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March 05, 2016

Selected Reports issued by the Office of the State Comptroller during the week ending March 5, 2016


Selected Reports issued by the Office of the State Comptroller during the week ending March 5, 2016
Click on text highlighted in color to access the full report

State audits released.
 
City University of New York – Administration of Fellowship Leaves; Follow-up
An initial audit issued in October 2013, examined whether the fellowship leaves granted instructional staff were awarded for authorized purposes and in compliance with all applicable requirements. Although most of the fellowship recipients reviewed complied with CUNY policy, improvements were needed to protect taxpayer dollars and the integrity of CUNY’s fellowship leave program. In a follow-up report, auditors determined CUNY has made progress in addressing the issues identified in the initial report.


Office of General Services – Passenger Vehicle Fleet Management
In the almost three years since the state’s Spending and Government Efficiency (SAGE) Commission’s recommendations, OGS has not made any formal recommendations regarding the state’s vehicle fleet, as directed in the commission report. As a result, there has been relatively little progress in achieving the overall goal of consolidating and centralizing management of the fleet, which largely remains the responsibility of managers at the individual agencies. For additional progress to occur, OGS needs to perform a comprehensive analysis of agency needs and take steps to ensure the fleet available to each agency is the proper size and makeup to most efficiently meet agency missions.


Department of Health – Fraudulent and Improper Claims – Follow-up
An initial audit issued in August 2013, determined that Medicaid made improper payments totaling $94,460 to Davis Ethical Pharmacy. Auditors determined that Davis Ethical likely fabricated nearly all of the improper claims. After an investigation, the owner, William Davis, pleaded guilty to Grand Larceny in the Second Degree in Nassau County District Court. In a follow-up, auditors determined DOH made progress addressing the problems identified in the initial report. At the time of the follow-up review, Davismade full restitution to the state.


United HealthCare – Fraudulent and Improper Claims
An initial audit report issued in August 2013, determined the New York State Health Insurance Plan (NYSHIP) made improper payments totaling $137,459 to Davis Ethical Pharmacy. After an investigation, the owner, William Davis pleaded guilty to Grand Larceny in the Second Degree in Nassau County District Court. In a follow-up, auditors determined United made progress addressing the problems identified in the initial report. At the time of the follow-up review, William Davis made full restitution to the state.
 

Higher Education Services Corporation – Tuition Assistance Program
Auditors determined that Metropolitan Learning Institute was overpaid $581,315 because school officials incorrectly certified students as eligible for state financial aid awards.


NYC Department of Health and Mental Hygiene – Administration of Contracts
NYC Department of Health and Mental Hygiene [DOHMH] did not effectively administer certain financial aspects of the contract with the Center for Urban Community Services. As a result, CUCS overbilled DOHMH by about $1.06 million during the year ended
June 30, 2013. The overbillings include $1.05 million of improperly claimed personal service expenses and $11,889 of unsupported or inappropriate non-personal service costs.


SUNY Downstate Medical Center – Review of Grove Technologies, Inc.
In April 2014, Downstate entered into a state-funded, non-competitive, single-source contract with Growe for electronic medical health record services.  Auditors found Downstate paid up to $1.3 million more than necessary by using a non-competitive procurement rather than bidding the services or using existing competitive contracts available to Downstate.  The decision to use the non-competitive contract was based on unsupported claims from Downstate officials.

March 04, 2016

IRS Alerts Payroll and HR Professionals to Phishing Schemes


IRS Alerts Payroll and HR Professionals to Phishing Schemes
Source: IRS Newsletter #IR-2016-34 [Links to additional information are in color below.]

On March 3, 2016, the Internal Revenue Service [IRS] issued an alert to payroll and human resources professionals warning of an emerging phishing e-mail scheme that purports to be from executive officers or supervisors and requests employee personal information.

The Merriam‑Webster dictionary defines phishing as "a scam by which an e-mail user is duped into revealing personal or confidential information which the scammer can use illicitly."

The IRS reports that it has learned this scheme – part of the surge in phishing e-mails seen this year – already has claimed several victims as payroll and human resources offices mistakenly e-mailed payroll data including W-2 Forms that contain Social Security numbers and other personally identifiable information, to cyber-criminals posing as executive officers or supervisors.

IRS Commissioner John Koskinen said “If your CEO appears to be e-mailing you for a list of company employees, check it out before you respond. Everyone has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees.”

IRS Criminal Investigation is reviewing several cases in which individuals have been tricked into sharing Social Security numbers with what turned out to be cyber-criminals. Criminals using personal information stolen elsewhere then seek to “monetize” this data, including filing fraudulent tax returns for refunds due a taxpayer. 

There is also a phishing variation is known as a “spoofing” e-mail. The e-mail will contain, for example, the actual name of an executive officer or supervisor. In this variation, the “CEO” sends an e-mail to a payroll or personnel office employee requesting a list of employees and information including employee Social Security numbers.

The following are actual examples of the information requested in these “spoof mails”:

“Kindly send me the individual 2015 W-2 (PDF) and earnings summary of all W-2 of our employees for a quick review

“Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary) as at 2/2/2016.

“I want you to send me the list of W-2 copy of employees wage and tax statement for 2015,

“I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and e-mail them to me ASAP.”

The IRS recently renewed and issued a consumer alert [IR-2016-28, Feb. 18, 2016] for e-mail schemes after seeing an approximate 400 percent surge in phishing and malware incidents so far this tax season and receiving other reports of scams targeting others in a wider tax community.

The e-mails are designed to trick individuals into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask individuals to provide a wide range of personal and financial information. E-mails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.

The IRS, state tax agencies and tax industry are engaged in a public awareness campaign – Taxes. Security. Together. – to encourage everyone to do more to protect personal, financial and tax data. See IRS.gov/taxessecuritytogetheror Publication 4524 for additional information addressing steps that can take to protect employees and individuals from spoofs, scams and phishing.  

March 03, 2016

Determining if an administrative agency's decision is arbitrary and capricious


Determining if an administrative agency's decision is arbitrary and capricious
Muhammad v Zucker, 2016 NY Slip Op 01446, Appellate Division, First Department

Dr. Rafeak Muhammad was disciplined after he was found to have falsified workers' compensation forms and treating workers' compensation patients when it was no longer medically indicated in his private practice.

Dr. Muhammad filed an Article 78 petition in which he sought to modify a consent order that limited his license to practice medicine and annul the determination of the Director of the Office of Professional Medical Conduct [the Director] with respect to certain modifications Dr. Muhammad had requested.

Supreme Court denied Dr. Muhammad's petition and dismissed the proceeding. The Appellate Division unanimously affirmed the Supreme Court’s ruling.

Citing the so-called Pell Doctrine,* the Appellate Division explained that the test used by courts to determine if an administrative agency's decision is arbitrary and capricious is whether the determination "is without sound basis in reason and is generally taken without regard to the facts." The court said that upon its review of the record, the Director’s decision not to join in Dr. Muhammad’s application seeking a modification of the underlying consent order "was rational and based on the facts.”

Dr. Muhammad had asked the Director to consider two proposed modifications of the consent order. The first modification would permit Dr. Muhammad to treat workers' compensation patients in the Jamaica Hospital Ophthalmology Clinic. The second modification Dr. Muhammad sought would permit him to treat workers' compensation patients in his private practice.

The Appellate Division noted that the Director concluded that the circumstances described in Dr. Muhammad’s letters of support from the chief financial officer of the hospital and the head of the ophthalmology department warranted only the adoption of first proposed modification.

The Director’s response to Dr. Muhammad's second modification request -- that he be permitted to treat workers' compensation patients in his private practice -- was a limited second modification order that would entail a more gradual release of the license restriction. 

This, said the court, demonstrated that the facts of this matter were considered and that the Director exercised his discretion in advocating an incremental approach, concluding that that this was not a case that would require the court to "surmise or speculate as to how or why an agency reached a particular conclusion."

* Pell v Bd. of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222

The decision is posted on the Internet at:
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