A school board member who acts on the advice of counsel will not be found to have engaged in a willful violation or neglect of duty

A school board member who acts on the advice of counsel will not be found to have engaged in a willful violation or neglect of duty

Application for the removal of certain school officials, Decisions of the Commissioner of Education, Decision No. 17,307

Monique McCray, Doris Dodson and Kelly Valentin [Petitioners] submitted an appeal to the Commissioner of Education seeking for the removal of certain  members of the Board of Education of the Central Islip Union Free School District, the removal of Dr. Craig Carr as Superintendent [collectively Respondents] involving was school constructions project substantially completed by May 2004.

At the result of Central Islip's failure to timely file final cost reports concerning the construction projects to the State Education Department [SED], SED, except for one project, discontinued the apportioned payments and sought to recoup the state aid apportionments in the amount $13,619,929 in "overpayments" over the course of three years by annual deductions from Central Islip's general State aid payments.

Central Islip then initiated an Article 78 in Supreme Court, contending that it was "entitled" to the overpayment claimed by SED. Supreme Court granted Central Islip's request for a temporary restraining order, which resulted in a payment from SED to Central Islip in the amount of approximately $7.5 million during the 2011-2012 school year. Governor Andrew Cuomo, however, had then signed Chapter 57 of the Laws of 2012 excusing "the actions and omissions of any school district which failed to file timely final cost reports for otherwise eligible school construction projects so long as the reports were filed by December 31, 2012.” If the school district filed by this deadline, Chapter 57 required SED to pay apportioned aid to the district in full except for a late filing penalty.[1] 

In March 2014, the Office of the New York State Comptroller [Comptroller] issued a report of examination entitled “Central Islip Union Free School District Financial Management” which covered the period from July 1, 2012 to June 30, 2013. The Comptroller concluded that district officials had “underestimated revenues and overestimated expenditures in the School Board-adopted budgets for fiscal years 2008-09 through 2012-13 ....”  The Comptroller also noted that, after Central Islip learned of the potential $13.6 million liability to SED in February 2010, “the entire amount needed was accumulated in unexpended surplus funds by the end of the 2010-11 fiscal year, due to the operating surplus incurred that year.”  Although district officials had “hoped that funds for this contingent liability could be placed in a reserve and excluded when calculating the statutory limit,” the Comptroller opined that “there is no statutory authority to establish a reserve for this liability.”

Petitioners in this appeal to the Commissioner contended that the Respondents willfully violated the Real Property Tax Law [RPTL] §1318 by retaining funds greater than four percent of the next fiscal year’s budget for the 2010-2011, 2011-2012 and 2012-2013 fiscal years and that during this period although the community was experiencing economic decline and high home foreclosure rates, district officials increased the tax levy, generating operating surpluses in excess of $25 million from 2008-2009 through 2012-2013.

The Petitioners also argued that Respondents had "a responsibility ... to bring information to the community about matters that affect their legal obligation to pay taxes” and “were obligated to be truthful and ethical and not jeopardize the community’s trust.” 

McCray and Dodson were alleged to have “raised questions about the [d]istrict’s practices of deliberately creating excess funds by under estimating revenue and over estimating expenditures” at an April 8, 2013 board meeting, and Respondents “acknowledge[d]” that there were “no internal controls to measure whether budget expenditures are efficient and increases are warranted.”  Petitioners request that Respondents be removed from their respective offices.

The Commissioner first address what she characterized as a "preliminary matter," Respondents claim that she would be "unable to issue an impartial decision in this matter because ... the application concerns an ongoing dispute between SED and respondent board."

The Commissioner, noting that Education Law §306 provides for an application to the Commissioner of Education when a petitioner seeks the removal of a board member or school officer, said that although "recusal may be necessary in an adjudicatory proceeding before the Commissioner under certain circumstances," she found that no such circumstances existed in this case.  In particular, the Commissioner said that she did not find that the lawsuit, which has concluded, "compromises [her] impartiality or otherwise requires [her] recusal in this case.

After addressing a number of procedural issues, the Commissioner addressed the Petitioners' appeal and found that [a]lthough the application must be denied as untimely, it would also be denied on the merits."

The Commissioner explained that RPTL §1318(1) provides that at the conclusion of each fiscal year, a board of education must apply any unexpended surplus funds to reduce its tax levy for the upcoming school year.  Surplus funds are defined as “any operating funds in excess of four percent of the current school year budget, and shall not include funds properly retained under other sections of law.” The Commissioner then observed that it has been "repeatedly held that, at the end of each school year, all unexpended operating funds in excess of the statutorily permitted four percent of the amount of the budget for the upcoming school year must be applied to reduce the tax levy."

As to Petitioners' seeking the removal of a member of the board of education or a school officer, Education Law §306 so permits "when it is proven to the satisfaction of the Commissioner that the board member or school officer has engaged in a willful violation or neglect of duty under the Education Law or has willfully disobeyed a decision, order, rule or regulation of the Board of Regents or Commissioner of Education." Further, said the Commissioner, to be considered willful, "the board member or officer’s actions must have been intentional and with a wrongful purpose."

Observing that in an appeal to the Commissioner, the petitioner has the burden of demonstrating a clear legal right to the relief requested and the burden of establishing the facts upon which petitioner seeks relief, the Commissioner decided that while Petitioners in this appeal have alleged and proved violations of the RPTL, which Respondents have in fact admitted, "the actions of which [P]etitioners complain do not rise to the level of a willful violation or neglect of duty under the Education Law."

In the words of the Commissioner, "[P]etitioners have produced no evidence that any [R]espondent acted with a wrongful purpose" nor have Petitioners contested Respondents' contention that "that they took the actions which resulted in the accumulation of unexpended surplus funds during the disputed timeframe after receiving the advice of counsel."

Citing a number of Decisions of the Commissioner of Education, including Application of Goldin, 39 Ed Dept Rep 14, Decision No. 14,158, the Commissioner opined that "It is well-settled that a board member who acts on the advice of counsel will not be found to have engaged in a willful violation or neglect of duty that would justify removal under Education Law §306" and denied the Petitioners' application.

Addressing one final administrative matter, the Commissioner granted the Respondents'  have request for Certificates of Good Faith pursuant to Education Law §3811(1) thereby authorizing the School Board to indemnify them for legal fees and expenses incurred in defending a proceeding arising out of the exercise of his or her powers or performance of duties as a board member or other title listed in §3811(1).  

As it is appropriate to issue such certification unless it is established on the record that the requesting respondent acted in bad faith, the Commissioner concluded that as there has been no finding that any respondent acted in bad faith, she so certified "solely for the purpose of Education Law §3811(1) that ... Philips, Devine, Softy and Carbajal are entitled to receive the requested certificate [and] to the extent such a certificate is necessary, that [R]respondent Carr, who was the superintendent at the time of the events giving rise to this application, is also entitled to receive the requested certificate."

The decision is posted on the Internet at:

http://www.counsel.nysed.gov/Decisions/volume57/d17307

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[1] Following passage of this legislation, Supreme Court dismissed the board’s lawsuit as moot on January 30, 2013, which was affirmed by the Appellate Division on October 30, 2014 (see Bd. of Educ. of Cent. Islip Union Free Sch. Dist. v. Steiner, 121 AD3d 1473).

Imposing sanctions based on frivolous litigation challenging the termination of an individual's employment

Imposing sanctions based on frivolous litigation challenging the termination of an individual's employment

Jiggetts v New York City Human Resources Admin., 2017 NY Slip Op 09236, Appellate Division, First Department

A  per diem employee, Kyle Jiggetts, was terminated from his position with the New York City Department of Homeless Services [DHS] 1994.

Jiggertts challenged his termination and an arbitrator concluded that, as a per diememployee, he could not challenge the termination of his employment under the disciplinary review procedures set forth in the controlling collective bargaining agreement.

Jiggetts, however, "continued to pursue lawsuits long after their lack of any legal basis was made apparent to him" and ultimately Supreme Court granted DHS's motion for sanctions. Jiggetts appealed.

The Appellate Division opined that given Jiggetts history of frivolous litigation, Supreme Court had providently exercised its discretion in imposing sanctions, which consisted of:

1. Ordering Jiggetts to pay $10,000;

2. Enjoining Jiggetts from commencing any further actions or proceedings arising out of his termination of employment from DHS without prior leave of the court.

The Appellate Division further explained that "[t]o the extent Jiggetts' remaining claims of discrimination and retaliation are not barred by res judicataprinciples based on prior federal and state court rulings rejecting his challenges to HRA's termination of his employment in 1994, they are barred by the applicable statutes of limitations, as the instant petition, filed in 2015, was commenced more than three years after petitioner was terminated in 1994."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_09236.htm

The unauthorized removal of inoperative medical equipment may not constitute misconduct

The unauthorized removal of inoperative medical equipment may not constitute misconduct

OATH Index No. 2286/17

A respiratory therapist [RT] was charged with removing a respiratory device from a patient, failing to notify a doctor or clinical team that respiratory device had been removed, and failing to respond when summoned to report to the emergency department to provide respiratory care for a trauma patient.

OATH Administrative Law Judge Astrid B. Gloade credited proof showing the patient broke the device before RT had removed it and recommended dismissal of the charge related to RT removal of the device from the patient. In effect, Judge Gloade found that an unauthorized removal of a patient’s inoperative respiratory machine did not constitute misconduct on the part of RT under the circumstances.

In contrast, the ALJ found that RT's failure to notify the clinical team that of the removal the nonfunctioning device from the patient and RT's failure to respond when summoned by the emergency department constituted misconduct for which RT could be sanctioned in an administrative disciplinary action.

Accordingly, Judge Gloade, recommended that RT be suspended for sixty-days without pay.

The decision is posted on the Internet at:

http://archive.citylaw.org/wp-content/uploads/sites/17/oath/17_cases/17-2286.pdf

Applying for reimbursement of reasonable counsel fees and litigation expenses associated with being a named respondent in a 42 USC §1983 Civil Rights action pursuant to Public Officers Law §17

Applying for reimbursement of reasonable counsel fees and litigation expenses associated with being a named respondent in a 42 USC §1983 Civil Rights action pursuant to Public Officers Law §17

Rademacher v Schneiderman, 2017 NY Slip Op 08416, Appellate Division, Third Department; decided with Swack v Schneiderman, Appellate Division, Third Department; 2017 NY Slip Op 08421*

In March 2012 an inmate at Attica Correctional Facility, George Williams, brought a 42 USC §1983 action alleging that Matthew Rademacher, a correction officer, and certain other correction officers, violated his civil rights by physically attacking him without justification and the filed false reports and statements that resulted in disciplinary sanctions against him. Williams contended that all the correction officers involved were acting within the scope of their employment at the time.

Rademacher requested, and the respondent in this action, Eric T. Schneiderman, as Attorney General of the State of New York [Law Department], said that the State, pursuant to Public Officers Law §17, would reimburse Rademacher for the reasonable counsel fees and litigation expenses associated with his defense in Williams' 42 USC §1983 action.

In January 2013, Rademacher and two of the other correction officers were indicted on charges of gang assault in the first degree, tampering with physical evidence and ]official misconduct. Ultimately Rademacher, in full satisfaction of the indictment, pleaded guilty to the charge of official misconduct. Pursuant to the plea agreement, Rademacher was sentenced to "a one-year conditional discharge" and he resigned from his position as a correction officer.

The Williams Civil Rights action pursuant to 42 USC §1983, however, had been stayed during the pendency of the criminal action and in May 2015, the Law Department advised Rademacher that in consideration of his guilty plea, the State no longer had a duty to pay for his legal representation in the Williams action pursuant to Public Officers Law §17. 

Rademacher initiated a CPLR Article 78 proceeding in Supreme Court seeking, among other things, an order compelling the Law Department to rescind its determination and pay for his legal defense in the Williams action. Supreme Court granted Rademacher's application and the Law Department appealed.

The Appellate Division initiated its analysis of the case by stating that there was no  question that the State initially had a duty to defend Rademacher in the Williams action §1983 complaint alleged that, while acting within the scope of his employment as a correction officer, [Rademacher] "caused Williams to suffer physical, emotional and psychological injuries by physically attacking him, intentionally and without justification, and thereafter authoring or engineering written statements and reports falsely accusing him of various crimes, offenses and rules violations."

The Law Department, however, argued that the State's duty to defend Rademacher ceased once he pleaded guilty to official misconduct because "the guilty plea established, as a matter of law, that the allegations underlying the civil complaint arose outside the scope of [Rademacher's] employment and were the result of intentional misconduct."

The Appellate Division disagreed, explaining that:

1. "As is the case in the private insurance realm, the state's determination to disclaim financial responsibility for an employee's defense is rational only if it can be determined, as a matter of law, 'that there is no possible factual or legal basis on which [the State] may be obligated to indemnify the employee'";

2. Pursuant to Public Officers Law §17 (3) (a), the State has an obligation to indemnify its employees for any judgment or settlement obtained against them in state or federal court, so long as "the act or omission from which [the] judgment or settlement arose occurred while the employee was acting within the scope of his [or her] public employment or duties" and "the injury or damage [did not] result[] from intentional wrongdoing on the part of the employee." In other words, said the court, the State will not have a duty to indemnify an employee if the act or omission giving rise to the civil judgment or settlement occurred outside the scope of his or her employment or was the product of intentional wrongdoing; and

3. Neither Rademacher's allocution** of his actions in his plea nor the elements of official misconduct preclusively established that the acts alleged in the 42 USC 1983 complaint occurred while Rademacher was acting outside the scope of his employment or that the injuries or damages allegedly sustained by Williams were the result of Rademacher's intentional wrongdoing.

The Appellate Division said that Rademacher, "[i]n allocuting to this crime," did little more than recite the elements of official misconduct, adding only that "he committed the unauthorized act on August 9, 2011 in Wyoming County while employed by the Department of Corrections and Community Supervision."

However, said the court, assuming, as the Law Department contended, that the commission of an unauthorized act for purposes of an official misconduct conviction falls outside the scope of employment and constitutes intentional wrongdoing, Rademacher's plea allocution did not particularize the unauthorized act that he committed or otherwise include admissions to any of the conduct alleged in the civil complaint in the Williams action.

Accordingly, the Appellate Division held that it could not conclude, as a matter of law, "that there is no possible factual or legal basis on which the state may eventually be obligated to indemnify [Rademacher]." This, said the court, is because the state must defend the entire action "[i]f any of the claims against [its employee] arguably arise from covered events."

N.B. In the event a public officer or employee in a defendant in a criminal action, §19.2.(a) of the Public Officers Law provides, in pertinent part, that "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 [or her] public employment or duties upon his [or her] acquittal or upon the dismissal of the criminal charges against him [or her] 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 [or her] public employment or duties unless such appearance occurs in the normal course of the public employment or duties of such employee.

It should also be noted that although not every employee is a public officer, all public officers are public employees.

* With the exception of the name of the Petitioner in Swack v Schneiderman, the facts and procedural history in the Swack v SchneidermanCPLR Article 78 proceeding are indistinguishable from those in Rademacher v Schneiderman.

** An allocution is a formal statement made to the court by the defendant who has been found guilty prior to being sentenced. An accused who had pleaded guilty to a criminal  charge or who had pleaded nolo contentere is deemed to "having been found guilty" of that criminal charge. However, although  a plea of nolo contendere has the same immediate effect as a guilty plea, it cannot be used against the individual in another cause of action.

TheRademacher decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_08416.htm

The Swack decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_08421.htm

Audits and examination reports issued on January 17, 2018 by NYS Comptroller Thomas P. DiNapoli

Audits and examination reports issued on January 17, 2018 by NYS Comptroller Thomas P. DiNapoli 

Click on text highlighted in color to access the full report

State Education Department: Kennedy Child Study Center: Compliance with the Reimbursable Cost Manual (2017-S-7)Kennedy is a New York City-based not-for-profit organization authorized by SED to provide preschool special education services to children with disabilities who are between the ages of three and five years. During the 2013-14 school year, Kennedy served about 345 students. The New York City Department of Education (DoE) refers students to Kennedy and pays for its services using rates established by SED. The DoE is reimbursed by SED for a portion of its payments to Kennedy. For the three fiscal years ended June 30, 2014, auditors identified $612,781 in reported costs that did not comply with state guidelines for reimbursement.
       
Public Service Commission: Pipeline Safety Oversight (Follow-Up) (2017-F-20)
An initial report issued in March 2016 found Department of Public Service (DPS) staff working under the Public Service Commission did not verify the accuracy of the information on employee/contractor qualifications maintained by individual operators. DPS staff rely on this data during field audits. In addition, DPS had not set up a process to identify instances where operators failed to notify them of specific gas-related incidents as required. In a follow-up, auditors determined DPS officials made significant progress in addressing the issues identified in the initial audit.

New York City Department for the Aging: Congregate Meal Services for the Elderly (2016-N-5)
Auditors found that DFTA officials could not demonstrate that they contracted with optimally located senior centers to ensure the maximum number of eligible senior citizens can take advantage of the congregate meals being offered. DFTA did not perform any analysis to determine whether the costs submitted by sponsors were reasonable.  Auditors also reviewed the sponsors’ administrative costs for four randomly selected senior centers and found that one overstated its February 2016 invoice by $12,006, and may have received $120,570 in overpayments during the fiscal year ended June 30, 2016.

New York State Health Insurance Program: United HealthCare (UHC): Improper Payments for Medical Services Designated By Modifier Code 59 (Follow-Up) (2017-F-23)
An initial audit report released in January 2015, identified 13 claims out of a sample of 245 that were overpaid by $39,345 because a distinct or independent service was not provided as required even though the services were designated as such with modifier 59. Based on statistical sampling techniques, auditors estimated that UHC overpaid between $1.6 million and $5.2 million for services that included modifier 59 during the one-year period ending Aug. 31, 2013. In a follow-up, auditors found UHC officials made significant progress in addressing the issues identified in the initial audit. UHC also recovered $29,856 of the $39,345 in identified overpayments.

State University of New York: Compliance With Payment Card Industry (PCI) Standards (Follow-Up) (2017-F-24)
An initial audit report issued in June 2016 found that although SUNY schools were generally knowledgeable about PCI compliance and the need to protect credit card data from unauthorized access, a range of weaknesses were found. In a follow-up, auditors found SUNY schools and the SUNY System Administration have made significant progress in implementing the recommendations identified in the initial report.