Determining the timeliness of an appeal of an administrative decision to an administrative appellate body within the agency

The critical lesson set out in this decision by the Appellate Division is that a request to reconsider a "final administrative determination" does not toll the running of the statute of limitations for initiating litigation challenging the decision.

The Appellate Division said it agreed with the Supreme Court's determination that the commencement of a proceeding pursuant to CPLR Article 78 was untimely as the retiree [Petitioner] did not file the action within four months of receiving the Retirement Systems determination informing her of the effective date of her retirement. Although Petitioner's subsequent asked the Retirement System to reconsider its determination regarding the effective date of her retirement, requests for "administrative reconsideration" do not extend or toll the running of the statute of limitations.

A related question concerns the timeliness of filing an administrative appeal of an agency's determination concerning a matter when a statute authorizes an individual to file an appeal from an administrative determination by mail. Is the controlling date the date the appeal was mailed to the agency's administrative appellate body or the date on which the appeal was received by the administrative appellate body?

In McLaughlin v Saga Corp., NYS Appellate Division, 242 A.D.2d 393, the Appellate Division overturned the traditional view was that the notice of appeal is untimely if it physically received by the appellate body after the Statute of Limitations had passed.

Rather, decided the Appellate Division, if the party is able to submit "proof of mailing within the limitations period," the application or appeal is timely.

The case arose under a provision of the Workers' Compensation Law that allowed a party to "serve" its appeal on the WCB by mailing it to the Board within 30 days. However, the Board took the position that unless it received the application for review on or before the last day of the 30-day limitations period, it was untimely. In Saga's case, although mailed within the 30-day period allowed for filing the application, WCB did not physically receive it until eight days after the statute of limitations had expired.

The rationale underlying the revised ruling is clear. If a person has a statutory right to make a decision, which may be then filed by mail, this period would necessarily be shortened if the appellate body could insist that it physically receive the mailed notice no later than the last day of the period of limitation.

In effect the Appellate Division concluded that the method of service of a notice of appeal, mail or personal delivery, should not determine the time period available to the party to decided whether or not to appeal an administrative ruling.

However, it appears that such a final action must be reduced to writing in order to start the running of the statute of limitations. In McCoy v San Francisco, City and County, 14 F.3d 28 , theU.S. Court of Appeals, 9th Circuit, ruled that a public employee's civil rights suit against his employer accrued when the appointing authority issued a  written statement suspending him from work, rather than from the date of a hearing held earlier at which time McCoy was orally told he was suspended from his position.

The Retirement System decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04177.htm

The McLaughlin v Saga decision is posted on the Internet at:

https://casetext.com/case/matter-of-mclaughlin-v-saga-corporation-1

The McCoy v San Francisco decision is posted on the Internet at:

https://www.leagle.com/decision/19944214f3d28130

School District held not a party to the long-term disability insurance policy issued by the insurer covering certain District employees

Arroyo v Central Islip UFSD

2019 NY Slip Op 04669

Decided on June 12, 2019

Appellate Division, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on June 12, 2019 SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department 
ALAN D. SCHEINKMAN, P.J. 
CHERYL E. CHAMBERS 
LEONARD B. AUSTIN 
COLLEEN D. DUFFY, JJ.

2016-09188 
(Index No. 32465/09) 

Gail Arroyo, appellant, 

v

Central Islip UFSD, et al., respondents, et al., defendants.

Law Offices of Wayne J. Schaefer, LLC, Smithtown, NY, for appellant.

Devitt Spellman Barrett, LLP, Smithtown, NY (John M. Denby of counsel), for respondents.

DECISION & ORDER*

In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Joseph C. Pastoressa, J.), dated June 30, 2016. The order granted the motion of the defendants Central Islip UFSD and Central Islip Union Free School District pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against them.

ORDERED that the order is affirmed, with costs.

The plaintiff was employed as a security guard by the defendants Central Islip UFSD and Central Islip Union Free School District (hereinafter together the District). She sustained injuries in the course of her employment and sought benefits under a long-term disability insurance policy issued by the defendant Sun Life and Health Insurance Company (U.S.) (hereinafter Sun Life), which covered certain employees of the District. The named policyholder was the Trustee of the New York State Group Insurance Trust. The policy provided that a written notice of claim for long-term disability benefits had to be sent to "us," defined as Sun Life, at its home office. The policy further provided that no legal action could be commenced against Sun Life for the claim until 60 days after the filing of the notice of claim.

A handbook which Sun Life provided to employees of the District stated that as participants in an employer benefit plan, employees were entitled to rights and protections under the Employee Retirement Income Security Act of 1974 (29 § USC 1001 et seq.; hereinafter ERISA). The handbook named Sun Life as the claims fiduciary with the obligation, and the discretion, to determine claims in its sole and exclusive discretion and to construe all issues relating to eligibility for benefits. The handbook stated that benefit determinations could be appealed to a named office of Sun Life and that, while the determination was final, an employee could bring an action in federal court under section 502(a) of ERISA (29 USC § 502[a]).

The plaintiff was initially granted long-term disability benefits by Sun Life but, after receiving benefits for almost three years, the plaintiff was notified by Sun Life in a letter dated September 11, 2008, that she was no longer eligible for benefits as she was no longer totally disabled. The plaintiff was given written notice of her right to appeal to a designated Sun Life office [*2](the same one named in the handbook). She was also advised that she may have the right to bring a civil action under ERISA in the event of an adverse appeals determination. The plaintiff exercised her right to appeal the determination to Sun Life; however, her appeal was denied. The plaintiff commenced this action against Sun Life, the District, and others, alleging breach of contract and wrongful denial of benefits under ERISA. The District moved pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against it based, inter alia, on a lack of privity. In an order dated June 30, 2016, the Supreme Court granted the District's motion. The plaintiff appeals.

The plaintiff's arguments on this appeal are predicated largely upon excerpts from a Summary Plan Description which the plaintiff asserts was issued by Sun Life's predecessor as policy issuer. The Summary Plan Description identifies the District as the plan administrator and as the agent for service of legal process. The Summary Plan Description also states that any denial of benefits would be provided by the named plan administrator, which was the District, and that the claimant has 60 days after receipt of a written denial to request review. The Summary Plan Description further states that a decision would be rendered within 60 days of receipt of the request for review and that plan participants have rights under ERISA which may be enforced by a lawsuit in federal court. The Summary Plan Description states that it does not constitute a part of the insurance plan or part of the insurance policy.

The plaintiff acknowledges that ERISA is not applicable to the subject Sun Life plan as it constitutes a governmental plan exempt from ERISA (see 29 USC §§ 1002[32]; 1003[b][1]; Lyndaker v Board of Educ. of W. Can. Val. Cent. Sch. Dist., 129 AD3d 1561, 1562-1563). Nevertheless, the plaintiff contends that, based on the language of portions of the Summary Plan Description, the District subjected itself to ERISA's statutory scheme governing appeals from denials of claims. We disagree.

An insurance policy is a contract to which standard provisions of contract interpretation apply (see Universal Am. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 25 NY3d 675, 680; Omanoff v Rohde, 129 AD3d 510, 510). "Liability for breach of contract does not lie absent proof of a contractual relationship or privity between the parties" (Hamlet at Willow Cr. Dev. Co., LLC v Northeast Land Dev. Corp., 64 AD3d 85, 104; see Siskin v Cassar, 122 AD3d 714, 717; CDJ Bldrs. Corp. v Hudson Group Constr. Corp., 67 AD3d 720, 722). "One cannot be held liable under a contract to which he or she is not a party" (Victory State Bank v EMBA Hylan, LLC, 169 AD3d 963, 965; see Maki v Travelers Cos., Inc., 145 AD3d 1228, 1230; 1911 Richmond Ave. Assoc., LLC v G.L.G. Capitol, LLC, 90 AD3d 627, 627).

Here, the District was not a party to the long-term disability policy issued by Sun Life to a different named policyholder. Even assuming the authenticity of the Summary Plan Description excerpts relied upon by the plaintiff, nothing in the record reflects that the District authored, published, or agreed to be bound by the Summary Plan Description, which, by its terms, did not form part of the insurance policy. Nor do the terms of the insurance policy incorporate the provisions of ERISA (cf. Advanced Refractory Tech. v Power Auth. of State of N.Y., 81 NY2d 670, 678). While portions of the handbook, distributed to District employees by Sun Life, assert the applicability of ERISA to those employees, the record does not indicate that the District issued or agreed to be bound by the provisions of the handbook. Further, the record indicates that the plaintiff followed the claims review and appeal procedures set forth by Sun Life and that the determinations were made by Sun Life without the involvement of the District. The plaintiff's lack of privity with the District is fatal to her breach of contract cause of action against the District (see Siskin v Cassar, 122 AD3d at 717; 1911 Richmond Ave. Assoc., LLC v G.L.G. Capitol, LLC, 90 AD3d at 627).

Additionally, the plaintiff failed to timely serve a notice of claim on the District, which is a condition precedent to the commencement of an action against a school district (see Education Law § 3813[1]; Matter of Zelin v Blind Brook-Rye Union Free Sch. Dist., 164 AD3d 1352, 1352; Santostefano v Middle Country Cent. Sch. Dist., 156 AD3d 926, 927). The plaintiff contends that the District waived the notice of claim requirements by agreeing to an ERISA-based appeal procedure as outlined in Sun Life's September 11, 2008, letter. This argument is without merit as the letter was issued by Sun Life, not by the District (cf. Matter of Geneseo Cent. School [*3][Perfetto & Whalen Constr. Corp.], 53 NY2d 306, 311).

Accordingly, we agree with the Supreme Court's determination granting the District's motion to dismiss the complaint insofar as asserted against it.

In light of this determination, we need not address the parties' remaining contentions.

SCHEINKMAN, P.J., CHAMBERS, AUSTIN and DUFFY, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04669.htm

* N.B. See, also, Matter of Gail Arroyo v Central Islip UFSD, et al., posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04688.htm

Failing to call the trial court's attention to a law, rule or regulation may preclude citing such provisions in an appeal from an adverse decision by the lower court

The New York State Department of Financial Services [DFS] appeal the District Court denial of its post-verdict motion for judgment as a matter of law, or, alternatively, for a new trial, after a jury found DFS liable under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., for unlawfully discriminating against an individual [Petitioner] based on his national origin when it failed to promote him.

On the issue of liability, DFS argued that the jury’s answer to a special interrogatory on the verdict form demonstrated [1] a level of jury confusion that warranted a new trial and that [2] the evidence presented at trial was insufficient to support Petitioner’s claims. After reviewing the record, the Circuit Court of Appeals, Second Circuit, reject DFS' arguments and affirm the judgment substantially for reasons stated in the District Court opinion and order.

Addressing DFS' challenge to the damages awarded by the District Court, the Circuit Court said that DFS contended that the District Court erred in calculating the Petitioner's  damages award when it used "a comparator hired from outside of the civil service," citing for the first time the New York State Department of Civil Service’s State Personnel Management Manual [Manual], which, in pertinent part, states that §131.1-a of the State Civil Service Law* applies only to external candidates hired from outside the New York Civil Service.

Finding that DFS failed to make the District Court aware of these provisions set out in the Manual and relying on §131.1-a for the first time on appeal, the Circuit Court, noting that the District Court had some discretion in using the salaries of comparators to determine back pay in this case, the affirmed the District Court’s damages award.

* Civil Service Law §131.1-a, Appointment above minimum salary in certain cases, provides that "Notwithstanding any other provision of this chapter, with respect to positions allocated to salary grades in section one hundred thirty of this chapter the director of the classification and compensation division, subject to the approval of the director of the budget, may authorize an increased hiring rate, not to exceed the job rate of the salary grade of the position to which a person is to be appointed when the training or experience of such appointee substantially exceeds requirements necessary for appointment. The salaries of other employees serving in the same title in the same geographical area or location having qualifications of training or experience equivalent to those of the person appointed shall be increased by such amount as may be necessary to equal the rate of compensation of the person appointed.

The decision is posted on the Internet at: http://www.ca2.uscourts.gov/decisions/isysquery/ebddfaba-00e1-4235-a653-50e2d8616b95/1/doc/18-2614_so.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/ebddfaba-00e1-4235-a653-50e2d8616b95/1/hilite/

An arbitral awards may vacated, in whole or in part, if it violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on an arbitrator's power

An individual [Petitioner] employed by the Department of Corrections and Community Supervision [DOCCS] was suspended without pay and subsequently served by DOCCS with a notice of suspension charging her with six instances of misconduct and imposing a penalty of dismissal.*

Petitioner waived her right to an agency-level hearing and the matter proceeded directly to arbitration. Following a hearing, the arbitrator, among other things, found Petitioner guilty of two of the charges of misconduct and imposed a one-month suspension as a penalty. The arbitrator also awarded Petitioner back pay for the period of interim suspension prior to the hearing. When DOCCS failed to pay Petitioner back pay for the time of her interim suspension, Petitioner commenced a CPLR Article 75 proceeding to confirm the award. DOCCS cross-moved to vacate the award insofar as it required the payment of back pay for the period of the interim suspension.

Supreme Court confirmed the award, denied DOCCS' cross motion and DOCCS appealed the court's ruling, contending that the arbitrator's award of back pay for the period of interim suspension exceeded his authority.

The Appellate Division overturned the Supreme Court's ruling, pointing out that:

1. "Judicial review of arbitral awards is extremely limited [but] a court may vacate an award when it violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on an arbitrator's power";

2.  "[A]lthough an arbitrator's interpretation of contract language is generally beyond the scope of judicial review, where a benefit not recognized under the governing CBA is granted, the arbitrator will be deemed to have exceeded his or her authority"; and

3. "[I]f the arbitrator imposes requirements not supported by any reasonable construction of the CBA, then the arbitrator's construction[,] in effect, made a new contract for the parties, which is a basis for vacating the award."

Here, the Appellate Division noted, "the arbitrator's award of back pay for the period of interim suspension was based upon a determination that DOCCS lacked probable cause to suspend petitioner." However, said the court, the relevant provision set out in the CBA states that "[s]uspensions without pay . . . shall be reviewable by a disciplinary arbitrator . . . to determine whether the [respondent] had probable cause."

Citing Matter of Livermore-Johnson [New York State Dept. of Corr. & Community Supervision], 155 AD3d at 1394, the court pointed out that it had previously held that hearing evidence should be considered by the arbitrator in determining probable cause." Here, however, the Appellate Division found that the arbitrator "did not rely on the hearing evidence to reach this determination, but instead relied solely on the information contained in the notice of suspension and referenced the Livermore-Johnson decision, which is an earlier decision that he rendered regarding the same CBA but a different employee."

In the words of the Appellate Division, "[i]n Livermore-Johnson, the arbitrator concluded that the suspension notice at issue in and of itself did not establish probable cause [and when reviewed by this Court] we affirmed Supreme Court's judgment vacating the arbitrator's award, holding that the arbitrator exceeded his authority by failing to consider hearing evidence and imposing the new requirement that probable cause be established in the notice of suspension."

Finding the record underlying the instant action "makes clear that the same error occurred here," the Appellate Division said that that portion of the order and judgment that orders back pay for [Petitioner] during the period of interim suspension must be vacated and the matter remitted for a rehearing on that issue."

* The terms of Petitioner's employment were governed by a collective bargaining agreement [CBA] that contained procedures that DOCCS was required to follow when seeking to discipline an employee.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04526.htm

The statute of limitations for filing an Article 78 petition challenging an regulation adopted by a government entity starts to run on the effective date of the regulation

General Municipal Law §209-q(1)(a) requires that individuals satisfactorily complete an approved municipal police basic training program prior to appointment as a police officer on a permanent basis. A certificate of completion issued upon completion of an approved training course remains valid, as relevant in this appeal, during the holder's continuous service as a police officer and during certain specified periods of "interruption" from service (see General Municipal Law §209-q[1][b]).* The State's Division of Criminal Justice Services [DCJS] is required by law to maintain a registry of all full-time and part-time police officers in the State and all agencies employing police officers are required to immediately report to DCJS when any officer it has employed ceases to so serve.

Executive Law §837[13] authorizes DCJS to adopt such regulations "as may be necessary or convenient to the performance of its duties." DCJS had adopted regulations requiring an agency employing police officers immediately notify DCJS when a police officer it had employed ceased to serve as a police officer and to indicate the reason for his or her ceasing to serve as a police officer, including reporting his or her "removal for cause".** 

Removal for cause included, as relevant in this action, resignation while a disciplinary proceeding was pending against the police officer pursuant to Civil Service Law §75 or pursuant to another statute or a contract disciplinary procedure negotiated pursuant to the Taylor Law.***

Among the issues addressed by the Appellate Division in this action was the effective date of a regulation adopted by DCJS for the purposes of determining the statute of limitations for timely filing a CPLR Article 78 petition seeking to annul a determination made by DCJS pursuant to the challenged regulation.

In April 2018, two former police officer [Plaintiffs] initiated proceedings and actions for declaratory judgments seeking to annul DCJS's determinations to invalidate their respective police officer basic training certificates. Supreme Court "converted these proceeding/action to a CPLR Article 78 proceeding upon consent of the parties" and then dismissed the Article 78 action as untimely. Plaintiffs appealed.

The Appellate Division noted that although the parties concede that this proceeding was governed by the four-month statute of limitations set forth in CPLR §217(1), they disagree as to when their respective causes of action arose and, in the words of the court, "their claims for relief are ultimately grounded on challenges to the validity of the regulations that were promulgated by DCJS in 2016 and 2017" in consideration of their status as police officers.

Citing Thrun v Cuomo, 112 AD3d 1038, the Appellate Division opined that as the challenged regulations "were quasi-legislative acts ... challenges to the validity of regulations accrued when the regulations become effective." Accordingly, explained the court, "inasmuch as the regulations became effective more than four months before this proceeding was commenced, Supreme Court properly found that [Plaintiffs' claims are time-barred."

Addressing an argument raised by one of the Plaintiffs whereby the Plaintiff asserted that he had submitted "his irrevocable resignation letter" on September 19, 2016 and that it had expressly provided that his resignation would be effective on October 31, 2016, five days after the regulations were adopted, the Appellate Division observed that the resignation was submitted in settlement of disciplinary charges that could have resulted in Plaintiff's removal.

Thus, said the court, Plaintiff's "arguments that he resigned before the regulations were enacted or, alternatively, that no disciplinary charges were pending on the effective date of his resignation are precluded by his acceptance of the benefits of the settlement, namely, being permitted to resolve the pending disciplinary charges by resigning and his further receipt of employment benefits from September 19, 2016 through the effective resignation date of October 31, 2016." 

* Interruption means separation from employment as a police officer "by reason of such officer's leave of absence, resignation or removal, other than removal for cause" (see General Municipal Law §209-q[1][c]).

** See 9 NYCRR 6056.2(g), employees removed for incompetence or misconduct.

*** 4 NYCRR 5.3(b) provides in pertinent part, "... when charges of incompetency or misconduct have been or are about to be filed against an employee, the appointing authority may elect to disregard a resignation filed by such employee and to prosecute such charges and, in the event that such employee is found guilty of such charges and dismissed from the service, his termination shall be recorded as a dismissal rather than as a resignation." Also, where necessary and appropriate, such disciplinary action may be conducted in absentia [see Mari v Safir, 291 AD2d 298].

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04524.htm