept her late husband's fully completed and notarized designation of beneficiary form naming her as his sole beneficiary.

Gopaul filed her petition in Supreme Court seeking an order to require NYCERS to accept, as effective, a designation of beneficiary form naming her as the sole beneficiary of her late husband's death benefit rather than to her late husband's sons, who were previously designated as his beneficiaries.

The Appellate Division noted that this proceeding could potentially involve the administration of a decedent's estate because the death benefit payable by NYCTRS is a testamentary substitute against which the Gopaul could exercise a right of election even if it was determined that she was not the designated beneficiary.

As the Surrogate's Court declined to exercise jurisdiction over this proceeding before it was commenced in the Supreme Court, the Appellate Division said that the Supreme Court “providently exercised its discretion in denying that branch of NYCERS' motion s pursuant to CPLR §325(e) to remove this proceeding to the Surrogate's Court.”

The Appellate Division also ruled that Supreme Court properly denied NYCERS' alternative motion seeking to dismiss the Gopaul’s petition as time-barred. In this proceeding, which was in the nature of mandamus to compel NYCERS to perform a ministerial act, the Appellate Division said that the four-month statute of limitations begins to run "after the NYCERS's refusal, upon the demand of  [Gopaul] . . . to perform its duty."

As the filing of a CPLR Article 78 petition can itself be construed as a demand, the Appellate Division ruled that as Gopaul made her demand that NYCERS perform its duty to accept her late husband's fully completed and notarized designation of beneficiary form by filing the petition in this proceeding in February 2012, the petition is not time-barred.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2014/2014_08020.htm
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Providing for the defense and indemnification of school officials pursuant to Public Officers Law §18(3)(a) or Education Law §381

Providing for the defense and indemnification of school officials pursuant to Public Officers Law §18(3)(a) or Education Law §3811

Appeal of Betty Carmand and Steven White, Decisions of the Commissioner of Education, Decision #16,689

In this appeal to the Commissioner of Education, Betty Carmand and Steven White challenged the Board of Education of the East Ramapo Central School District's decision under color of §18 of the Public Officers Law to expend district funds to appoint counsel to defend or otherwise represent current and former board members and district employees in connection with several actions, proceedings and other matters. 

Carmand and White contended that the individual respondents named in their appeal are not entitled to defense and indemnification of legal costs with respect to the relevant Administrative and Federal civil actions in which they were involved because [1] they had engaged in a pattern of willful and intentional misconduct which includes the breach of fiduciary duties, defrauding the district and its residents, and committing “Constitutional torts”; [2] they were not acting within the scope of their employment or duties when the acts or omissions giving rise to the causes of action occurred; and [3] their acts or omissions were made in bad faith and thus such “respondents/defendants are not entitled to legal representation, defense, and indemnification, pursuant to Public Officers Law §18(3)(a) or Education Law §3811.”*

After considering a number of procedural issues, the Commissioner addressed the merits of the appeal, which he sustained in part.

Addressing the Board's contention Public Officers Law §18 controls and that Education Law §3811 is irrelevant to this appeal, the Commissioner explained:

1. Education Law §3811 provides for the defense and indemnification of school board members, officers and employees if they comply with certain procedural steps where the matter arises out of the exercise of their powers or the performance of their duties; and a court or the Commissioner, as the case may be, certifies that the individual appeared to act in good faith with respect to the exercise of his powers or the performance of his duties while

2. Public Officers Law §18(3) provides for defense and indemnification in any civil action or proceeding arising out of any alleged act or omission which occurred or allegedly occurred while acting within the scope of the individual’s employment or duties.

However, Public Officers Law §18[4][b] provides that the duty to indemnify under this statute does not arise where the injury or damage resulted from intentional wrongdoing or recklessness on the part of the employee.

Further Public Officers Law §18(12 provides that, the rights accorded to employees regarding defense and indemnification under the Public Officers Law shall take the place of defense and indemnification provisions provided by another enactment unlessthe public entity provides that the benefits shall supplement and be in addition to protections conferred by another law.

Once adopted by a public entity or board, Public Officers Law §18 normally becomes the exclusive source of an employee’s or board member’s defense and indemnification rights, but not if the governing body elects to retain existing protections under another enactment by providing that the benefits of Public Officers Law §18 would supplement, or be in addition to, the protections conferred by an existing enactment.

In this instance, said the Commissioner, the Board approved a resolution adopting the protections afforded under Public Officers §18 in which it expressly stated that such protections shall be in addition to the indemnification provisions available under Education Law §3811. The Commissioner concluded that Education Law §3811 is the primary source of defense and indemnification in this case and protections under Public Officers Law §18 are secondary

Addressing the challenge to the appointment of counsel in the Federal Action and the Attorney General Investigation, the Commissioner found that the complaint specifically alleges that the Remaining Individual Respondents, as defendants in that action, “were at all times herein acting under color of state law in the course and scope of their duties and functions as officers and agents of the [district] ... although in a manner ultra vires.”

Noting that the district’s insurance carrier disclaimed coverage because the Federal Action alleged certain intentional wrongful conduct, the Commissioner said that he was not bound by the determination of a school district’s insurance carrier that was interpreting the terms of an insurance policy. The Commissioner then held that the complaint in the Federal Action alleges conduct arising out of the performance of the Remaining Individual Respondents’ duties as board members and the initial appointment of counsel for their defense in the Federal Action was appropriate. 

However, said the Commissioner, the ultimate determination whether the conduct charged arises out of the remaining Individual Respondents’ performance of their duties thus entitling them to indemnification of their legal costs must be made within the context of the underlying proceedings.

Similarly, a determination of whether a board member is eligible for indemnification based on lack of good faith cannot be made until a final decision is rendered in the underlying action or proceeding. 

The Commissioner explained that “Until a final decision is rendered, there is no factual record on which to base a finding that the board member is disqualified from receiving indemnification”

Turning to that part of the Board’s resolution that purported to “unconditionally” indemnify the Remaining Individual Respondents in the Administrative Action and the Federal Action, the Commissioner said that neither Public Officers Law §18 nor Education Law §3811 authorizes unconditional indemnification.

Further, the Commissioner said that a Board resolution dated October 2, 2012 broadly provides that “current and former members, officers and employees shall be fully and unconditionally indemnified ...” in the future, without regard to any particular individual, whether the individual’s actions  arose out of the exercise of his or her powers or the performance of his or her duties, were within the scope of his or her public employment or duties, or whether the action was undertaken in good faith or constitutes intentional wrongdoing or recklessness – criteria set forth under Education Law §3811 and Public Officers Law §18. The Commissioner said that “such broad, unconditional action disregards such criteria, is void as against public policy and cannot be permitted.”

The Commissioner also noted that the several defendants/respondents will require “Certificates of Good Faith” to be eligible receive indemnification for their defense and other costs. As that question is still pending in the court actions, the Commissioner aid that “it cannot be decided separately in this appeal.”

As to the Board's appointed counsel prospectively, pursuant to Public Officers Law §18, for the defense and indemnification of any current and former board members and district employees who may be subpoenaed or compelled to testify in the Attorney General Investigation, Carmand and White contend that this was improper because the Attorney General Investigation is not a “civil action or proceeding, state or federal” as contemplated by Public Officers Law §18 (3)(a), the Commissioner agreed. Further, said the Commissioner, “Education Law §3811 also applies wherever a board member, officer or employee defends 'any action or proceeding' (Education Law §3811[1]), a prerequisite not met here.”

With respect to any concerning the reasonableness of the attorneys’ fees incurred by the district the Commissioner said that he did not have jurisdiction to rule on such an issue either under either Education Law §3811 or Public Officers Law §18. Rather, said the Commissioner, such a challenge should be brought in a taxpayer’s action in court. Similarly, noted the Commissioner, Public Officers Law §18(3)(c) expressly provides that any dispute regarding “the amount of litigation expenses or the reasonableness of attorneys’ fees shall be resolved by the court upon motion or by way of a special proceeding.”

As to the issue related to the Open Meetings Law raised by Carmand and White, the Commissioner pointed out that Public Officers Law §107 vests exclusive jurisdiction over complaints alleging violations of the Open Meetings Law" in the Supreme Court of the State of New York, and alleged violations thereof may not be adjudicated in an appeal to the Commissioner."

The Commissioner then sustained the appeal filed by Carmand and White to the extent indicated in his ruling and promulgated the following orders:

IT IS ORDERED that that September 13, 2012 resolution of the Board of Education of the East Ramapo Central School District relating to defense and indemnification of Daniel Schwartz in the Federal Action is annulled insofar as it provides for unconditional indemnification; and

IT IS FURTHER ORDERED that that September 13, 2012 resolution of the Board of Education of the East Ramapo Central School District relating to defense and indemnification of Moses Friedman in the Federal Action is annulled insofar as it provides for unconditional indemnification; and

IT IS FURTHER ORDERED that that September 13, 2012 resolution of the Board of Education of the East Ramapo Central School District relating to defense and indemnification of Yehuda Weissmandl in the Federal Action is annulled insofar as it provides for unconditional indemnification; and

IT IS FURTHER ORDERED that that September 13, 2012 resolution of the Board of Education of the East Ramapo Central School District relating to defense and indemnification of Richard Stone in the Federal Action is annulled insofar as it provides for unconditional indemnification; and

IT IS FURTHER ORDERED that the October 2, 2012 resolution of the Board of Education of the East Ramapo Central School District relating to defense and indemnification of unnamed individuals in an Attorney General Investigation is hereby annulled insofar as it applies to the Remaining Individual Respondents.

* Carmand and White also alleged that one of the respondents, Daniel Schwartz was improperly provided with separate counsel in the Administrative Action.  Other issues raised by Carmand and White in this appeal: [a] appointed counsels’ fees were unreasonable; [b] the board's lack of authority to appoint counsel to “defend” school officials an Attorney General Investigation or to proactively initiate litigation against the Attorney Genera; [c] the propriety of the votes taken at each board meeting appointing counsel and [d] the board's allege violations of the Open Meetings Law. 

                              
The decision is posted on the Internet at:
http://www.counsel.nysed.gov/Decisions/volume54/d16689

Infographic on White Collar Crime

Infographic on White Collar Crime
Gould School of Law, University of Southern California

The University of Southern California's Gould School of Law has posted an “infographic” on the Internet focusing on white collar crime.

The infographic states that “White collar crime is as old as business itself, with the pioneers of the art form resorting to crude measures to bilk others out of their hard earned currency.” USC notes that one of the earliest recorded white collar crimes concerned an importer who, after taking out a loan to acquire goods for sale, planned to fake a shipwreck and make off with the goods and money.

Another such scheme was the genesis of the ruling of the Lord Chief Justice, the 1st Earl of Mansfield [William Murray], in the Zone case [Gregson v Gilbert (1783) 3 Doug. KB 232]. Lord Mansfield's decision contributed to the adoption of the British Slave Trade Act of 1807 [47 Geo 3 Sess 1 c 36 ], which abolished slave trade in the British empire.

USC's infographic is posted on the Internet at: http://onlinellm.usc.edu/white-collar-crime/

The jurisdiction of New York State’s Division of Human Rights is limited to resolving complaints of alleged unlawful discrimination involving an employer, an employment agency, or a labor union

The jurisdiction of New York State’s Division of Human Rights is limited to resolving complaints of alleged unlawful discrimination involving an employer, an employment agency, or a labor union
Malcolm v New York State Dept. of Labor, 2014 NY Slip Op 07852, Appellate Division, Fourth Department

Bernice Malcolm filed a complaint of unlawful discrimination with the New York State Division of Human Rights in which she named the New York State Department of Labor [DOL] as one of a number of respondents.

The New York State’s Division of Human Rights dismissed that part of her complaint that alleged unlawful discrimination on the part of the New York State Department of Labor “for lack of jurisdiction.” Supreme Court sustained the Division’s decision and Malcolm appealed.

The Appellate Division affirmed the lower court’s ruling, holding that Supreme Court’s dismissal with respect to DOL was not arbitrary or capricious. The court explained that DOL was not Malcolm’s employer nor was it an employment agency or a labor organization.*Accordingly, said the court, subdivisions (a), (b) and (c) of §296.1, of the Executive Law were inapplicable with respect to DOL and the State's Division of Human Rights lacked jurisdiction of over the matters alleged in Malcolm’s complaint with respect to that agency.

* §292 of the Executive Law defines the terms “employer,” employment agency and labor organization for the purposes of Article 15, the State’s Human Rights Law.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2014/2014_07852.htm
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Selected reports and information published by New York State's Comptroller Thomas P. DiNapoli on December 3, 2014

Selected reports and information published by New York State's Comptroller Thomas P. DiNapoli on December 3, 2014
Click on text highlighted in color  to access the full report

Department of Health (DOH): Improper Payments Related to the Medicare Buy-In Program (Follow-Up) (2014-F-12)
An initial audit report issued in October 2012 determined that, from March 2006 through February 2011, Medicaid made nearly 260,000 improper payments (totaling about $26.8 million) for people enrolled in the Medicare buy-in program. In a follow-up, auditors found that DOH officials made progress in addressing the problems identified in the initial audit report. However, further actions are still needed as millions of dollars in questionable and improper Medicaid payments continue to be paid for people enrolled in the Medicare buy-in program. 

Department of Health: Medicaid Program – Excessive Medicaid Payments to Federally Qualified Health Centers for Group Therapy Services (2013-S-51)With approval from the federal Centers for Medicare and Medicaid Services, DOH amended the Medicaid State Plan in 2008 to allow Federally Qualified Health Centers (FQHCs) to provide group therapy services, including group therapy provided by clinical social workers, to Medicaid recipients. FQHCs are organizations such as community health centers and public housing centers that provide primary and preventive care to underserved populations. Auditors found that during the audit period, Medicaid overpaid four FQHCs $7.7 million because the FQHCs billed incorrect reimbursement rates on their claims for group therapy services. The FQHCs billed an approximate rate of $200 per person for group therapy, as opposed to the required $35.16 rate per person.
Hudson River-Black River Regulating District: Financial Management Practices (2013-S-55)
Auditors found revenue from statutory beneficiaries, hydropower agreements, and permit holders has not been sufficient to cover the district’s annual needs. Since September 2009, the district has had a significant backlog of capital projects because of funding limitations, including one project that had been mandated by the Federal Energy Regulatory Commission in 2007 for public safety reasons. The district has cut spending and taken other steps to balance its annual budgets. However, it could potentially generate more revenue and become more efficient by strengthening its practices over past-due assessments, facility maintenance, equipment inventories, time and attendance, and procurement. 

Office of Parks, Recreation and Historic Preservation (OPRHP): Riverbank State Park Administration of the Concession Contract With Riverbank Restaurant Group (RRG) (2013-S-22)
OPRHP entered into a 10-year contract with RRG to provide food concession services at Riverbank State Park in Manhattan. The anticipated state revenues resulting from this contract were estimated at $160,000 annually. RRG was also contractually required to invest a minimum of $622,000 in capital improvements and concession-related upgrades. Auditors found RRG’s reported monthly sales, and the office’s associated licensing fees, were significantly less than anticipated in the contract – about $11.6 million in sales and $580,000 in licensing fees from 2005 to 2009. Further, RRG did not submit the correct amount of licensing fees on the revenues it did report. At the time of the audit, RRG owed OPRHP $136,459 in licensing fees. OPRHP did not perform a thorough vendor responsibility check on RRG before the contract was awarded, and did not adequately monitor RRG operations on a timely basis.