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NYS Comptroller

THOMAS P. DiNAPOLI

Press Releases

May 6, 2014, Contact: Press Office (518) 474-4015

DiNapoli Applauds Top Court Ruling Reaffirming Audit Powers

New York State Comptroller Thomas P. DiNapoli today applauded the unanimous Court of Appeals decision in South Island Orthopaedic Group v. DiNapoli, which reaffirmed his far-ranging constitutional authority as the State’s chief fiscal officer.

“The state’s highest court has upheld the power of this office to follow payments of state dollars wherever the public’s money is spent,” DiNapoli said. “The court’s decision recognizes the importance of our independence in carrying out objective audits of state payments in order to protect taxpayer dollars.”

A copy of the full decision is available here: http://www.nycourts.gov/ctapps/Decisions/2014/May14/69-70opn14-Decision.pdf

Case background
The Court of Appeals was asked to determine whether the State Constitution (Article V, Section 1) limits the Comptroller's authority to review the billing records of private companies that provide health care under the Empire Plan. The Court concluded it does not.

The decision arose from the Comptroller's 2009 audit of non-participating provider claims paid by United Healthcare Insurance— the State's contractor which processes and pays claims made by Empire Plan beneficiaries. The Comptroller argued that he had authority to review the providers' billing records as part of his audit of State expenditures and the Court emphatically agreed.

In an earlier review of the records of South Island, the Comptroller determined that the two non-participating providers routinely waived the Empire Plan member's co-payment, which led to overpayments by the State. The Comptroller’s audits recommended that United recover the overpayments and prevent future waivers of Empire plan member's co-payments. South Island and one of the non-participating doctors challenged the Comptroller's authority to audit their books.

South Island argued that the Comptroller could not review their records because they receive State funds indirectly, through United and Empire Plan members. The Court found that despite the State's use of a third-party conduit to pay health care costs, the payments to South Island remain State dollars and are subject to the Comptroller's auditing power.

The Court distinguished today’s decision from its 2009 charter school decision (New York Charter Schools Assn v DiNapoli) — in which it held that the Legislature violated the Constitution when it required the Comptroller to conduct a performance audit of charter schools — finding that it did not involve performance audits, rather a review of billing records to ensure that the State did not make overpayments.
While the Court did not find the need to decide "the expanse of the Comptroller's auditing power over third parties,” the Court noted that in this instance the Comptroller's power was properly focused on billing records for State payments.

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