State Comptroller Dinapoli releases audits

New York State audits listed below were issued on December 30, 2019.

Department of Agriculture and Markets: Oversight of Industrial Hemp (2018-S-32)

The department’s program has rapidly expanded opportunities for industrial hemp production in the state. However, the department does not always follow established practices when reviewing applications, conducting inspections, and sampling plants. The department inspected only 57 percent of growers in the program and tested plant THC levels for only 58 percent of the growers during 2018. Incomplete records and unreliable data systems further hinder its ability to effectively monitor program requirements.

City University of New York (CUNY): Compliance With Payment Card Industry Standards (2018-S-61)

Auditors found that while CUNY recognizes the importance of compliance with payment card industry standards and is committed to maintaining strong internal controls, it has not provided its colleges with sufficient guidance and direction for addressing and maintaining compliance with data security requirements.

New York City Department of Finance (DOF): Selected Aspects of Parking Violations Operations to Collect Fines and Fees (2017-N-8)

Overall, auditors determined that while DOF identifies parking summonses to be processed, its collection of payments for parking fines needs to be improved. Many parking summonses are dismissed as defective due to errors that occurred when the summonses were issued. Until October 2018, DOF expended minimal effort to collect amounts due for summonses issued to vehicles with diplomatic plates. These amounts due include $15.6 million for summonses issued before Nov. 1, 2002.

Metropolitan Transportation Authority (MTA) - Staten Island Railway (SIR): Operational Training and Medical Assessments of Train Crews (Follow-Up) (2019-F-18)

An audit released in March 2018 found that SIR was not in compliance with the requirements of the induction and refresher training established for its engineers and conductors. In a follow-up, auditors found MTA-SIR officials made progress in addressing the problems identified in the initial audit.

Department of Motor Vehicles (DMV): Allocation, Billing, and Collection of Expenses of Administering the Motor Vehicle Financial Security Act and the Motor Vehicle Safety Responsibility Act (2019-S-5)

In general, DMV is appropriately allocating, billing, and collecting nearly all the expenses related to administering the acts. However, auditors identified areas for improvement.

New York State Health Insurance Program: UnitedHealthcare: Reasonable and Customary Reimbursement Rates for Delayed Claims (2018-S-60)

United's automated claims processing system uses only the two most recent rate periods (i.e., reimbursement rates from the prior 12 months) to process all claims – even claims for services that occurred before those rates took effect. From a sample of 100 claims, auditors calculated a potential cost savings of $214,008 for 84 claims that were paid using a rate period that was not in effect on the date of the service.

New York State Health Insurance Program: Empire BlueCross: Improper Payments for Special Items Billed by Hospitals Within Long Island Health Network (LIHN) (2017-S-43)

Auditors found Empire did not pay for special item claims according to the terms of its contract with LIHN. From a sample of 874 claims, Empire overpaid LIHN hospitals $3,597,688 for 722 special item claims (83 percent of the claims sampled). As of July 23, 2019, Empire had recovered $262,467.

Niagara Frontier Transportation Authority (NFTA): Use of Vendor-Supported Technology (2019-S-40)

NFTA officials have not developed policies and procedures to ensure that its systems are regularly reviewed and kept up to date. Auditors identified unsupported systems used by NFTA on 66 devices.

Homes and Community Renewal: Office of Rent Administration (ORA): Collection of Fines Related to Tenant Complaints (2018-S-58)

Auditors found ORA lacks proper fiscal controls over fines and settlements. There is limited assurance that all monies due the state are received and accounted for because of system, process, and policy weaknesses. ORA does not exercise its full authority to collect outstanding fines more timely. As of April 2019, there were at least $346,000 in outstanding fines. Harassment fines were imposed in only 12 out of the 684 harassment cases (2 percent) filed during the audit scope.

New York City Department of Social Services: Oversight of Security Expenses in Single Adult and Adult Family Homeless Shelters (Follow-Up) (2019-F-31)

An audit issued in May 2018 found that DHS lacks strong internal controls – most notably DHS-specific standard operating procedures. A review of four sampled providers’ security expenditures alone identified nearly $2.2 million in insufficiently documented or questionable security expenses, indicating that significant monitoring gaps exist. In a follow-up, auditors found DHS officials have made progress in addressing the issues identified in the initial report.

Department of Health (DOH): Oversight of Obesity and Diabetes Prevention Programs (Follow-Up) (2019-F-43)

An audit issued in September 2018 identified opportunities for improved oversight, particularly regarding contractor performance, of the state’s obesity and diabetes prevention programs. In a follow-up, auditors found DOH officials have made significant progress in correcting the problems identified in the initial report.

Department of Health: Wadsworth Center Environmental Laboratory Approval Program (ELAP) (2018-S-1)

Auditors identified opportunities to improve documentation of on-site assessments, for which Wadsworth has taken corrective action. However, auditors did not find a significant amount of other non-compliance with ELAP procedures and protocols in the areas reviewed that would cause us to question the sufficiency of Wadsworth’s processes for certifying, monitoring, and enforcing regulations over environmental laboratories.

The "Son of Sam Law" allows crime victims to recover from any funds of a convicted person, including a retiree's pension benefits

A retired New York City police officer [Defendant] was convicted of, among other crimes, murder in the second degree and attempted murder in the second degree and was sentenced to a lengthy prison term.*

Plaintiff in this action had brought a personal injury action against Defendant that ultimately resulted in a judgment in excess of $1 million against Defendant. When Plaintiff's attorney served a restraining notice upon the New York City Police Pension Fund [Fund] to prevent any disbursements by the Fund to Defendant pending Defendant's criminal appeal, the Fund's general counsel advised Plaintiff's attorney that the Fund "was prohibited from honoring" Plaintiff's restraining notice "because Defendant's pension was subject to an anti-assignment provision. Defendant then moved to vacate the restraining notice and to stay the enforcement of the money judgment against him. 

Supreme Court denied Defendant's motion, finding that the so-called Son of Sam Law** specifically permitted crime victims to recover from any funds of a convicted person, including pension funds. Defendant appealed the court's decision.

The Appellate Division rejected Defendant's appeal challenging the Supreme Court's ruling. The court explained that the legislative intent of the Son of Sam Law was to improve the ability of crime victims to obtain "full and just compensation from the person convicted of the crime by allowing crime victims or their representatives to sue the convicted criminals who harmed them when the criminals receive substantial sums of money from virtually any source and protecting those funds while litigation is pending," citing Waldman v State of New York, 163 AD3d 1114,.

Although the Son of Sam Law initially only permitted a crime victim to recover "profits of the crime", in 2001 the Legislature amended the law to allow a crime victim to seek recovery from "funds of a convicted person," which, said the Appellate Division, includes "all funds and property received from any source by a person convicted of a specified crime."***

Defendant had argued that CPLR §5205 exempted his pension from assignment to satisfy Plaintiff's judgment because it provides for the exemption of pension funds from the award of money judgments. 

Citing Matter of New York State Off. of Victim Servs. v Raucci, 106 AD3d 1138, the Appellate Division, said it had found that CPLR 5205 (c) was superseded by the Son of Sam Law. Further, the Appellate Division opined that Defendant's assertions that Retirement and Social Security Law §110 and Administrative Code of the City of New York §13-264 protected his pension from assignment to satisfy plaintiff's money judgment "are similarly without merit due to the broad reach of the Son of Sam Law."

* See People v Guzy, 167 AD3d 1230, lv denied 33 NY3d 948

** Executive Law § 632-a

*** The law, as amended, however, specifically excludes child support and earned income (Executive Law §632-a [1] [c]).

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_00011.htm

* See People v Guzy, 167 AD3d 1230, lv denied 33 NY3d 948

** Executive Law § 632-a

*** The law, as amended, however, specifically excludes child support and earned income (Executive Law §632-a [1] [c]).

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_00011.htm

An Article 78 petitioner is not aggrieved by an administrative determination made following petitioner's default and may not seek to review such a determination

Supreme Court dismissed the Petitioner's CPLR Article 78 action seeking a review of a determination by the Commissioner of Education [Commissioner], alleging that that the penalties imposed by the Commissioner "were excessive and improper.

The Commissioner had affirmed the decision of a hearing officer that Petitioner had operated an English as a second language school without, among other things, [a] being certified; [b] employing at least one private school agent, [c] paying required fees; [d] submitting required licensure and certification paperwork; and [e] recommended certain civil penalties upon, and restitution by, Petitioner. Supreme Court dismissed the action, finding that Petitioner's default precluded review of the order* and Petitioner appealed.

The Appellate Division, affirmed the lower court's ruling, observing that Petitioner had not answered or otherwise contested the Department's charges and thereafter failed to appear at a hearing before the designated Hearing Officer and, as a result of Petitioner's failure to appear, the Hearing Officer deemed the allegations against Petitioner to be admitted and recommended the imposition of fines totaling $398,000.

The court also noted that Petitioner did not deny that it failed to answer or otherwise appear following service upon it of both the notice of charges and the notice of hearing date nor object to the Hearing Officer's report or otherwise seek to vacate its default prior to the Commissioner's issuance of the order imposing the subject fines.

Citing Matter of Matsos Contr. Corp. v New York State Dept. of Labor, 80 AD3d 924 and other court rulings, the Appellate Division observed that it is well settled that "a petitioner is not aggrieved by an administrative determination made on its default and may not seek to review such a determination."

Addressing a procedural matter, the court noted that "the fact that a determination is final for the purpose of its present execution does not mean it is final for judicial review purposes." In such situations the proper procedure for a petitioner seeking judicial review of the merits underlying an administrative default "is to apply to the agency to vacate the default by demonstrating a reasonable excuse for the default and the existence of a meritorious claim and, if unsuccessful, seek[ing] court review of the agency's denial of that application."

Considering this point, the Appellate Division rejected Petitioner's claim that "(1) Education Law §5003 expressly relieves petitioner from having to submit an application seeking to vacate its administrative default before seeking judicial review of the underlying merits or (2) that the absence of a statutory and/or regulatory procedural mechanism for seeking vacatur of an administrative default precludes the agency from otherwise entertaining such an application."

Rather, noted the Appellate Division, during oral argument counsel for [the Commissioner] conceded that the "Commissioner would readily entertain an application" by Petitioner seeking to vacate the subject default. Thus, said the court, as Petitioner has, to date, not filed an application seeking to vacate its administrative default, "we find that its petition was properly dismissed."

* Petitioner had not answered or otherwise contested the Department's charges and thereafter failed to appear at a hearing before the designated Hearing Officer. 

N. B. In contrast, with respect to disciplinary action initiated by an appointing authority charging an employee with misconduct or incompetence pursuant to law or a provision set out in a collective bargaining agreement, the general rule in such situations is that if the employee fails to appear at the disciplinary hearing, the charging party may elect to proceed but must actually hold a “hearing in absentia” and prove its allegations rather then merely impose a penalty on the individual on the theory that the employee’s failure to appear at the hearing as scheduled is, in effect, a concession of guilt.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_00016.htm

Procedural error results in the dismissal of an appeal to the Commissioner of Education

§310 of the Education Law provides for an aggrieved party filing an appeal or petition challenging an act or omission with the Commissioner of Education and the Commissioner is "authorized and required to examine and decide" issues involving, but not limited to, an act or omission at a school district meeting; by a district superintendent and other officers, and official act or decision of any officer, school authorities, or meetings concerning any other matter addressed by the Education Law.

In this appeal, a school superintendent [Petitioner] asked the Commissioner of Education to remove the president and member of the board [President] from the School Board. The Commissioner dismissed the Petitioner's appeal, explaining appeal must be rejected and the application denied because Petitioner's application failed to include proper notice to the President as required by §277.1(b) of the Commissioner’s regulations,* citing Appeal of Cea, 58 Ed Dept Rep, Decision No. 17,482 among other Decisions of the Commissioner of Education.

The notice of petition serves to alert a party to the fact that he or she is the subject of removal proceedings and a notice of petition that fails to contain the required language is fatally defective and does not secure jurisdiction over the respondent.

* See 8 NYCRR Part 877, Practice on application for removal of school officers.

The Commissioner's decision is posted on the Internet at:

http://www.counsel.nysed.gov/Decisions/volume59/d17803

Agency's alleged failure to process an employee's contract grievance does not state a claim that the union breached its duty of fair representation

PERB's ruled that petitioner [Employee] in this CPLR Article 78 action failed to state a claim of improper practices against his employer [Agency] and his employee organization [Union] based on his allegation that the Agency "did not process his grievances quickly enough." The Employee appealed but the Appellate Division unanimously affirmed PERB's determination.

Citing Civil Service Bar Association, Local 237 v City of New York, 64 NY2d 188, the Appellate Division explained that PERB had rationally found that Employee failed to allege facts that would show that his Union had engaged in arbitrary, discriminatory or bad faith conduct, which is necessary to state a claim that the Union had breached its duty of fair representation within the meaning of Article 14 or the Civil Service Law, typically referred to as the Taylor Law.

Noting that Employee had acknowledged that a Union representative had sent an email to the Agency seeking to schedule three of Employee's grievances for a "Step II hearing" with respect to Employee's primary complaint that the Agency "did not process his grievances quickly enough," the court opined that such an allegation "does not present a basis for finding that [the Union] breached its duty of fair representation." As the Employee failed to show that the Union had breached its duty of fair representation, he was precluded from litigating directly against the Agency for any alleged improper employer practice within the meaning of Civil Service Law §209-a(1).

Further, said the court, PERB "rationally concluded that [Employee's] charge failed to allege facts that would show that [the Agency] refused to process his grievances on the basis of improper motivation or discrimination. Indeed, the Appellate Division observed that "construed liberally in [Employee's] favor, the allegations in the charge are conclusory and fail to establish that PERB acted arbitrarily and capriciously in dismissing the charge."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_00065.htm