Audits issued by the New York State Comptroller during the week ending January 15, 2021

New York State Comptroller Thomas P. DiNapoli announced the following audits of State departments and agencies and local governmental entities were issued during the week ending January 15, 2021.

Audits of State Departments and Agencies

Office for the Aging (OFA): Long-Term Care Ombudsman Program (Follow-Up) (2020-F-27) An audit issued in October 2019 found that certain system-generated office data may not have been sufficiently reliable for the agency’s use for analysis at the facility, regional program, or complaint level, which may limit its usefulness in decision making. Auditors also found that many residents of long-term care facilities lack regular access to ombudsman services, due in part to a decline in the number of volunteers combined with a lack of paid regional program staff. In a follow-up, auditors determined OFA has made significant progress in addressing the problems identified in the initial report.

Office of Children and Family Services (OCFS): Access Controls over Selected Critical Systems (Follow-Up) (2020-F-11)  An audit issued in March 2019 found that access controls over six OCFS systems containing confidential information were insufficient to prevent unnecessary or inappropriate access to those systems. In a follow-up, auditors found OCFS has made progress in correcting the problems identified in the initial report. Of the two recommendations OCFS officials implemented one and did not implement one.

Department of Civil Service: New York State Health Insurance Program: CVS Health - Accuracy of Drug Rebate Revenue Remitted to the Department of Civil Service (Follow-Up) (2020-F-23) An audit issued in January 2019 reviewed the rebate revenue generated from agreements with six drug manufacturers and found that CVS Health did not always properly invoice drug manufacturers for rebates or remit all rebate revenue it collected. As a result, New York was due $2,052,653 in rebates. In a follow-up, auditors found CVS Health has made progress in correcting the problems and collecting some of the rebates identified in the initial report.

Department of Civil Service: New York State Health Insurance Program: Empire Plan Members with Dual Family Coverage (2019-S-23)New York state does not allow two family coverages for its employees. Other public organizations that participate in the Empire Plan, including local governments and public authorities, may allow for dual family coverage, whereby each employee has family coverage. Auditors identified 696 employees and retirees of participating organizations with dual family coverage during the audit period. The total cost of premiums to the members and participating organizations for the second family coverage was $39,777,772.

Department of Health (DOH): Improper Medicaid Payments for Childhood Vaccines (Follow-Up) (2020-F-3) An audit released in December 2018 identified $32.7 million in improper Medicaid payments, which included payments for free vaccines and inaccurate payments for the administration fee. Of this amount, managed care organizations made improper payments totaling $29.8 million, and the department made improper fee-for-service payments totaling $2.9 million. In a follow-up auditors found DOH has made some progress in addressing the problems identified in the initial audit report, yet significant action is still required to prevent future Medicaid overpayments.

State Education Department (SED): The Kelberman Center Inc. – Compliance with the Reimbursable Cost Manual (2019-S-57) Kelberman is an SED-approved special education provider located in Utica. Kelberman provides preschool special education services to children with disabilities who are between three and five years of age. Kelberman is reimbursed for these services through rates set by SED. For the fiscal year ended June 30, 2017, auditors identified $23,616 in ineligible costs Kelberman reported for reimbursement. 

State Education Department (SED): Kids Unlimited, PT, OT & SLP, PLLC - Compliance with the Reimbursable Cost Manual (2020-S-33)Kids Unlimited is a New York City-based for-profit organization authorized by SED to provide special education services. The New York City Department of Education refers students to Kids Unlimited. For the three fiscal years ended June 30, 2015, auditors identified $446,835 in reported costs that did not comply with the requirements for reimbursement. 

State Education Department (SED) Mama Program LLC – Compliance with the Reimbursable Cost Manual (2019-S-73) Mama Program is a New York City-based for-profit organization authorized by SED to provide preschool special education services. The New York City Department of Education refers students to Mama Program. For the three fiscal years ended June 30, 2015, auditors identified $95,562 in reported costs that did not comply with requirements for reimbursement.

State Education Department (SED): SteppingStone Day School Inc. - Compliance with the Reimbursable Cost Manual (2020-S-23) SteppingStone is a New York City-based not-for-profit organization authorized by SED to provide special education services. The New York City Department of Education refers students to SteppingStone. For the three fiscal years ended June 30, 2018, auditors identified $562,609 in reported costs that did not comply with the requirements for reimbursement.

Department of Taxation and Finance: Personal Income Tax and Property Tax (2020-BSE08-01) Auditors found 19,049 questionable or inappropriate refunds resulting in a savings of $34.9 million and 4,331 credits resulting in a savings of over $1.1 million. In addition, auditors identified 10,142 credits totaling $4.1 million where the department potentially paid more than one credit to the same individual on multiple properties, or paid credits to multiple individuals on the same property where only one credit was due.

 

Audits of Local Governmental Entities

Village of Dering Harbor – Payroll (Suffolk County)The board did not establish adequate controls over payroll and employee benefit payments. The board also did not require formal, written employment contracts to document terms of employment; job descriptions and responsibilities; work hours; salaries or hourly rates and employee benefits. In addition, the village paid overtime payments to employees as if they were independent contractors. Auditors also found the board approved reimbursements to employees for medical benefit claims without ensuring they had adequate supporting documentation.

 

Madison County – Temporary Courthouse Lease and Renovations County officials paid more than $1.5 million to a limited liability company (LLC) to lease and renovate temporary courthouse space for a 19-month period. Auditors found county officials did not use a competitive process to lease and renovate the temporary courthouse space. Auditors determined officials paid the LLC a $500,000 deposit before any renovation work was completed or services rendered. They paid approximately $131,000 in renovation claims to the LLC without adequate supporting documentation.

 

Town of Orange – Budget Review (Schuyler County)Certain significant revenue and expenditure projections in the town’s adopted budget for the 2021 fiscal year are not reasonable. Auditors’ review took into consideration the potential impact the COVID-19 pandemic may have on the town’s finances. They determined the general and highway fund revenues are potentially overestimated by $25,000. In addition, highway fund appropriations are underestimated by at least $17,900.The general fund’s 2020 ending fund balance is estimated at $64,000, which is sufficient to balance the 2021 budget. However, additional fund balance may be needed to replace revenue shortfalls and to supplement the highway fund. The deficit in the highway fund is estimated at $27,000 as of Dec. 1, 2020. The town’s 2021 adopted budget complies with the tax cap limit.

 

Village of Remsen – Clerk-Treasurer’s Records and Reports (Oneida County) The clerk-treasurer did not maintain adequate records and reports to allow the board to properly manage village finances. Required annual financial reports were not completed or filed with the State Comptroller’s Office for any of the last four years (2015-16, 2016-17, 2017-18 and 2018-19). Fund transfers were not properly recorded and inadequate financial reports were provided to the board. In addition, the board did not annually audit the clerk-treasurer’s records and reports, as required.

 

 

 

 

Challenging administrative decisions made by educational institutions

The petitioner [Plaintiff] in CPLR Article 78 proceeding has been employed by the New York City Department of Education [DOE] as a teacher of library or as a librarian for over 20 years. Plaintiff 's performance was reviewed by her Supervising Principal at the conclusion of the relevant school year,. The Supervising Principal rated the Plaintiff's overall performance as unsatisfactory. 

Plaintiff filed an administrative appeal challenging her unsatisfactory performance rating. DOE's Deputy Chancellor for Teaching and Learning denied Plaintiff's appeal and sustained the Supervising Principal's rating of unsatisfactory.

Plaintiff initiated a CPLR Article 78 proceeding challenging the Deputy Chancellor's determination and Supreme Court, after a hearing, determined that the Deputy Chancellor's determination was arbitrary and capricious and that the rating of unsatisfactory was not rational. 

Supreme Court then granted Plaintiff's Article 78 petition, annulled the determination of the Deputy Chancellor and substituted a determination rating the Petitioner's performance as satisfactory. DOE appealed.

The Appellate Division reversed the judgment of the Supreme Court, denied Plaintiff's petition and confirmed the Deputy Chancellor's determination, explaining:

1. "Administrative decisions of educational institutions involve the exercise of highly specialized professional judgment and these institutions are, for the most part, better suited to make relatively final decisions concerning wholly internal matters"; and

2. Court should not overturn an employer's rating of an employee as unsatisfactory unless it is arbitrary and capricious, made in bad faith, or contrary to the law.

Observing the Plaintiff failed to demonstrate that the Supervising Principal's rating her unsatisfactory was arbitrary or capricious. Rather, said the Appellate Division, the evidence in the record "demonstrated that the rating of unsatisfactory was based on incidents of misconduct, unprofessionalism in interacting with other teachers, and insubordination."

Concluding that the Deputy Chancellor's determination was rational, the Appellate Division held that the lower court "should not have supplanted the judgment of the DOE with its own" and vacated the Supreme Court's decision.

The Appellate Division's decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_07384.htm.

Submitting a memoranda amicus curiae in an appeal to the Commissioner of Education

§275.17 of the Regulations of the Commissioner of Education permits interested persons to file applications to submit memoranda amicus curiae.* 

In this appeal to the Commissioner of Education the aggrieved party [Petitioner] submitted a proposed amicus curiae brief prepared by “an attorney whose work has focused on human rights and immigration law.” 

In considering Petitioner's application to submit the proposed amicus curiae brief, then Interim Commissioner of Education Betty A. Rosa noted that historically the standard applied by the Court of Appeals in such situations has been followed by the Commissioner of Education.

Citing Appeal of Touré, et al., 54 Ed Dept Rep, Decision No. 16,660, the Commissioner indicated that Court of Appeals' standard requires establishing at least one of the following criteria:

(1) That the parties are not capable of a full and adequate presentation and that the amicus curiae brief could remedy this deficiency;

(2) That the amicus curiae brief could identify law or arguments that might otherwise escape the Commissioner’s consideration; or

(3) That the amicus curiaebrief offered would otherwise be of assistance to the Commissioner.

Commissioner Rosa declined to accept the proposed amicus brief into the record, explaining that she found no basis upon which to conclude that the Petitioner was not capable of a full and adequate presentation of his case requiring remedy by an attorney's "proposed amicussubmission."  

The Commissioner, after reviewing the proposed amicus submission, said that she found "it fails to identify law or arguments that might otherwise escape [her] consideration" nor that it would otherwise be of assistance in this case.

* An impartial adviser to a judicial or quasi-judicial body in a particular case, often serving pro bono.

Click here to access full text of the Commissioner's decision.

 

Court finds a probationary employee terminated without explanation presented evidence sufficient to raise a triable issue of fact concerning his alleged deficient job performance

A probationary police officer [Plaintiff] terminated by the appointing authority [Town] filed a petition pursuant to CPLR Article 78 challenging his termination. Plaintiff contended that he performed his duties as a law enforcement officer "in an exemplary manner," as reflected by the numerous community policing awards for which he had been nominated during his 18-month probationary period. Plaintiff alleged that his employment "was nevertheless terminated by the Town Board four days before the expiration of his probationary period, without explanation."*

In the course of the proceeding Plaintiff filed a motion seeking to compel the disclosure of certain "in-car video recordings." The Town opposed the motion, calling it "a fishing expedition" and argued that it was unnecessary to disclose these videos because its Chief of Police had reviewed them and "determined that the vehicular stops were not being properly made."

The Supreme Court directed the Town to produce a copy of the videotapes that Plaintiff  had requested for his in camera review.** Supreme Court, after the in camera review,  denied Plaintiff's motion to compel the disclosure of the video recordings. The court said that the videos were not "relevant" and subsequently held that the record supported the Town's assertion that Plaintiff's employment had been terminated due to poor performance. 

Supreme Court also held that Plaintiff failed to sustain his burden of raising a triable issue of fact as to whether his employment was terminated in bad faith and summarily dismissed his Article 78 petition.

Plaintiff appealed the Supreme Court's decision. The Appellate Division, reversing the lower court's ruling explained:

1. "As relevant here, a probationary employee may "be dismissed for almost any reason, or for no reason at all." This broad discretion is not unlimited, however, and "[t]he employment of a probationary employee may not be terminated "in bad faith, for a constitutionally impermissible or an illegal purpose, or in violation of statutory or decisional law."

2. In a judicial review a determination to terminate a probationary employee's employment, "[t]he burden of presenting legal and competent evidence to show a deprivation of petitioner's rights or bad faith or other arbitrary action ... must be borne by petitioner."

3. In the event the court finds that the record presents triable issues of fact as to whether the employer was acting in good faith in terminating the probationary employee's employment, a trial must be held.

The Appellate Division, noting that the Town made the positive assertion in the course of the Article 78 action that Plaintiff's employment had been terminated due to his poor performance as a police officer, observed that the Town "did not present any contemporaneous documents or other evidence" to substantiate its claim that Plaintiff had performed his duties in a substandard manner.

Further, in a verified reply to the Town's "new" assertion that Plaintiff was dismissed "for poor performance," Plaintiff said that the Chief of Police "had never advised him that his arrests were improper or illegal during the probationary period" but that the Chief had told him that "the Town Board was unhappy" with a certain arrest Plaintiff had made.

With respect to the Town's failure to produce "any contemporaneous records to support its assertion that [Plaintiff] had performed poorly as a police officer," the Appellate Division's decision notes that "the evidence in the record showed that [Plaintiff] had been given at least nine tours of overtime duty, and had been honored at a regional awards ceremony and received a commendation for his performance as a law enforcement officer during his 18-month probationary term."

The decision also noted that the single written evaluation of Plaintiff's performance signed by the Chief of Police about two months before the termination of Plaintiff stated that Plaintiff's did not need improvement in any area, and that his overall performance was "above standards." Significantly, said the court, the evaluation specifically stated that Plaintiff "[m]akes good arrests," and that he had "grasped the job well" and was "an asset to the department."

Citing Higgins v La Paglia, 281 AD2d 679, the Appellate Division concluded that on this record, Plaintiff's "evidentiary submissions were sufficient to raise a triable issue of fact as to whether his job performance was satisfactory and whether the Town's proffered explanation of poor performance was pretextual."

Under the circumstances, said the Appellate Division, Supreme Court improvidently exercised its discretion in denying Plaintiff's motion to the extent that he sought disclosure of the video recordings that are referenced in the Town's answer and remanded the matter to the lower court for "an immediate trial."

* In York v McGuire, 63 NY2d 760, the Court of Appeals held that “After completing his or her minimum period of probation and prior to completing his or her maximum period of probation, a probationary employee can be dismissed without a hearing and without a statement of reasons, as long as there is no proof that the dismissal was done for a constitutionally impermissible purpose, or in violation of statutory or decisional law, or the decision was made in bad faith.”

** A "private review" of material sought by a party by the court, typically taking place in the private chambers of the judge, with the press and public excluded.

The decision is posted on the Internet at https://law.justia.com/cases/new-york/appellate-division-second-department/2020/2017-11383.html