CPLR Article 78 expresses a preference that state courts, rather than federal courts, decide a federal litigant’s “state-law statutory-construction” claim

CPLR Article 78 expresses a preference that state courts, rather than federal courts, decide a federal litigant’s “state-law statutory-construction” claim

Carver v. Nassau County Interim Finance, CA2, Docket Nos. 13-0801, 13-0840

James Carver, Gary Learned, and Thomas R. Willdigg, as presidents of the their respective employee organizations representing certain employees in Nassau County police collective bargaining units [Police Union], challenged a wage freeze imposed by the Nassau County Interim Finance Authority [NIFA].* Police Union alleged that the freeze violated the Contracts Clause, Article I, Section 10 of the Constitution of the United States and NIFA’s power to impose a wage freeze pursuant to §3669 of the New York Public Authorities Law had expired.

The district court granted summary judgment to Police Union based solely on the statutory Interpretation of its State law claim. NIFA appealed and the Circuit Court of Appeals held that the district court, in granting summary judgment to Police Union on its state law claim without reaching the constitutional question, abused its discretion in exercising pendent jurisdiction over the statutory construction claim. It vacated the lower court’s ruling and remanded the matter with instructions to the district court to dismiss Police Union’s statutory construction claim..

On January 26, 2011, NIFA imposed a control period. After Nassau County unsuccessfully challenged the imposition of the control period in an Article 78 proceeding, County of Nassau v. Nassau County Interim Finance Authority, 33 Misc. 3d 227, NIFA passed two resolutions freezing wages for all County employees on March 24, 2011.

The wage freeze forced the County to breach the terms of the collective bargaining agreements it had entered into with the various County police unions. On April 1, 2011, Police Union commenced this action in federal court, alleging that the wage freeze violated the Contracts Clause, Article I, Section 10 of the Constitution. Police Union later amended its complaint to add a second claim that NIFA lacked the authority under state law to order a wage freeze after the conclusion of the interim finance period.

The district court did not reach Police Union’s “Constitutional claim,” holding that the statutory question was “most appropriate for summary disposition.”

The Circuit Court, noting that district courts have supplemental jurisdiction over pendent state law claims “that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution,” 28 U.S.C. §1367(a) said that it was reviewing the district court’s decision to assert supplemental jurisdiction over a state law claim under an abuse-of-discretion standard.

As this case “… concededly presents an unresolved question of state law and is also one in which there are exceptional circumstances which provide compelling reasons for declining jurisdiction,” the Circuit Court held that “the construction of the provision of the NIFA Act at issue raises an unresolved issue of state law – the interpretation of a poorly drawn statute – that should be resolved by the New York state courts because the manner in which the statute is construed implicates significant state interests.”

The court explained that as it had previously ruled, “[w]here a pendent state claim turns on novel or unresolved questions of state law, especially where those questions concern the state’s interest in the administration of its government, principles of federalism and comity may dictate that these questions be left for decision by the state courts,” citing Seabrook v. Jacobson, 153 F.3d 70, 72 (2d Cir. 1998).

Although the defendants argued that jurisdiction over this pendent state law claim should be denied because of the special statutory procedure that New York law – CPLR Article 78 – provides for adjudicating claims that a body or officer has acted in a manner not authorized by state law the Circuit Court said that it “need not decide, however, whether Article 78 can, on its own, deprive a federal court of jurisdiction over claims brought under that provision, as some district court cases have held….” For present purposes, said the court, it is sufficient to recognize that Article 78 reflects a state preference for a state mode of procedure that “is designed to facilitate a summary disposition of the issues presented . . . and has been described as a fast and cheap way to implement a right that is as plenary as an action, culminating in a judgment, but is brought on with the ease, speed and inexpensiveness of a mere motion.”

The Circuit Court said that on remand “the district court should dismiss the state-law claim, but retain jurisdiction over [Police Union’s] federal constitutional claim. Should Police Union decide to pursue its state-law statutory-construction or other related claims in state court, the district court may decide, within its discretion, to stay the federal action until the state-court litigation has completed because the state courts’ resolution of the state claim may obviate the need to resolve the federal constitutional question.

* The Nassau Interim Finance Authority is a public benefit corporation created by the New York State Legislature in June 2000 in response to the growing financial crisis facing Nassau County.

The decision is posted on the Internet at:

http://www.ca2.uscourts.gov/decisions/isysquery/b65ec9ef-fa95-4977-ab50-375dc005b6b9/1/doc/13-801_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/b65ec9ef-fa95-4977-ab50-375dc005b6b9/1/hilite/.

The Commissioner of Education does not provide an “advisory opinion” in adjudicating an appeal filed pursuant §310 of the Education Law

The Commissioner of Education does not provide an “advisory opinion” in adjudicating an appeal filed pursuant §310 of the Education Law

Decisions of the Commissioner of Education, Decision No. 16,551

In this appeal the educator alleged that the school district had assigned her to a tenure area without her consent.

Citing Appeal of Vuoto, 44 Ed Dept Rep 251, [Decision No. 15,163], the Commissioner dismissed the educator's complaint explaining that essentially the educator sought an advisory opinion concerning her seniority status and that such “relief that is unavailable in an Education Law §310 appeal.”

However, said the Commissioner, his dismissal of the educator’s appeal was “without prejudice to any future application for similar relief should [the educator] hereafter become actually aggrieved within the purview of Education Law §310.”

The decision is posted on the Internet at:

http://www.counsel.nysed.gov/Decisions/volume53/documents/d16551.pdf
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Summaries of selected reports and information published by New York State's Comptroller Thomas P. DiNapoli

Summaries of selected reports and information published by New York State's Comptroller Thomas P. DiNapoli

New York State Comptroller Thomas P. DiNapoli issued the following audit reports during the week ending September 21, 2013. Click on text highlighted in bold to access the full report.

Department of Health, Enhanced Medicaid Payments to Selected Home Health Care Service Providers (Follow-Up ) (2013-F-1)

An initial issued in September 2010, examined whether selected home health care providers properly used Medicaid funds for the recruitment, training and retention (RTR) of direct care staff and whether DOH was effectively overseeing this funding. Auditors were unable to fully account for providers' use of RTR funds because the funds were comingled with other funds. In a follow-up report, auditors found DOH had not implemented the four recommendations made in the initial report and further actions are still needed.

New York State Health Insurance Program, Upcoding of Selected Evaluation and Management Services (Follow-Up) (2013-F-13)

The New York State Health Insurance Program provides health insurance coverage to active and retired state, participating local government and school district employees and their dependents. The Empire Plan is the primary health benefits plan for the Program. The state Department of Civil Service contracts with United HealthCare to process medical claims for services provided to Empire Plan members. In an initial audit, auditors estimated United overpaid as much as $6,487,932 to providers who billed at a higher paying code than the service actually merited. In a follow-up, auditors found United completed a major project to review claim payments for evaluation and management services. As a result, United recovered more than $1 million in overpayments.

Department of Health, Collection of Medicaid Accounts Receivable (Follow-Up) (2013-F-2)

An initial audit report issued in September 2010 examined whether DOH effectively recovered accounts receivable when Medicaid overpaid providers. For the period Jan. 1, 2006 through Feb. 18, 2010, auditors found DOH needed to act more effectively to collect about $37 million of accounts receivable. Auditors also found DOH needed to act more promptly to recover amounts repaid to the federal government for receivables that eventually became uncollectible and, therefore, were written-off. In a follow-up, auditors found DOH and the Office of the Medicaid Inspector General have made progress in correcting the problems identified in the initial report. All four prior audit recommendations have been partially implemented.

New York City Department of Consumer Affairs, License Fee Revenues (Follow-Up) (2013-F-6)

The New York City Department of Consumer Affairs issues licenses and permits for certain businesses operating and collects associated fees. For the fiscal year ended June 30, 2013 the department collected $8.1 million in license fees, $10 million in franchise fees, and fines totaling $14.3 million. Auditors found that the methods used to identify unlicensed businesses were not sufficient, and that some businesses continued operating many years after their licenses expired. The department could likely generate additional revenue if it used better methods to identify businesses that operate without a required license. In a follow-up, auditors found department officials have made significant progress in addressing the matters identified in the initial report as all five prior audit recommendations have been implemented.

New York City Health and Hospitals Corporation, Non-Emergency Patient Transportation (Follow-Up) (2013-F-7)

 
The New York City Health and Hospitals Corporation operates 11 acute care hospitals, four skilled nursing facilities, six large diagnostic and treatment centers, and more than 70 community health or school-based clinics. HHC provides non-emergency transportation to patients who require it for healthcare-related services. In an initial report, auditors identified a number of weaknesses in the system, including a lack of documentation for physician authorization of patient transportation and instances where trips were not billed at the correct rates. Auditors also found that three of the 14 drivers working for one of the providers had criminal histories. In a follow-up, auditors found HHC officials have made progress in addressing the problems identified in the initial report. Of the seven prior audit recommendations, six recommendations have been implemented.

State University of New York at Albany, Disposal of Electronic Devices (2012-S-40)

At the time of the audit, the university had 36 electronic devices ready for disposal through the Office of General Services’ surplus unit. Seven of the computer hard drives still contained data, even though University at Albany had provided OGS with certifications indicating all information had been removed.
Two of these hard drives contained personal, private or sensitive information including social security numbers, dates of birth, home addresses and financial information. One of these two hard drives also contained potentially inappropriate photographs that could be considered offensive for the work place.
The other five hard drives also contained retrievable data that included resumes, personal vacation photos, research information and student term papers. One of the seven hard drives was taken from a laptop computer, which should have required more stringent security controls and been encrypted.

Department of Corrections and Community Supervision, Disposition of Farm Assets (2013-S-24)

DOCCS employed an average of about 250 inmates and 50 State employees to operate its farming operations. As part of the 2009-2010 state budget process, DOCCS was directed to close these farm operations to generate cost savings. While auditors could not precisely determine the nature and extent of all the equipment and livestock on hand at the time of the farm closures in 2009, they did identify more than 3,300 farm equipment items and almost 300 head of cattle that had been publicly sold or transferred to other state agencies. These transactions generated almost $570,000 of one-time revenues. DOCCS has also leased a significant portion of its former farm land via public bidding and is earning approximately $125,000 annually from this effort.

State University of New York at Binghamton, Selected Employee Travel Expenses (2012-S-127)

 

As part of a statewide initiative to determine whether the use of travel money by selected government employees was appropriate, auditors selected seven Binghamton employees for audit with travel expenditures totaling $839,204, but were only able to audit the expenses incurred for these seven employees from June 14, 2009 and March 31, 2011 totaling $548,262 because the university, as allowed by state record retention policies, had purged documentation prior to June 14, 2009. Most of the travel expenses examined were appropriate. However, university officials failed to ensure that lodging expenses were within allowable rates in 24 instances allowing a total of $2,258 to be spent in excess of federal per diem lodging rates. University officials also allowed employees to pay back $36,880 of unused travel advances in installments long after the ten day accounting and reconciliation requirement.

Office of Court Administration, Selected Employee Travel Expenses (2012-S-96)

Auditors examined the travel costs of one employee whose travel costs totaled $115,797. They found that while the travel expenses for the employee were supported, they need to be further reviewed to determine whether Internal Revenue Service "tax home" rules may apply and may result in taxable income.  In addition, Judicial Travel Rules were sometimes not complied with.

Village of Gowanda – Procurement (Cattaraugus County)

The village is incurring higher costs than necessary for goods and services. Auditors found purchases were not formally bid or awarded by the village board, quotes were not always obtained, and village officials did not determine if they received the correct state or county contract pricing.

Town of Mohawk – Records and Reports (Montgomery County)

The town supervisor did not maintain accurate and complete accounting records to properly document assets, liabilities, fund balances, results of operations, or prepare accurate reports that would allow the board to adequately monitor the town’s financial operations. As a result, town officials lacked assurance that fund balance was available to fund budgeted appropriations.

Town of Sodus – Financial Management and Professional Services (Wayne County)

The town board repeatedly adopted budgets with inaccurate revenue and expenditure estimates, which led to the accumulation of significant surplus funds. In addition, the town’s procurement policy does not require the solicitation of written proposals or quotes for the acquisition of professional services. In 2011 and 2012 the town paid $314,781 to seven professional service providers without soliciting competition.

South Fallsburg Fire District – Internal Controls Over Financial Operations (Sullivan County)

While the district does have adequate financial policies, it does not have certain financial procedures in place. For example, the district treasurer submits a budget-to-actual financial report to the board only at the end of the fiscal year and has not filed the required annual financial report with the Office of State Comptroller since the 2008. In addition, the board contracts with an independent auditor to perform an annual audit of the treasurer’s records; however, the last completed audit was performed in 2010.

Village of Spencerport – Financial Management (Monroe County)

The village board has consistently adopted budgets with unrealistic estimates of revenues, expenditures and the amount of fund balance to be used to fund operations. From 2007 through 2012, the board appropriated $3.73 million in fund balance for the general and sewer funds, but did not use $2.9 million of this amount. Consequently, the village accumulated $833,139 of unexpended surplus funds in the general fund and $522,373 in the sewer fund.

Town of White Creek – Board Oversight of Financial Activities (Washington County)
 
The town supervisor did not adequately oversee and monitor the work of the budget officer who served as the town’s bookkeeper and maintained the town’s accounting records. Due to the poor condition of the town’s financial records and reports, the town board was unable to determine the town’s true financial condition or effectively monitor financial operations.
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