Audits and reports issued by the New York State Comptroller during the week ending April 16, 2021

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending April 16, 2021.

Click on the text highlighted in color to access the complete audit report.

MUNICIPAL AUDITS

Village of Shoreham – Board Oversight and Justice Court (Suffolk County)  Auditors found the board did not properly oversee the village’s financial operations and the Justice Court did not properly account for court funds. Auditors found 22 claims totaling $132,819 were paid without support, duplicate receipts were rarely issued and not all cash was deposited in a timely manner. The board also did not annually audit the clerk-treasurer's or court's records and reports. For the court, 70 tickets could not be accounted for, duplicate receipts were not always issued and bank reconciliations and accountability analyses were not complete or reconciled. In addition, receipts totaling $3,435 were collected and deposited but payments to the clerk-treasurer and reported to the Justice Court Fund only amounted to $3,360.

SCHOOL DISTRICT AUDITS

Hudson City School District – Information Technology (Columbia County) District officials did not adequately secure and protect its information technology (IT) systems against unauthorized use, access and loss. The board and district officials also did not adopt adequate IT policies or a disaster recovery plan. Auditors found questionable internet use on four of six computers tested. School officials also did not disable 123 of the 462 enabled network accounts auditors examined. These 123 user accounts were not needed and included generic and former employee accounts. In addition, sensitive IT control weaknesses were communicated confidentially to officials.

 

Royalton-Hartland Central School District – Information Technology Contingency Planning (Genesee County, Niagara County and Orleans County) The board and district officials have not developed and adopted a comprehensive written information technology (IT) contingency plan. The district pays $10,500 for central site infrastructure support, which includes a disaster recovery plan template, a key component of an IT contingency plan. Although the district paid for a template, officials did not obtain it. Without a comprehensive written IT contingency plan in place that is properly distributed to all responsible parties and periodically tested for efficacy, district officials have less assurance that employees will react quickly and effectively to maintain business continuity. As a result, important financial and other data could be lost, or suffer a disruption to operations.

Westhampton Beach Union Free School District – Extra-Classroom Activity Funds (Suffolk County) The extra-classroom activity clubs did not maintain adequate records. Therefore, auditors could not determine whether all funds received and disbursed were properly accounted for. Deposits were not always supported by school deposit forms or accurately completed bank deposit slips and activity logs.

 

Wyandanch Union Free School District – Budget Review (Suffolk County) Auditors found that the significant revenue and expenditure projections in the proposed budget are reasonable. District officials did implement the recommendations in Comptroller DiNapoli’s July 2020 budget review letter. The district's proposed budget complies with the tax levy limit because it includes a tax levy of $22,922,337, which is within the limits established by law.

 

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Find out how your government money is spent at Open Book New York. Track municipal spending, the state's 180,000 contracts, billions in state payments and public authority data. Visit the Reading Room for contract FOIL requests, bid protest decisions and commonly requested data.

 

Tolling the running of the statute of limitations to permit the reinstatement of an action

In this decision the Appellate Division addressed the application of the statute of limitations with respect to certain proceedings encountered in the course of a CPLR Article 78.

Typically the statute of limitations for filing a timely Article 78 petition is four months from the time that the determination to be reviewed becomes final. CPLR 205(a), however, provides, in pertinent part, that [i]f an action is timely commenced and is terminated in any other manner than by ... a dismissal of the complaint for neglect to prosecute the action, ... the plaintiff may commence a new action upon the same transaction or occurrence ... within six months after the termination ....

In contrast, the CPLR provides that in the event a dismissal is one for neglect to prosecute the action, "the judge shall set forth on the record the specific conduct constituting the neglect, which conduct shall demonstrate a general pattern of delay in proceeding with the litigation."

Further, explained the Appellate Division, "CPLR 205(a) is a tolling provision, which serves the salutary purpose of preventing a Statute of Limitations from barring recovery where the action, at first timely commenced, had been dismissed due to a technical defect which can be remedied in a new action". It is "designed to insure to the diligent suitor the right to a hearing in court until he or she reaches a judgment on the merits,"citing Wells Fargo Bank, N.A. v Eitani, 148 AD3d 193.

Thus, said the court, the "'neglect to prosecute' exception in CPLR 205(a) applies not only where the dismissal of the prior action is for '[w]ant of prosecution' pursuant to CPLR 3216, but whenever neglect to prosecute is in fact the basis for dismissal."

Accordingly, the court in this proceeding opined that "the tolling provision of CPLR 205(a) is inapplicable where, as here, over the course of nearly 14 months, a litigant fails to timely perfect a proceeding and fails to make any effort to obtain an extension of time to perfect, citing Andrea v Arnone, Hedin, Casker, Kennedy & Drake, Architects & Landscape Architects, P.C. [Habiterra Assoc.], 5 NY3d at 521.

Click Here to access the full text of the Appellate Divisions decision.

 

Middletown chiropractor sentenced to nine years for insurance fraud

On April 13, 2021, New York State Comptroller Thomas P. DiNapoli announced James “Jay” Spina was sentenced in federal court for running a large-scale healthcare insurance fraud scheme. Spina and three co-conspirators systematically double-billed insurers, charged for services never rendered, created shell companies and falsified records to hide their crimes.

In 2018, Spina and three others were charged with billing insurers for medically unnecessary services and procedures, submitting claims for services not rendered, double-billing for services, fabricating medical records and concealing the fraud by blocking audits. The submitted claims totaled more than $80 million. All four individuals who were charged have pleaded guilty.

Spina pled guilty to one count of conspiracy to commit healthcare fraud and was sentenced to serve 108 months (nine years) in federal prison, plus three years of probation and pay $9.7 million in restitution and forfeit $9.1 million. The co-conspirators are awaiting sentencing.

DiNapoli said “This type of fraud harms all New Yorkers and contributes to higher health care costs across the state and country." He thanked  U.S. Attorney Audrey Strauss, the FBI, the U.S. Department of Health and Human Services Inspector General and the Orange County Sheriff's Office for their aid and assistance in this matter.

U.S. Attorney Audrey Strauss said: “James Spina led a sophisticated, widespread, and callous scheme that put greed and profits ahead of patients and their well-being.  In doing so, he betrayed his professional obligations and bilked insurance companies and Medicare out of millions of dollars.  Thanks to the coordinated efforts of federal and state investigative agencies, Spina will now serve a lengthy sentence in federal prison.”

Since taking office in 2007, DiNapoli has committed to fighting public corruption and encourages the public to help fight fraud and abuse.

Reports of alleged of fraud involving taxpayer money may be made by calling the toll-free Fraud Hotline at 1-888-672-4555, by mailing a report to the Office of the State Comptroller, Division of Investigations, 14th Floor, 110 State St., Albany, NY 12236, or via Internet at https://www.osc.state.ny.us/investigations.

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Claimant who voluntarily retired became ineligible for workers' compensation benefits after the effective date of such retirement

An individual working for a public employer [Claimant] suffered an injury on the job and was classified as permanently partially disabled. Awarded benefits "for reduced earnings," Claimant continued to perform her duties with her employer "on a fairly consistent basis for many years."

When Claimant decided to retire, she opted for "regular service retirement" because she had reached the eligibility age and did not seek disability retirement benefits.  The Workers' Compensation Board found that Claimant's work-related injuries did not cause or contribute to her decision to retire and thus she was not entitled to an award of reduced earnings subsequent to the date of her retirement. Claimant appealed the Board's determination.

Although Claimant stated that she received medical advice from one physician to retire, the Appellate Division noted that the record did not contain any substantiating medical documentation supporting her having received such advice from a physician. 

The Appellate Division sustained the Board's determination that Claimant withdrew from the labor market voluntarily when she retired and thus she was not entitled to a Workers' Compensation award for "reduced earnings" subsequent to the effective date of her retirement.

Click HEREto access the Appellate Division's decision.

Determining workers' compensation benefits in situations where the employee suffered a disability that is not amenable to a schedule award

The Appellate Division affirmed a decision by the Workers' Compensation Board in which the Board ruled, among other things, that the claimant sustained a 32.5% loss of wage-earning capacity.

Citing Matter of Varrone v Coastal Envt. Group, 166 AD3d 1269, the court opined that "In situations where, as here, a claimant sustains a permanent partial disability that is not amenable to a schedule award, the Board must determine the claimant's loss of wage-earning capacity in order to fix the duration of benefits".

The court agreed with the Board's method for determining the loss of wage-earning capacity for a claimant with a non-schedule permanent partial disability, which involved the evaluation of three elements: 

1. The nature and degree of the medical impairment;

2. Functional ability/loss; and

3. Non-medical vocational factors such as education, skill, training, age and literacy.

Click HERE to access the Appellate Division's decision.