Municipal audits released by the New York State Comptroller

New York State Comptroller Thomas P. DiNapoli announced the following local government audits have been issued during the week ending July 10, 2020.

Click on the text highlighted in color for the full report.

Village of Maybrook – Financial Condition (Orange County)

The board did not adequately manage the village’s financial condition. Auditors determined the board used unrealistic revenue estimates during the budget process. The village’s overall fund balance decreased by $642,000 (63 percent) from 2014-15 to 2018-19. The general and sewer funds had operating deficits during the past five years, and the water fund had an operating deficit in 2019. In addition, village officials did not develop a fund balance policy, multiyear financial plan or capital plan.

Monsey Fire District – Board Oversight (Rockland County)

The board provided inadequate and ineffective oversight of the district’s operations and did not comply with General Municipal Law’s financial filing and

audit requirements. In addition, for seven consecutive years, an annual update document, which is a required annual financial report, was not properly filed. The required annual independent audit of the district’s financial records was not performed since 2012, and the length of service awards program that started in 1990 was never audited.

Village of Sackets Harbor – Budgeting and Financial Management (Jefferson County)

The board and village officials did not develop realistic budgets. From 2016-17 through 2018-19, budgeted appropriations in the general, water and sewer funds exceeded actual expenditures by a total of $4.9 million (a 39 percent budget variance). In addition, officials also appropriated $3.6 million of fund balance during this period that was not needed to fund operations. The board has not adopted a fund balance policy or multiyear financial and capital plans.

Claiming collateral estoppel in an effort to influence the decision by another tribunal involving the same issues and the same parties

An employee, while suspended from his position, was accused of certain misconduct and discharged from his employment. The individual [Claimant] had filed for unemployment insurance benefits and had contested his termination by seeking arbitration pursuant to the collective bargaining agreement.

Prior to the decision being issued by the arbitrator, an unemployment insurance hearing was held and the Administrative Law Judge [ALJ] denied a joint request by the parties to adjourn the matter until the arbitrator's award was promulgated.

Following the conclusion of the unemployment insurance hearing, but prior to the ALJ issuing a decision, the arbitrator issued an arbitration award finding that Claimant had engaged in misconduct warranting his termination from his position. The employer mailed a copy of the arbitrator's decision to the ALJ and asked that the ALJ take judicial notice* of it.

The ALJ issued a decision a few days later in which there was no mention of the arbitrator's decision and found that there was no evidence establishing that Claimant engaged in the alleged misconduct. The ALJ ruled that Claimant was entitled to receive unemployment insurance benefits.

The employer appealed ALJ's decision to the Unemployment Insurance Appeal Board [Board] contending that the ALJ's decision was contrary to the arbitrator's decision, which it maintained was final and binding.

The Board found, among other things, that the ALJ did not abuse her discretion in denying an adjournment and affirmed the ALJ's determination. The employer appealed the Board's decision and the Appellate Division reversed the Board's ruling.

Citing Matter of Tucek [Big V Supermarkets-Commissioner of Labor], 277 AD2d 628, the Court noted that while "the Board is not bound by arbitration decisions regarding [a] claimant's discharge issued subsequent to the time the Board rendered its decision" the Board was informed of the arbitration decision prior to its decision. Thus, explained the Appellate Division, "the factual findings of the arbitrator should have been accorded collateral estoppel effect in relation to the final unemployment insurance decision, so long as the parties had a full and fair opportunity to litigate the misconduct issue at the arbitration hearing."

Further, opined the court, the fact that the arbitration decision was issued after the conclusion of the unemployment insurance hearing does not preclude its consideration for collateral estoppel purposes, as "the final factfinder in the administrative process is the Board, not the ALJ."

Finding that the Board had indicated that the arbitrator's decision was not part of the record before it notwithstanding its being an element in employer's appeal and a copy of it was annexed to the employer's administrative appeal to the Board, Appellate Division remanded the matter to the Board to permit the employer to place the arbitration decision into the record and to provide an opportunity for Claimant and the employer to provide additional evidence and testimony regarding the nature of the arbitration hearing.

* A procedure used by a court to accept a fact presented as evidence as true without a formal presentation such submitting public and court records, the tables of the times of sunset and sunrise and similar documents.

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2020/2020_03705.htm

Article 23-A of New York State's Correction Law does not control if an employee is terminated for a criminal offense committed after the individual was hired

Article 23-A of New York State's Correction Law provides that "no employment ... held by an individual ... shall be ... acted upon adversely by reason of the individual's having been previously convicted of one or more criminal offenses"* where the conviction "preceded such employment."**

Local 100, Transport Workers Union of America brought an action pursuant to CPLR Article 75 seeking to vacate an arbitration award that terminated a New York City Transit Authority [Authority] employee [Plaintiff***] and for a court order reinstating Plaintiff to his former position with full back pay and awarding Plaintiff costs and attorney's fees. Supreme Court denied Plaintiff's petition and dismissed the proceeding. Plaintiff appealed the court's decision.

The Appellate Division sustained the Supreme Court determination explaining:

1. Plaintiff's termination by the Authority was based on conduct that, if proven in court, would have constituted a felony and was not against public policy;

2. Although Correction Law Article 23-A provides, in pertinent part, that "no employment ... held by an individual  ... shall be ... acted upon adversely by reason of the individual's having been previously convicted of one or more criminal offenses" where the conviction "preceded such employment," in this instance Plaintiff's conviction did not precede his employment but occurred following his employment and was, therefore, not within the ambit of Article 23-A.

Addressing Plaintiff's request for reinstatement, the court held that denial of the request was not arbitrary and capricious as the governing regulations provide that an agency "may consider such application" but is not required to do so, and  approval of such an application is made at the discretion of the appointing authority.

Citing 55 RCNY Appendix A §6.2.6[a]-[b], the Appellate Division opined that "[i]t was not irrational for [the Authority] to conclude that in seeking reinstatement, [Plaintiff] merely sought to relitigate issues" earlier considered and decided by a neutral arbitrator in the course of a "grievance proceeding pursuant to a collective bargaining agreement" that resulted in Plaintiff's termination by the Authority.

* Correction Law §752, Unfair discrimination against persons previously convicted of one or more criminal offenses prohibited.

** Correction Law §751 applies to any person seeking a license or employment at any public or private employer who has previously been convicted of one or more criminal offenses in New York State or in any other jurisdiction.

*** Plaintiff was initially employed by the Authority in 2008. Ten years later Petitioner was arrested and ultimately plead guilty to a violation of 18 U.S.C. §641. His sentence: one-year probation and 80 hours of community service.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_01008.htm

Workers' Compensation Benefits awarded for both schedule and nonschedule permanent injuries suffered in the same work-related accident

In this CPLR Article 78 action the Workers' Compensation Board ruled, among other things, that Petitioner [Claimant] was not simultaneously entitled to an award for a schedule loss of use and a permanent partial disability classification.

Claimant was injured in a motor vehicle accident while working as a police officer and established a workers' compensation claim for injuries suffered in that accident, including a neck injury. The Workers' Compensation Board found that Claimant had a permanent medical impairment that was not amenable to a schedule loss of use [SLU] finding and directed the matter be returned to the hearing calendar for a determination of loss of wage-earning capacity.

A Workers' Compensation Law Judge [WCLJ] determined that Claimant was permanently partially disabled with a 15% loss of wage-earning capacity, but he was not entitled to awards based upon a nonscheduled permanent partial disability classification as his current position as a police sergeant did not result in any reduced earnings. However, the WCLJ also found that Claimant "sustained a 15% SLU of his right hand, left hand and left arm and a 7.5% SLU of his right leg, entitling him to an SLU award."

The Board modified the WCLJ's decision, rescinding the SLU award based on its finding that Claimant's permanent medical impairment was subject to a nonscheduled classification encompassing all of Claimant's injuries and, therefore, Claimant was not entitled to an SLU award. Claimant appealed the Board's determination.

Addressing Claimant's appeal of the Board's rescinding the SLU award, Appellate Division noted that it had recently held that "where a claimant who has sustained both schedule and nonschedule permanent injuries in the same work-related accident has returned to work at pre-injury wages and, thus, receives no award based on his or her nonschedule permanent partial disability classification,  he or she is entitled to an SLU award."*

As there was a finding of permanency as to Claimant's neck injury and he had returned to work at pre-injury wages, the Appellate Division held that Claimant was entitled to an SLU award for the remaining injuries, reversing the Board's ruling and "remitted [the matter] to the Workers' Compensation Board for further proceedings not inconsistent with the Court's decision."

* See Matter of Fernandez v New York Univ. Benefits, 180 AD3d 1305

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_03713.htm

Remedying an inadvertent disclosure of records provided pursuant to a Freedom of Information Law request

In responding to the Center on Privacy and Technology's [Center] request for certain documents pursuant to the Freedom of Information Law [FOIL] the New York City Police Department [Department] sent certain "unredacted" documents to the Center. The Department subsequently asked Supreme Court to prohibit the information inadvertently given to the Center from being disclosed by it. Supreme Court granted the Department's motion and the Center appealed the court's ruling.

The Appellate Division held that Supreme Court's order did not impose an unconstitutional prior restraint by precluding the Center from referring to the source of unredacted documents inadvertently disclosed to it by the Department in responding to the Center's FOIL request. The court said that the unredacted documents at issue constituted but a small portion of the thousands of pages of records the Department had provided the Center in responding to its FOIL request. 

Citing Seattle Times Co. v Rhinehart, 467 US 20, the Appellate Division explained that "an order prohibiting dissemination of discovered information before trial is not the kind of classic prior restraint that requires exacting First Amendment scrutiny." Instead, opined the Appellate Division, a court may restrict a litigant's use of information obtained through litigation as long as the restriction:

[a] "furthers an important or substantial governmental interest unrelated to the suppression of expression"; and

[b] "the limitation of First Amendment freedoms is no greater than is necessary or essential to the protection of the particular governmental interest involved."

Concluding that the Department had a substantial government interest in preventing the inadvertent disclosure of the unredacted records at issue, the court noted that the Supreme Court's protective order was narrowly tailored in expressly allowing the Center to disseminate any information it had gleaned from the materials at issue and requiring the Department to provide the Center "with replacement records bearing redactions that are not challenged on the merits [in] the instant appeal."

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2020/2020_01724.htm