Audits and reports issued during the week ending September 18, 2021 by the New York State Comptroller

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending September 18, 2021

Office of Alcoholism and Substance Abuse Services: Oversight of Contract Expenditures of Palladia Inc. (2020-S-5) In 2014, OASAS entered into a five-year $45.6 million contract with Palladia, under which Palladia would provide drug and addiction treatment services. Auditors found OASAS is not effectively monitoring the expenses reported by Palladia to ensure that reimbursed claims are allowable, supported and program related. For the three fiscal years ended June 30, 2018, auditors identified $2,508,682 in costs that did not comply with the requirements for reimbursement. 

Office of Children and Family Services (OCFS): Oversight of Direct Placement of Children (Follow-Up) (2021-F-6) An audit issued in March 2020 found that OCFS did not maintain adequate oversight of direct placement to ensure that Local Departments of Social Service (Local Districts) comply with applicable laws and regulations and that children are placed in safe environments. OCFS also had not developed the same type of centralized standards, policies, or procedures for Local Districts to follow in supervising all direct placement cases as it has for similar child welfare services, such as foster care. In a follow-up, auditors determined OCFS officials have made limited progress in addressing the issues identified in the initial report. 

Office of General Services (OGS): Compliance with Executive Order 95 (Open Data) (Follow-Up) (2021-F-12) An audit released in April 2020 found OGS had taken steps to meet the requirements of EO 95; however, certain aspects of the order were not fully addressed. OGS did not identify the total population of publishable state data that it maintains. Therefore, there was limited assurance OGS provided a complete catalogue of its publishable state data or accompanying schedules for making that data public, as required. In a follow-up, auditors found OGS made limited progress in addressing the problems identified in the initial audit report. 

Department of Health (DOH): Improper Fee-for-Service (FFS) Payments for Services Covered by Managed Long-Term Care (MLTC) Plans (Follow-Up) (2021-F-4) An audit issued in January 2020 identified $16.4 million in improper Medicaid FFS payments for MLTC covered services. Of these overpayments, $15.6 million was paid because DOH did not configure eMedNY payment system edits and MLTC benefit packages correctly, so eMedNY did not identify certain services as the responsibility of the MLTC plan. The remaining $877,000 was improperly paid because, at the time eMedNY adjudicated the claim, the recipient was not enrolled in MLTC, but was retroactively enrolled at a later date. In a follow-up, auditors found DOH made some progress in addressing the problems identified in the initial audit report; however, further actions are still needed.  

Homes and Community Renewal - Division of Housing and Community Renewal: Controls Over Federally Funded Programs and Maximization of Federal Funding (2020-S-48)Generally, the division has established controls to ensure the Weatherization Assistance Program meets federal reimbursement documentation requirements and that the division receives federal reimbursements on time and in a manner that recovers all funds. However, the division lost $120,475 in federal funding during the audit period because it was not expended by program deadlines, primarily due to a decrease in production caused by the COVID-19 pandemic. As of Dec. 31, 2020, the division had until March 31, 2022 to obligate and expend $10,925,486 or it will be returned to the U.S. Department of Energy. 

Public Service Commission (PSC): Enforcement of Commission Orders and Other Agreements (Follow-Up) (2021-F-5) An audit issued in March 2020 found PSC’s Department of Public Service does not always adequately monitor compliance with order conditions – and in some cases even lacks the equipment necessary to do so. Orders are, at times, ambiguous and lack time frames for completion, interim performance measures, and consequences for non-compliance, making enforcement difficult and inconsistent. In a follow-up, auditors found department officials made significant progress in addressing the issues identified in the initial audit report. 

Department of State: Compliance with Executive Order 95 (Open Data) (Follow-Up) (2021-F-11) An audit released in April 2020 found the department had generally complied with the requirements of EO 95, incorporating compliance with EO 95 into its core business functions and continued to identify new data sets to add to Open Data. However, the department did not identify the total population of publishable State data that it maintains. Additionally, the audit found some problems with the usability of some of the department’s data sets on Open Data. In a follow-up, auditors determined the department has made progress in addressing the problems identified in the initial audit report. 

Department of Taxation and Finance: Efforts to Collect Delinquent Taxes (2019-S-61) For a significant number of the delinquent tax assessments reviewed, auditors were unable to determine, based on documentation, that the department took adequate collection actions prior to completing or closing cases for one of the five collection steps tested: using applicable search tools to identify taxpayer resources that might be pursued to satisfy the debt. Auditors recommended the department improve documentation for each relevant assessment to affirm which actions are applicable and which actions staff take in their collection activities; and take steps to ensure compliance with policies and procedures that address abatement decisions, and, when needed, document the rationale for decisions.

Judicial review of decisions involving the placement of a position in the classified service in the exempt class or the noncompitive class

The New York State Department of Financial Services [DFS] asked the Civil Service Commission [Commission] to jurisdictionally classify the titles of Director, Financial Services Programs 1 and 2, positions in the noncompetitive class with a "policy-influencing" designation pursuant to §42[2-a] of the Civil Service Law.*

DFS also sought to have certain vacant noncompetitive investigative positions given "title changes" to the titles of Investigator 1 and Assistant Chief Investigator [Investigator Positions] and, further, jurisdictionally reclassified as positions in the exempt class.

The Public Employees Federation, AFL-CIO [PEF] objected to these title and jurisdictional classification changes** but the Commission ultimately approved the changes as requested by DFS. PEF then initiated a CPLR Article 78 proceeding seeking a court review of the Commission's determination contending that its determinations were "arbitrary and capricious and contrary to law." Supreme Court dismissed PEF's application, ruling that the Commission's determinations were rational. PEF appealed the court's decision.

The Appellate Division, noting that to prevail PEF bore the burden of demonstrating that the Commission "erred in its job classification determinations," said that decisions of the Commission are "subject to limited judicial review and will not be disturbed absent a showing that [they were] wholly arbitrary or without a rational basis", citing Cove v Sise, 71 NY2d 910.

Explaining that it is "well-settled [s]tate policy that appointments and promotions within the civil service system must be merit-based and, when 'practicable,' determined by competitive examination," as mandated by Article V §6 of the State Constitution, opined that "[t]he constitutional dictate does not create an absolute bar to civil service appointments and promotions without competitive examinations."

Citing a number of decisions by New York State courts, the Appellate Division noted the Commission may place a title in the noncompetitive class based on its finding that "it is impracticable to determine merit and fitness for the berth by competitive examination." Focusing on the DFS' requests with respect to the director titles, the court opined that the fact that "the director positions have some overlapping responsibilities with other competitively-tested positions does not preclude a finding that competitive examination is impracticable" for the DFS positions in issue.

As to the investigator positions in issue, the Appellate Division observed that the Commission's determination to place the investigator positions in the exempt jurisdictional class also had a rational basis, explaining that a position may be jurisdictionally classified as exempt based on findings as to "the confidential nature of the position, the performance of duties which require the exercise of authority or discretion at a high level or the need for the appointee to have some expertise or personal qualities which cannot be measured by a competitive examination."

* Subdivision 2-a provides as follows: "The state or municipal civil service commission by appropriate amendments to its rules shall designate among positions in the non-competitive class in its jurisdiction those positions which are confidential or require the performance of functions influencing policy."

** All positions in the classified service are automatically in the competitive class unless placed in a different jurisdictional classification by the responsible civil service commission or personnel officer or by statute.

Click HERE to access the full text of the Appellate Division's decision.

Another case of Jobbery, i.e., the practice of using a public office or position of trust for one's own gain or advantage

On September 16, 2021, State Comptroller Thomas P. DiNapoli, Madison County District Attorney William Gabor, and New York State Police Superintendent Kevin P. Bruen announced that a former non-sworn state police mechanic has pleaded guilty to felony corrupting the government for the theft of more than $24,000 in auto parts and supplies from the state.

Charged with eight felony and three misdemeanor charges including corrupting the government, grand larceny and criminal possession of stolen property and official misconduct, the mechanic pleaded guilty to felony corrupting the government in the third degree and was sentenced to interim felony probation and has already paid back $20,000.

The arrest was a result of a joint investigation between the State Comptroller’s Office, the New York State Police and Madison County District Attorney William Gabor.

Requirements for stating a justiciable claim alleging the employer intentionally inflicted emotional distress on the distressed employee

The motion court denied the complaint's [Plaintiff] motion for leave to amend his complaint alleging unlawful employment retaliation in violation of Not-For-Profit Corporation Law §715-b by adding claims alleging "intentional infliction of emotional distress" among others.

Sustaining the Supreme Court's decision, the Appellate Division explained that to state a claim for intentional infliction of emotional distress in such an action a party must allege:

1. "extreme and outrageous conduct;

2. an "intent to cause, or disregard of a substantial probability of causing, severe emotional distress;

3. "a causal connection between the conduct and injury; and

4. "severe emotional distress."

Citing 164 Mulberry St. Corp. v Columbia Univ., 4 AD3d 49, the court said that "Whether the requisite 'outrageousness of the conduct' has been satisfied by the petitioner's allegations is, in the first instance, an issue of law for judicial determination."

In this instance, said the Appellate Division, although Plaintiff alleged, "in a conclusory fashion that the defendants [Respondents] engaged in a pattern of harassment that caused Plaintiff to suffer from anxiety and stress that eventually led to a serious cardiac event," it found that Plaintiff's allegations of abusive conduct directed at him in the context of his employment "do not rise to the level of outrageousness required to state a claim."

Further, opined the Appellate Division, Plaintiff's proposed amendment did not allege facts establishing that Plaintiff had an "imminent apprehension of harmful or offensive contact" to support a claim for assault.

The Appellate Division also addressed a "new claim for standard negligence" in the proposed amended complaint and opined that it "fails to allege with the requisite specificity that the [Respondent] board members acted with gross negligence in the training and supervision of [Plaintiff's supervisor] nor did Plaintiff present any specific allegations that the [Respondent] board members "acted intentionally."

Accordingly, the court found that Plaintiff's negligence claim was barred by the qualified immunity defense available to uncompensated board members under §720-a of the Not-For-Profit Corporation Law.

Click HERE to access the Appellate Division's decision

Appealing the termination of a probationary teacher

In this appeal to the New York State Commissioner of Education a probationary teacher [Petitioner] challenged her termination from her position with the New York City Department of Education's [DOE]. 

The Commissioner sustained DOE's termination of the Petitioner, observing that "[e]ven if the appeal were not dismissed as untimely, it would be dismissed on the merits."

The Commissioner explained that pursuant to its authority under Education Law §2573(1)(a), DOE may discontinue the services of a probationary teacher “at any time and for any reason, unless the teacher establishes that the termination was for a constitutionally impermissible purpose, violative of a statute, or done in bad faith,” citing Matter of Frasier v Board of Educ. of City School Dist. of City of N.Y., 71 NY2d 763.

Further, the Commissioner's decision notes that the petitioner has the burden of:

[1] demonstrating a clear legal right to the relief requested; and 

[2] establishing the facts upon which he or she seeks relief in his or her appeal to the Commissioner of Education.

In this instance the Commissioner found that Petitioner has "neither alleged nor proven that her discontinuance was for a constitutionally impermissible reason or that it violated any statute."  Rather, said the Commissioner, Petitioner suggests that DOE acted in bad faith insofar as her discontinuance was the result of the principal’s personal animus toward her but offers no competent proof of this contention other than her own assertions.

DOE generally denied Petitioner’s allegations and submit numerous annual professional performance review [APPR] reports supporting their position that Petitioner’s discontinuance was based on the many “developing” and “ineffective” ratings that she received throughout the school years she served as a probationary teacher. 

Although Petitioner suggested that such feedback was insufficient and that her school administrators did not adequately address various challenges she faced during her probationary service, the Commissioner held that such assertions fail to render DOE's discontinuance of her probationary service impermissible.

Additionally, observed the Commissioner, Petitioner’s assertion that the APPR ratings she received lack a reasonable justification does not provide a basis to annul her discontinuance and reinstate her to a teaching position. 

The Commissioner's decision cited Education Law §3012-c, which section sets forth the procedures and requirements applicable to APPR ratings, provides that “nothing in this section shall be construed to affect the unfettered statutory right of a school district ... to terminate a probationary teacher ... for any statutorily and constitutionally permissible reason.” Accordingly, said the Commissioner, Petitioner’s objection to her APPR ratings is insufficient to establish her entitlement to the relief she requested. 

Addressing Petitioner's request the DOE be directed "to implement a regulation, policy, or procedure” requiring the superintendent to speak with a probationary teacher prior to discontinuance, the Commissioner said that Petitioner had failed to set forth an adequate basis for such relief.  

The Commissioner noted that the record reflected that Petitioner received ample notice that she may be discontinued from her position; that the superintendent’s initial letter invited Petitioner to submit a response; that Petitioner did, in fact, respond to the superintendent’s letter; and that the superintendent considered Petitioner’s response prior to rendering her final determination.  

Accordingly, the Commissioner said that she decline to compel DOE to implement a new procedure, beyond the requirements of Education Law §2573, obligating the superintendent to communicate with a probationary teacher in person or by telephone. 

Opining that Petitioner has failed to carry her burden of proving that DOE discontinued her probationary employment for a constitutionally impermissible purpose, in violation of a statute, or in bad faith, the Commissioner dismissed Petitioner's appeal.

Click HERE to access the full text of the Commissioner's decision.