State agency audits issued by New York State Comptroller Thomas P. DiNapoli

New York State Comptroller Thomas P. DiNapoli announced the following audits were issued during the week ending August 20, 2020.

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Office of Children and Family Services (OCFS): Oversight of Runaway and Homeless Youth (2019-S-47) OCFS has generally established controls but is not conducting program and fire safety inspections for certified runaway and homeless youth programs and facilities. Auditors found OCFS did not always conduct inspections within established time frames as 57 of 186 program inspections (31 percent) and 23 of 184 fire safety inspections (13 percent) were late. Additionally, they found various safety conditions needed to be improved. These included missing smoke detectors, missing outlet covers, overloaded power strips, and water damage to ceilings with possible mold. 

Office of General Services: Summit Security Services Inc. (2019-BSE3-001) OGS paid Summit more than $867,000 for 40 individuals provided by Summit’s subcontractor, Bestworth, who did not meet the contract qualifications for security guards. Bestworth’s president acknowledged none of the 40 employees who provided security guard services at the Adam Clayton Powell Jr. State Office Building took a drug test. Furthermore, 27 of these individuals lacked other necessary qualifications, including the required New York State Department of State Security Guard registration. 

Department of Civil Service: New York State Health Insurance Program: CVS Health – Accuracy of Drug Rebate Revenue Remitted to the Department of Civil Service (2019-S-51) The Department of Civil Service contracted with CVS Health to administer the Empire Plan’s prescription drug program for the period Jan. 1, 2014 through Dec. 31, 2018. CVS Health was required to negotiate agreements with drug manufacturers for rebates, discounts, and other consideration and remit the rebate revenue to Civil Service. Auditors reviewed discrepancies between the drug rebates that CVS Health invoiced versus collected from drug manufacturers and found CVS Health did not always collect and remit all rebate revenue to Civil Service. As a result, Civil Service is due $453,029 in rebates. 

Department of Civil Service: New York State Health Insurance Program – Payments by Empire BlueCross for Hospital Services for Ineligible Members (2019-S-32) The audit identified 3,177 claims totaling $18.2 million that were paid for hospital services provided during periods when members were not eligible. The claims were paid due to various reasons, including retroactive disenrollments. For retroactive disenrollments, it took an average of nearly 400 days to cancel members’ coverage. Empire recovered $11.5 million and $2.1 million was beyond recoverability time frames, leaving $4.6 million to be recovered. 

Empire State Development (ESD): Oversight of Select High-Technology Projects (2017-S-60) ESD has provided millions of dollars to private companies in high-tech sectors with the goal of creating jobs and increasing private investment. While ESD has effective practices for monitoring specific programs, it has not adequately monitored other high-tech projects to ensure that taxpayer money is effectively spent and is producing the intended results. 

Homeless Housing and Assistance Corp.: Homeless Housing and Assistance Program (HHAP) – Project Selection and Maintenance (2020-F-14) (Follow-up) An audit issued in January 2019 found that, of the 51 projects that were awarded funding by HHAP during the three-year period ending March 31, 2016, all but one were operational or in the pre-construction or construction phase within two to four years of being awarded funding. Auditors also identified several areas for improvement. In a follow-up, auditors found HHAP has made progress in addressing the problems identified in the initial audit report; however, additional improvements are needed. 

Metropolitan Transportation Authority – New York City Transit (NYCT) – Signal Maintenance, Inspections, and Testing (2019-F-58) (Follow-up) An audit issued in October 2017 found NYCT did not always perform required tests of its signal equipment within required intervals and supervisors were often late in inspecting equipment. NYCT also did not have an inventory system to account for the equipment it maintains. In a follow-up, auditors found NYCT has made progress in addressing the issues identified. Of the 18 prior recommendations, three were implemented, 10 were partially implemented and five were not addressed. 

Office for People With Developmental Disabilities (OPWDD): Controls Over Transportation Services and Transportation-Related Expenses (2019-S-38) Auditors reviewing upstate New York OPWDD transportation services and related expenses found it could improve accountability over transportation expenses and services and doesn’t have controls in place to educate or improve driving skills for employees with frequent driver license interruptions or serious violations (e.g., speeding, disobeying traffic devices, driving while intoxicated). OPWDD could also improve controls to ensure vehicle recalls are repaired in a timely manner. Auditors found that 219 vehicles had 235 unresolved (open) recall notices. Most (201) had been open for over nine months. 

Office for People With Developmental Disabilities (OPWDD): Oversight of Passenger Safety (Follow-Up) (2020-F-1) An audit released in October 2018 found that OPWDD did not analyze traffic violations to identify whether employees in the New York City region needed training or counseling, or if they should be reassigned. The audit also found that four regional Developmental Disabilities Services Offices were not properly identifying drivers whose licenses had been suspended. In addition, repairs related to manufacturer recalls were not being performed in a timely manner or at all. In a follow-up, auditors found OPWDD has made limited progress in addressing the problems identified in the initial audit. 

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The anatomy of a student disciplinary hearing conducted by a public institution of higher education

Following the student's [Student] administrative disciplinary hearing and the Students administrative appeal of the hearing decision, a unit of State University of New York [SUNY] suspended Student  for three years and noted Student's college transcript accordingly. Student initiated a CPLR Article 78 proceeding seeking a court order annulling SUNY's actions.

Among the elements of SUNY's administrative disciplinary procedures challenged by Student, and considered by the Appellate Division, were the following:

1. Due Process: 

Citing Matter of Sharma v State Univ. of N.Y. at Buffalo, 170 AD3d 1565, among other decisions., the Appellate Division concluded that SUNYsubstantially adhered to its procedural rules with respect to the administrative disciplinary proceedings involving Student and that the alleged violations of those rules did not deny Student"the full panoply of due process guarantees to which he was entitled or render ... the finding of responsibility or the sanction imposed arbitrary or capricious".

2. Discovery: 

The Appellate Division rejected Student's contention that SUNY denied him due process with respect to his judicial appeal, explaining that "[i]n a disciplinary proceeding at a public institution of higher education, due process entitles a student accused of misconduct to a statement detailing the factual findings and the evidence relied upon by  [SUNY's] decision-maker in reaching the determination of [Student's] guilt ... and here the record reflects that [Student] was provided with the documents that were relied on by [SUNY]" in making such determinations.

3. Assistance of counsel: 

The court dismissed Student's claim that he was denied the assistance of counsel at his hearing, noting Student was, as authorized by SUNY's administrative hearing procedures, assisted by an attorney advisor throughout the disciplinary process, including such assistance at the hearings.* 

4. Prosecuting an effective appeal: 

Notwithstanding Student's contention to the contrary, the Appellate Division opined that SUNY's written determinations did not violate Student's right to due process as they contained sufficient detail "to permit [Student] to effectively challenge the determination in administrative appeals and in the courts and to ensure that the decision was based on evidence in the record," nor did the record support Student's claim that the determination with respect to his administrative appeal was based on matters outside of the record.

Finding that SUNY's determination was supported by substantial evidence, the Appellate Division said it perceived no basis to disturb SUNY's decision. 

* The Appellate Division also rejected Student's claim that he was denied due process as the result of SUNY's alleged failure "to call live witnesses or to accept questions to be asked of such live witnesses."

The decision is posted on the Internet at: 
http://www.nycourts.gov/reporter/3dseries/2020/2020_04628.htm

Defending and indemnifying employees of the City of New York being sued in a civil action

§50-k(3) New York State's General Municipal Law provides that New York City must, if certain conditions are satisfied, defend and, if necessary, indemnify, an employee being sued in a civil action related to the employee's conduct performed in compliance with the rules and regulations of the employee’s agency at the time the plaintiff was injured, so long as the injury to the plaintiff did not result from the employee’s intentional wrongdoing or recklessness.*

Two New York City police officers [jointly Defendants] had arrested an individual [Accused] and charged him with disorderly conduct, harassment, obstruction of governmental administration, and resisting arrest. After obtaining video footage of the incident, prosecutors dismissed all charges.

The Accused then filed a lawsuit pursuant to 42 U.S.C. §1983 alleging false arrest, malicious prosecution, the use of excessive force, denial of the right to a fair trial, a failure of a police officer to intervene in the course of the incident, and First Amendment violations, as well as malicious prosecution in violation of New York state law, against the City of New York [City], the Defendants, and another New York City police officer. A federal district court jury found for the Accused and Defendants appealed.

One of issues raised by Defendants in the district court was the City’s decision not to provide for their defense and indemnification under color of General Municipal Law §50-k(3). The Circuit Court held that "the district court did not err" in denying Defendants’ request for an evidentiary hearing" addressing the City's decision not to provide for Defendants' defense and indemnification.

The Circuit Court held that whether the employee's act or omission was in violation of an agency rule, or was within the employee’s scope of employment was a factual determination to be made in the first instance by the City's Corporation Counsel, whose determinations may be set aside only if they are not supported by the evidence or are in some other sense ‘arbitrary and capricious.” Further, the Circuit Court noted that the City is not required to indemnify a defendant for “intentional wrongdoing or recklessness.

The Circuit Court opined that the fact that Defendants may have certain employment rights meriting a hearing prior to termination** "says nothing of their right to indemnification after trial." The Circuit Court's decision also observed that "Defendants had a full and fair opportunity to present their defense in court, yet failed to convincingly do so." 

In addition, said the court, in any event, the City "maintains discretion to indemnify officers" and, in consideration of the substantial factual support for the City’s decision, "the district court did not err in denying Defendants’ request for an evidentiary hearing. In the words of the Circuit Court, "The City’s assessment of Defendants’ wrongdoing or recklessness was supported by the findings of the City's Civilian Complaint Review Board, the videotape of the incident, and the federal district court's jury’s findings of liability and awarding of punitive damages."

* See, also, Public Officers Law §17 [defense and indemnification of State officers and employees] and Public Officers Law §18 [defense and indemnification of officers and employees of public entities]. Public Officers Law §19.2(a) addresses the duty of the State, as the employer, to pay reasonable attorneys' fees incurred as the result of a State officer or employee appearing before a Grand Jury or in a criminal proceeding arising out of any act which occurred while such individual was acting within the scope of  his public employment or duties.

** Subdivision 5 of §50-k(3) provides that "[i]n the event that the act or omission upon which the court proceeding against the employee is based was or is also the basis of a disciplinary proceeding by the employee's agency against the employee, representation by the corporation counsel and indemnification by the city may be withheld (a) until such disciplinary proceeding has been resolved and (b) unless the resolution of the disciplinary proceeding exonerated the employee as to such act or omission."

The decision is posted on the Internet at:

https://www.ca2.uscourts.gov/decisions/isysquery/59c1a0cd-0da0-4f63-a556-2e35a1e5f76c/1/doc/19-769_so.pdf#xml=https://www.ca2.uscourts.gov/decisions/isysquery/59c1a0cd-0da0-4f63-a556-2e35a1e5f76c/1/hilite/

Denying an individual an "on-street parking permit" did not violate the individual's equal protection rights under the circumstances

In an action to recover damages for alleged civil rights violations pursuant to 42 USC §1983, Plaintiff appealed Supreme Court's granting the Town's cross motion for summary judgment dismissing Plaintiff's complaint. Plaintiff had contended that Plaintiff's right to equal protection was violated because Plaintiff was denied an "on-street parking permit" for a specified location in the Town on the ground that Plaintiff was not a resident at the location involved.

The Appellate Division said that the Town had established its prima facie entitlement to judgment as a matter of law and that Plaintiff failed to raise a triable issue of fact in opposition.

With respect to Plaintiff's cause of action for recovery under 42 USC §1983 on equal protection grounds, the Appellate Division explained that recovery under 42 USC §1983 is triggered where a defendant has denied the plaintiff a constitutional or federal statutory right, and that such denial was effected under color of state law. Here, said the court, Plaintiff "is not a member of a suspect class and no fundamental right is implicated. Thus the challenged action need only be rationally related to a legitimate governmental purpose."

Further, opined the Appellate Division, a local law limiting the issuance of on-street parking permits to residents of that street is rationally related to the legitimate governmental purpose of alleviating an on-street parking shortage on that street.

Citing Village of Willowbrook v Olech, 528 US 562, the Appellate Division also rejected Plaintiff's claim that Plaintiff is a "class of one" for purposes of prosecuting an equal protection claim, explaining there has been no showing that Plaintiff had been intentionally treated differently from others similarly situated and that there was no rational basis for the difference in treatment.

The court also noted that the individually named Town defendants "are entitled to qualified immunity, as they are government officials performing discretionary functions, and their conduct did not violate any clearly established statutory or constitutional rights of which a reasonable person would have known."

Finally, the Appellate Division said it agreed with the Supreme Court's determination directing dismissal of Plaintiff's cause of action alleging retaliation in connection with the issuance of a parking ticket. In the words of the court: "While retaliation claims alleging an adverse employment action because of a complaint of discrimination are actionable under 42 USC §1983 [Plaintiff] has no employment relationship with the Town and the statute does not apply in this context.

The bottom line: the Appellate Division agreed with Supreme Court's decisions [1] denying Plaintiff's motion for summary judgment on Plaintiff's complaint, and [2] granting the Town's cross motion for summary judgment dismissing Plaintiff's complaint.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_04503.htm

Absent a statutory basis for a public referendum there is no clear legal right to a court's granting an order in the nature of mandamus to compel the holding of a public referendum

Qualified electors of a Town [Plaintiffs] filed a proceeding pursuant to CPLR Article 78  seeking a court order in the nature of mandamus compelling the Town [Respondents] to conduct a special election providing for certain term limits for the offices of Town Supervisor and members of the Town Board. Supreme Court dismissed Plaintiff's the petition for failure to state a cause of action and, in effect, denied the petition and dismissed the proceeding. Plaintiff appealed the Supreme Court's ruling.

The genesis of this Article 78 action was the Plaintiffs' filing a petition under color of Town Law §81(4) asking the Town to hold a referendum on a proposition to limit the terms of the Town Supervisor and members of the Town Board to "no more than two consecutive terms." The Town Board did not reject the petition filed by the Plaintiffs but took no further action on it on the advice of the Town Attorney. The Town Attorney had concluded that Town Law §81 did not permit a referendum concerning term limits.

Finding that there was no statutory basis for a public referendum on this particular issue, the Appellate Division ruled that Plaintiffs' petition failed to adequately allege a clear legal right to the relief Plaintiffs sought and sustained the Supreme Court's granting the Respondents' motion to dismiss Plaintiffs' petition for failure to state a cause of action

The Appellate Division explained that the extraordinary remedy of mandamus will lie only to compel the performance of a ministerial act, and then only where there exists a clear legal right to the relief sought, citing Legal Aid Society of Sullivan County v Scheinman, 53 NY2d 12. Further, said the court, a town may not submit a proposition to the electorate "in the absence of express statutory authority permitting it to do so."

Noting that Town Law §81(1)(d) specifically provides that: "The town board may upon its own motion and shall upon a petition ... cause to be submitted at a special or biennial town election, a proposition ... [t]o vote upon or determine any question, proposition or resolution which may lawfully be submitted, pursuant to this chapter or any general or special law," the court opined that such language "only operates if submission of the proposition to the electorate has been specifically validated by some other law."

As Plaintiffs failed to set forth separate statutory authority for a public referendum on this particular issue, the Appellate Division held that Plaintiffs' petition failed to adequately allege a clear legal right to the relief sought, a court order in the nature of mandamus compelling the Respondents to conduct such a special election, sustained Supreme Court's decision granting the Respondents' motion to dismiss the Plaintiffs' petition for failure to state a cause of action.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_04476.htm