State audits and examinations issued during the week ending June 21, 2019

On June 21, 2019, New York State Comptroller Thomas P. DiNapoli announced today the following audits and examinations have been issued.

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Department of Agriculture and Markets: Annual Assessment of Market Orders for 2015 and 2016 (2018-S-44)
The department established procedures to accurately report its assessable expenses for the two years ended June 30, 2016 for the Apple and Sour Cherry Market Orders and for the two years ended March 31, 2016 for the Apple, Cabbage, and Onion Research and Development Programs. The department should work with the state Urban Development Corporation to improve oversight of the Market Order Program, specifically the Apple Market Order and the New York Apple Association Inc. contract.

Department of Agriculture and Markets: Safety of Seized Dogs (Follow-Up) (2019-F-5)
An initial report issued in April 2018 determined the department was adequately overseeing the seizure of dogs to ensure their safety and protect the rights of owners. However, auditors identified four minor deficiencies at four of the 48 shelters they visited. In a follow-up, auditors found the department made progress in addressing the problems identified.

New York City Department of Education (DOE): Compliance With Special Education Requirements: Evaluations (2017-N-3)
The DOE had difficulty meeting the 60-calendar-day time frame requirement for completing evaluations, resulting in potential delays in the provision of services for students. A delay in services could adversely impact students’ educational growth.

Department of Health: Medicaid Program: Improper Medicaid Payments for Recipients Diagnosed With Severe Malnutrition (2017-S-85)
Auditors identified $416,237 in overpayments on inpatient claims that hospitals billed to Medicaid that contained a severe malnutrition diagnosis that medical records did not appear to support. Auditors found the hospitals were not following recommended guidelines for identifying and documenting severe malnutrition.

Department of Health: Medicaid Overpayments for Inpatient Care Involving Mechanical Ventilation Services (2018-S-45)
Auditors identified $975,795 in overpayments on 32 inpatient claims that reported 96 consecutive hours or more of mechanical ventilation services. Auditors found claims processing weaknesses that prevent eMedNY from identifying claims where 96 consecutive hours or more of mechanical ventilation services was not possible.

Metropolitan Transportation Authority (MTA) – New York City Transit and MTA Bus Company: Bus Wait Assessment and Other Performance Indicators (2017-S-54)
Transit’s Service Guidelines Manual contains transit and MTA bus minimum service frequency standards; however, auditors found the guidelines are not always met. Further, there was insufficient documentation to determine if scheduled service was reasonable. Auditors found there is a risk that the number of buses may have been inappropriate to meet customer needs.

New York State Health Insurance Program: CVS Health: Accuracy of Drug Rebate Revenue Remitted to the Department of Civil Service (2018-S-50)
Auditors reviewed the rebate revenue generated from agreements with six drug manufacturers and found that CVS Health did not always invoice drug manufacturers for rebates, collect rebates from the manufacturers, or remit all rebate revenue to Civil Service. As a result, Civil Service is due $2,240,798 in rebates.

Office for People With Developmental Disabilities: Fuel Card (2018-BSE7-02)
Auditors found 119 purchases totaling nearly $8,000 made by one employee were not for legitimate business purposes, but instead for personal use. As a result of our examination, the employee was terminated, arrested, pled guilty to petit larceny (a Class A misdemeanor) and is required to make restitution to the state.

Port Authority of New York and New Jersey (PANYNJ): Selected Aspects of Leasing Practices for Real Estate Services Department and Port Commerce (2017-S-58)
The PANYNJ did not always accurately account for its leases. Discrepancies existed in the lease information contained in two primary systems. Moreover, neither system accounted for all PANYNJ leases. Auditors also found two properties that were vacant for a combined 45 months as of Nov. 29, 2018, resulting in forgone revenue totaling $828,290, and the authority could not document that it attempted to lease the properties examined at the market rate.

State Commission of Correction: Facility Oversight and Timeliness of Response to Complaints and Inmate Grievances (Follow-Up) (2019-F-4)
An audit released in January 2018 found the commission received data such as complaints and unusual incidents regarding various aspects of Department of Corrections and Community Supervision facilities operations, but had not analyzed and tracked the information to identify any trends or patterns that may have warranted monitoring or review. In a follow-up, auditors found the commission made significant progress in addressing the issues identified.

State Education Department (SED): Amerimed Kids LLC: Compliance With the Reimbursable Cost Manual (2018-S-17)
Amerimed Kids is a New York City-based for-profit organization authorized by SED to provide Preschool Special Education Itinerant Teacher services to children with disabilities who are between the ages of three and five years. For the three fiscal years ended June 30, 2015, auditors identified $975,845 in reported costs that did not comply with state requirements in the RCM, including $479,500 in compensation to the executive and assistant executive directors.

State Education Department: Family and Educational Consultants (FEC): Compliance with the Reimbursable Cost Manual (2018-S-29)
FEC is an SED-approved, for-profit special education provider located in Ulster County. FEC provides preschool special education services to children with disabilities who are between three and five years of age. For the three fiscal years ended June 30, 2015, auditors identified $161,956 in ineligible costs that FEC reported for reimbursement. The ineligible costs included $96,006 in personal service costs and $65,950 in other than personal service costs.

SUNY Maritime College: Review of Procurement Card (PCard) Transactions and Travel Card Expenses (2017-Credit Card-01)
Auditors found 58 of 59 PCard transactions in a sample were inappropriate, did not comply with state or Maritime PCard guidelines or had insufficient documentation to determine appropriateness. This includes $12,340 in inappropriate transactions. Maritime also approved up to $3,750 in unnecessary luxury lodging accommodations over a six-year period for a professor who taught an annual course on a Carnival Cruise ship.

Department of Transportation (DOT): Welcome Center and Rest Area Planning and Implementation (2017-S-25)
DOT did not follow its own policies and procedures for capital project planning and implementation for welcome centers and rest areas, prioritizing those ahead of other projects. DOT also incurred cost overruns of more than $8.8 million and needlessly spent approximately $4 million due to poor planning for one rest area and four welcome center capital projects.

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To prevail in an action challenging an unsatisfactory performance rating the individual must show that the rating was arbitrary and capricious or made in bad faith

In this CPLR Article 78 action the Petitioner challenged the "Unsatisfactory" annual performance rating she had received for the 2013-2014 academic year and [2] the calculation of her pension. Supreme Court dismissed both of these claims advanced by the Petitioner and, in addition, rejected her contention that she had suffered a "discontinuance of employment." The Appellate Division unanimously affirmed the Supreme Court's rulings.

Citing Murname v Department of Education of the City of New York, 82 AD3d 576, the Appellate Division explained that Petitioner failed to show that the U-rating she had been given for the academic year by the New York City Board of Education [Respondent] was arbitrary and capricious or made in bad faith. Rather, said the court, Respondent's determination to uphold the U-rating has a rational basis in the record, which shows repeated instances of pedagogical deficiencies during the 2013-2014 school year, as well as a failure to improve.

With respect to Petitioner's appeal concerning the calculation of her pension , the court's decision indicates  that there were two obstacles to its consideration of her complaint: [1] the Respondent was not the proper party against which to bring her claims and [2] "[t]hese claims could not in any event be entertained, because [Petitioner] failed to exhaust her administrative remedies."

Addressing Petitioner's contention that she had been "discontinued from service", the court found that "there was no discontinuance of employment." Rather, said the Appellate Division, Petitioner had voluntarily resigned from her position.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04887.htm

Proceeding with a disciplinary action notwithstanding the appointing authority's receipt of the employee's written resignation from the position

The Petitioner in this Article 78 action sought to have Supreme Court annul a determination of City of New York Civil Service Commission [Commission] affirming the decision of the New York City Administration for Children's Services [ACS] terminating Petitioner's employment for misconduct and incompetence. In addition, Petitioner attempted to have the court to annul the Commission's affirming a ruling by the New York City Department of Citywide Administrative Services [Citywide] disqualifying Petitioner from employment with the New York City Taxi and Limousine Commission based on ACS's findings. Supreme Court dismissed the proceeding, which resolution of the matter the Appellate unanimously affirmed.

The Appellate Division observed that Petitioner had submitted both a "conditional resignation" and "a handwritten resignation letter" while disciplinary charges were pending against him. ACS, however, elected to disregard these resignations and continue to prosecute the charges against Petitioner.  Citing 4 NYCRR 5.3[b], the court found that the appointing authority could, and did, ignore Petitioner's consistent with the provisions of the rule which, in pertinent party, provides "... 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."

Further, said the court, "Petitioner failed to establish that respondents acted in excess of their jurisdiction, citing Civil Service Law §76[1], [3]. The court explained that Petitioner, a probationary employee, could be dismissed "for almost any reason, or no reason at all," failed to allege facts that would establish that he was dismissed in bad faith or for an improper or impermissible reason.

* §22 of the General Construction Law, in pertinent part, provides that “Whenever words of the masculine or feminine gender appear in any law, rule or regulation, unless the sense of the sentence indicates otherwise, they shall be deemed to refer to both male or female persons.”

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_04880.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