Selected reports issued by the Office of the State Comptroller during the week ending July 16, 2016

Selected reports issued by the Office of the State Comptroller during the week ending July 16, 2016

Source: Office of the State Comptroller

Click on text highlighted in color to access the entire report 

Bradford Fire Co. Treasurer Arrested for Stealing Public Funds

New York State Comptroller Thomas P. DiNapoli announced the arrest of Bradford Volunteer Fire Company Treasurer Sherry Hamilton. She was charged with grand larceny in the third degree, a class D felony, after an audit and investigation by DiNapoli’s office, working with the New York State Police and Steuben County District Attorney Brooks Baker, uncovered that Hamilton misappropriated more than $8,000 in fire company funds by allegedly taking "advance" payments on company activities and manipulating company bank accounts and records.

Since taking office in 2007, DiNapoli has committed to fighting public corruption and encourages the public to help fight fraud and abuse.  Individuals can report allegations of fraud involving public funds by calling the toll-free Fraud Hotline at 1-888-672-4555, by transmitting an e-mail to investigations@osc.state.ny.us, by filing a complaint online athttp://osc.state.ny.us/investigations/complaintform2.htm or by mailing a complaint to Office of the State Comptroller, Division of Investigations, 14th Floor, 110 State St., Albany, NY 12236.

Independent Review Finds State Pension Fund Strong, But Warns of Risks Posed by Limited Staffing

New York State Comptroller Thomas P. DiNapoli released an independent fiduciary and conflict of interest reviewof the New York State Common Retirement Fund (Fund) that commended the Fund for its strong policies and ethical management, stating that DiNapoli’s office "maintains a very high level of ethical, professional and conflict of interest standards." Funston Advisory Services, who conducted the review, repeatedly warned, however, that existing constraints on the Fund’s staffing and compensation could have current and future consequences.

Managed Care Companies Wasting Millions in State Medicaid Dollars

United HealthCare and Amerigroup, managed care organizations that contract with the Department of Health to provide health services under the state’s Medicaid program, made at least $6.6 million in improper and questionable payments to ineligible providers over a four-year period, including almost $60,000 in payments to pharmacies for medications that were prescribed by deceased doctors, according to an auditreleased by State Comptroller Thomas P. DiNapoli.

Audits of State entities released by State Comptroller DiNapoli

Port Authority of New York and New Jersey (PANYNJ): Inspecting Highway Bridges and Repairing Defects (Follow-Up) (2015-F-19)

An audit issued in May 2014 found the authority did not follow state Department of Transportation (DOT) requirements for classifying, reporting and repairing bridge defects. Instead, the PANYNJ followed its own methods and did not always comply with DOT’s requirement for an annual interim inspection if the repairs are not completed. Further, auditors noted that 10 of the 17 safety conditions sampled were not repaired for more than two years, including three which were open for five years. In a follow-up, auditors determined PANYNJ officials made progress in correcting the problems identified.

Higher Education Services Corporation: College of Westchester Tuition Assistance Program (2015-T-5)

Auditors determined that the procedures used by Westchesterofficials to certify students for state financial aid substantially complied with the governing law and regulations.

Office of General Services (OGS) and State Education Department (SED): Preferred Source Contracting (2014-S-77)

Although SED is responsible for monitoring the New York State Industries for the Disabled (NYSID) preferred source contracting program activities, it has provided only minimal oversight. As such, there is little assurance that NYSID is awarding contracts in a manner that best meets the purpose of the program, that member agencies and corporate partners are meeting contract requirements, and that the majority of the contracted work is being completed by disabled workers. Auditors also looked at the role that OGS plays in the program and found OGS is appropriately fulfilling its current responsibilities under the program. Nonetheless, auditors identified opportunities for OGS to improve its effectiveness.

From the LawBlogs – Week ending July 16, 2016

From the LawBlogs – Week ending July 16, 2016

[Internet links highlighted in color]

Posted by Justia

Prew v. Employee Ret. Sys. of City of Providence

“Petitioner, after more than fifteen years of service in the City of Providence, [Rhode Island] Police Department, was injured while on duty. The Department concluded that Petitioner’s injury interfered with her ability to handle a firearm. Later that month, Petitioner applied to the City of Providence Retirement Board for accidental-disability retirement. The Board voted to deny Petitioner’s application, finding that Petitioner’s condition was correctable with surgery and that Petitioner failed to mitigate her injury by undergoing surgery. The Supreme Court quashed the Board’s decision, holding that the Providence Code of Ordinances does not require an otherwise eligible employee to mitigate her injury by undergoing a surgical procedure in order to qualify for an accidental-disability pension. Remanded.”

N.B. Among the rulings by New York courts on the issue of "directing an employee to submit to surgery" are the following:

In Schenectady PBA v PERB, 196 A.D.2d 171, the Appellate Divisions said that General Municipal Law "§207-c evinces a legislative intent to balance a police officer's right to receive full salary and certain benefits while disabled due to an injury incurred in the line of duty, with certain rights of the employer, including the right to have the employee submit to medical and surgical treatment, and to obligate the injured officers to perform light duty if able," as §207-c expressly authorized an employer to discontinue paying benefits if the injured officer refused to accept light duty assignments or refused medical treatment.

In contrast, in Kauffman v Dolce, 216 A.D.2d 298 the critical issue concerned City of White Plains Firefighter Kauffman’s refusal to undergo surgery for a second time. The City terminated his General Municipal Law §207-a disability benefits on the ground that his refusal undergo the second surgery constituted a waiver of his right to these benefits. Supreme Court reinstated Kauffman's §207-a benefits, finding that his refusal to undergo surgery a second time was reasonable in light of the unsuccessful previous surgery and "the lack of the likelihood of success of the proposed surgery." The Appellate Division sustained the lower court's ruling, observing that the Court of Appeals' holding in Schenectady Police Benevolent Association v Public Employment Relations Board, 85 NY2d 480, that a municipality could require police officers receiving General Municipal Law 207-c benefits to undergo corrective surgery "under appropriate circumstances ... where reasonable,"  did not apply in Kauffman's situation.

A school teacher who had lost an eye as the result of an injury on the job refused to undergo eye surgery involving the other eye because of the problems which could result. Such refusal was held reasonable by the Workers' Compensation Board. When the insurance carrier appealed, the Appellate Division affirmed the Workers' Compensation Board's determination,  holding  that the Board's finding that the teacher's refusal was reasonable under the circumstances was supported by the record (Burroughs v Goshen Public Schools, 98 A.D.2d 891).

Posted by Employment Law Daily

Police officer’s racial profiling led to job loss

By David Stephanides, Esq.

A local police department was proud of its reputation for stopping alcohol- or drug-impaired drivers passing through its city, and it encouraged its officers to make a high volume of stops. A well-respected officer decided, on his own initiative, to be more aggressive with his traffic stops to get his numbers up (City of Chaska, Minnesota and Law Enforcement Labor Services, Inc., Local No. 210, St. Paul, Minnesota,Feb. 19, 2016, Richard Miller, Arbitrator).

Employee with mental health issues unqualified due to safety risk; no direct threat defense required

By Dave Strausfeld, J.D.

The Wisconsin Division of Motor Vehicles was not required to rely on a direct-threat defense in a discriminatory discharge suit brought by an employee with a mental health disability whose behavior raised safety concerns, so it did not need to bear the burden of proof associated with that affirmative defense, held the Seventh Circuit, affirming summary judgment dismissing her Rehabilitation Act claim. Rather, it could simply argue she failed to make a showing that she was “otherwise qualified” for her position, and on this issue she bore the evidentiary burden. Sending her for an independent medical examination did not necessarily trigger the direct-threat framework (Felix v. Wisconsin Department of Transportation, July 6, 2016, Rovner, I.).

First Amendment may protect officer from retaliation for aiding FBI investigation

By Dave Strausfeld, J.D.

The First Amendment might protect a police sergeant from retaliation for aiding an FBI investigation into corruption by police department and town officials, held the Fifth Circuit, reversing a summary judgment ruling. His involvement in the FBI investigation did not appear to be within the ordinary perimeters of his job duties, especially since he was forbidden to disclose it to anyone in the police department, so he appeared to be communicating with the FBI in his capacity as a “citizen.” But on a separate issue, he did not state a False Claims Act whistleblower retaliation claim against individual town officials because a 2009 amendment did not expand the FCA to provide individual liability (Howell v. Town of Ball, July 1, 2016, Jolly, E.).

An arbitration award must be vacated if a party's rights were impaired by an arbitrator exceeding his or her power in making the determination

An arbitration award must be vacated if a party's rights were impaired by an arbitrator exceeding his or her power in making the determination

Matter of O'Flynn (Monroe County Deputy Sheriffs' Assn., Inc.), 2016 NY Slip Op. 05261, Appellate Division, Fourth Department

The Monroe County Sheriff’s Department terminated then Deputy Sergeant Paul Doser from his position after Doser was involved in a one-car rollover accident and it was determined that he was driving while intoxicated (DWI).

The appointing authority filed disciplinary charges against Doser alleging: (1) Driving while intoxicated in violation of Vehicle and Traffic Law §1192(3); (2) Aggravated DWI with a blood alcohol content of .18 percent or greater in violation of Vehicle and Traffic Law §1192(2-a)(a); (3) Aggravated DWI with a child in the car in violation of Vehicle and Traffic Law §1192(2-a)(b); (4) Endangering the welfare of a child in violation of Penal Law §260.10(1); and (5) Engaging in conduct unbecoming of his position. 

Consistent with the controlling collective bargaining agreement (CBA), the Department held a administrative disciplinary hearing at which Doser was represented by the Monroe County Deputy Sheriffs' Association, Inc. [Association]. Doser was found guilty of all the charges filed against him and the penalty imposed was termination.

Doser then filed a grievance challenging the Department’s disciplinary decision and, pursuant to the CBA, a hearing was held before an arbitrator.

At the arbitration the arbitrator found that certain evidence, including the chemical test results measuring Doser's blood alcohol content, was inadmissible. Refusing to consider such evidence, the arbitrator found that the second and fifth charges were not supported by clear and convincing evidence and dismissed those charges but sustained charges one, three, and four.

Comparing the penalty imposed on Doser, termination, with the penalties imposed on other officers also involved in similar DWI-related violations, the arbitrator noted that none of the other officers had been terminated. Concluding that Doser's termination was arbitrary and capricious, the arbitrator ruled [1] that demotion, rather than termination, was the appropriate penalty and [2] that Doser was to be reinstated by the Department and compensated for lost pay.

The Department filed a CPLR §7511 petition seeking to vacate the arbitrator's determination and award. Finding that the arbitrator “exceeded his authority by improperly neglecting to consider certain evidence” received in the course of the disciplinary hearing, Supreme Court vacated the award in its entirety, and ordered a rehearing before a different arbitrator.

The Association appealed the Supreme Court’s decision. The Appellate Division, however, sustained the lower court’s ruling, explaining that CPLR §7511(b) provides that an arbitration award must be vacated if, as relevant in this appeal, “a party's rights were impaired by an arbitrator who exceeded his [or her] power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made."

The Appellate Division observed that "[i]t is well settled that a court may vacate an arbitration award only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power" and “[o]utside of these narrowly circumscribed exceptions, courts lack authority to review arbitral decisions, even where an arbitrator has made an error of law or fact." The court concluded that the arbitrator, in this instance, had “clearly exceeded his authority as provided by the CBA.”

Rather than comply with the provisions in the CBA that "[t]he arbitrator shall review the record of the disciplinary hearing and determine if the finding of guilt was based upon clear and convincing evidence," the arbitrator, instead of reviewing the record from the hearing, considered only a portion of the record after having decided to exclude certain evidence from his review.

Having failed to review all the evidence that, in this instance, the arbitrator was required to review, the Appellate Division concluded that Supreme Court had properly found that the arbitrator exceeded his authority and vacated the arbitration award. In so doing, the Appellate Division rejected the Association’s argument that “any error in this regard was harmless.” Rather, said the court, the arbitrator’s refusal to consider the inappropriately-excluded evidence directly resulted in the dismissal of two out of the five charges.

In addition, the Appellate Division rejected the Association’s claim that even if that error did not impact the arbitrator's determination as to the penalty to be imposed, the imposition of the penalty of termination was arbitrary and capricious in and of itself. The Appellate Division disagreed, explaining by the arbitrator's  making comparisons between the conduct alleged against Doser and that committed by other officers in other, similar, cases after excluding certain evidence against Doser resulted making a comparison without the benefit of a full review of the record.

As to the objection of the Association to Supreme Court’s ordering a rehearing before a different arbitrator, the Appellate Division said that in “vacating an arbitration award, a court has the discretion to ‘order a rehearing and determination of all or any of the issues either before the same arbitrator or before a new arbitrator.’" As the arbitrator making the decision challenged by the Department exceeded his authority under the CBA, the Appellate Division said it conclude that the court did not abuse its discretion in ordering that a different arbitrator conduct the rehearing and affirmed the Supreme Court’s order vacating the initial arbitrator’s opinion and award and ordering a rehearing before a different arbitrator.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_05261.htm

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A Reasonable Penalty Under The Circumstances - a 618-page volume focusing on New York State court and administrative decisions addressing an appropriate disciplinary penalty to be imposed on an employee in the public service found guilty of misconduct or incompetence. For more information click on http://booklocker.com/7401.html

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New York State’s Human Rights Law does not protect an employee from all retaliation, only from retaliation that results in an injury or harm

New York State’s Human Rights Law does not protect an employee from all retaliation, only from retaliation that results in an injury or harm

Napierala v New York State Div. of Human Rights, 2016 NY Slip Op 04832, Appellate Division, Fourth Department

Lisa Napierala challenged New York State Division of Human Rights’ [SDHR] determination of "no probable cause" with respect to her complaint that Erie Community College [ECC] had retaliated against her in violation of the State’s Human Rights Law. Supreme Court granted Napierala’s CPLR Article 78 petition and the SDHR appealed.

The Appellate Division unanimously reversed the Supreme Court’s ruling “on the law” and reinstated SDHR’s determination.

Napierala, a security officer at ECC had alleged that ECC had retaliated against her "by subjecting her to adverse employment actions after she complained of discrimination." In particular, she contended that:

1. ECC retaliated against her by assigning her to guard duty in its athletic center at a time when the gymnasium floor was being polyurethaned and strong fumes resulted in her becoming ill near the end of her shift.*  

2. ECC retaliated against her when it allegedly lost her "On-the-Job-Training Certificate," which led to the lapse of her security license and resulted in her suspension without pay.

In reinstating SDHR’s finding of "no probable cause" the Appellate Division observed that when SDHR renders a determination of no probable cause without holding a hearing, the appropriate standard of judicial review is whether the "no probable cause" determination was arbitrary and capricious or lacked a rational basis. Further, noted the court, SDHR "has broad discretion to determine the method to be employed in investigating complaints … and its determinations are entitled to considerable deference due to its expertise in evaluating discrimination claims."

The court said that in its view, SDHR's determination is not arbitrary or capricious and it has a rational basis. Further, the record established that Napierala "had a full and fair opportunity to present her case and that [SDHR's] investigation was neither abbreviated nor one-sided." Probable cause exists, explained the Appellate Division, "only when, after giving full credence to the complainant’s version of the events, there is some evidence of unlawful discrimination."

Crediting Napierala’s contention that ECC intentionally assigned her to its athletic center knowing that the gym floor was being polyurethaned, the Appellate Division concluded that there is no evidence of unlawful discrimination as Napierala:

[1] was not forced to stay at the athletic center against her will, nor 

[2] was she disciplined for leaving work early. 

The New York State’s Human Rights Law and Title VII of the Civil Rights Act of 1964, and, in the words of the Appellate Division, "are textually similar and ultimately employ the same standards of recovery," and thus "federal case law in this area . . . proves helpful to the resolution of this appeal." The Appellate Division then pointed out that the United States Court of Appeals for the Second Circuit has opined that Title VII "does not protect an employee from all retaliation, but only retaliation that produces an injury or harm.  ... and in Napieralasituation there was no injury or harm."

Turning to Napierala’s allegation concerning the security license lapse issue, the Appellate Division stated that it did not appear from the record that ECC ever was in possession of Napierala’s training certificate. In any event, the court said that the record shows that ECC provided Napierala with an opportunity to rectify the situation. While Napierala was ultimately suspended without pay, this suspension was initiated only after she failed to rectify the situation, an action consistent with ECC’s treatment of other security officers with lapsed licenses.

As to SDHR’s failure to hold a hearing concerning Napierala’s complaint, the Appellate Division explained that “there was no need for a hearing ‘because the record does not demonstrate the existence of unresolved questions that required further scrutiny.’”

Citing McFarland v New York State Div. of Human Rights, 241 AD2d 108, the court explained that "[A]s long as the investigation is sufficient and the [petitioner is] afforded a full opportunity to present his [or her] claims, [i]t is within the discretion of [SDHR] to decide the method or methods to be employed in investigating a claim." As SDHR had contacted both Napierala and ECC and had requested specified answers and documents related to Napierala’s allegations, "the conflicting evidence before SDHR did not create a material issue of fact that warranted a formal hearing."

* Napieralaleft work after leaving a voice message with her supervisor advising him that she had to leave her shift early. She subsequently met with the Human Resources Department to discuss why she went home sick without first obtaining her supervisor's permission. However, no disciplinary action against her was taken.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04832.htm

Changes in IRS rule concerning deferred compensation plans of a state, a local government and other tax-exempt organizations proposed

Changes in IRS rule concerning deferred compensation plans of a state, a local government and other tax-exempt organizations proposed

Source: The FEDERAL REGISTER, 40548, Vol. 81, No. 120

Proposed regulations set out rules addressing the taxation of compensation applicable to "tax deferred compensation plans" established and maintained by State or local governments and other tax exempt organizations.* 

The proposed regulations include rules for determining "when amounts deferred under these plans are includible in income, the amounts that are includible in income, and the types of plans that are not subject to these rules."

The proposed regulations would affect participants, beneficiaries, sponsors, and administrators of certain plans sponsored by State or local governments or tax-exempt organizations that provide for a deferral of compensation.

* Article 8-C of New York State's Education Law, Special Annuity Plan, establishes a “deferred compensation plan” available to “a person employed by the state university [of New York and the employees at the Statutory Contract Colleges at Cornell and Alfred Universities], the board of higher education of the city of New York, or a community college established and operated under article one hundred twenty-six” of the Education Law as permitted pursuant to §403(b) of the Internal Revenue Code, as amended. Article 63 of the Education Law allows “§403(b) deferred compensation plans” to be made available to employees of a school district or a BOCES by the appointing authority.

The proposed regulations and notice of public hearing is posted on the Internet at: https://www.gpo.gov/fdsys/pkg/FR-2016-06-22/pdf/2016-14329.pdf