Statement from Senator Rivera on PBM Investigations Update

  "In an effort to protect the health and financial stability of New Yorkers, the Senate Committee on Investigations and Government Operations, with the assistance of the Senate Committee on Health, opened an investigation into the practices of pharmacy benefit managers in New York. For the past two months, our teams have been working on this ongoing investigation.

"In an attempt to address some of the serious issues that pharmacists and consumers face, investigators participated in good faith conversations with three major pharmacy benefit managers operating within New York State. Unfortunately, two of the three pharmacy benefit managers have completely halted any further good faith discussions, and as a result, our Committees have jointly submitted a number of proposals to be included in the New York State Senate one-house budget resolution.

"The proposals seek to maximize accountability amid concerns that some or all pharmacy benefit managers are engaged in price manipulation, causing significant harm to local pharmacists and consumers alike."

Below are the relevant Senate one-house budget proposals:

• Limit how much pharmacy benefit managers can charge Medicaid managed care plans by prohibiting the use of spread pricing in Medicaid managed care; 

• Prohibit pharmacy benefit managers from passing along other fees to Medicaid managed care plans;

• Require the registration and licensing of pharmacy benefit managers operating in New York State with the New York State Department of Financial Services. Addition of increased penalties for noncompliance;

• Require pharmacy benefit managers to disclose information to the Department of Financial Services including any financial incentive received by the pharmacy benefit manager for promoting the use of certain drugs, other financial arrangements affecting insurance plans, and other quarterly reports, as the Department requires;

• Authorizes the Department of Financial Services to revoke a pharmacy benefit manager's license if they violate New York State laws or regulations;

• Mandates increased penalties on pharmacy benefit managers for violating New York State laws or regulations;

• Language creating a fiduciary duty between a pharmacy benefit manager and its clients, including that the pharmacy benefit manager must hold funds in trust for its clients;

• Language requiring the pharmacy benefit manager to disclose financial incentives to its customers and/or clients;

• Require pharmacy benefit managers to disclose any potential conflict of interest to customers and/or clients;

• Language prohibiting a pharmacy benefit manager from requiring the substitution of one prescription drug for another in dispensing a prescription drug unless the prescriber approves.
   

"The Committee on Investigations and Government Operations is continuing to examine pharmacy benefit manager practices and will release a report upon the inquiry's conclusion with findings and additional recommendations."

BOROUGH PRESIDENT DIAZ RELEASES ‘BRONX ANNUAL DEVELOPMENT REPORT’

The Bronx saw $3.48 billion in total development in 2018, the most of any year of Borough President Diaz’s tenure

  Bronx Borough President Ruben Diaz Jr. released his “Bronx Annual Development Report” today, highlighting the most successful year in total development funding The Bronx has seen since the borough president took office in 2009.

In 2018 the borough saw $3.48 billion in total investment. The total number is an increase of 25.6 percent over 2017, when the borough saw roughly $2.7 billion in total development investment.

In addition, 8,885 total housing units were developed in The Bronx in 2019, the most of any year since 2009. This includes 4,225 units built with government subsidies.

“We continue to attract tremendous interest from all sectors, and we are making that growth work for all Bronx residents,” said Bronx Borough President Ruben Diaz Jr. “In 2018 not only did we attract the most development dollars of any year since I first took office we also built the most subsidized housing units of any year in the past decade, helping to keep Bronx families in their communities and providing new housing opportunities at the lowest income levels. As we continue the positive redevelopment of The Bronx we are making sure that our efforts work for everyone.”

The full report can be read at https://on.nyc.gov/2HfUffG.

The “Bronx Annual Development Report” also illustrates the year-to-year investment and construction The Bronx has played host to since 2009, when Borough President Diaz first took office.

The borough has seen more than $18.9 billion in total development, as well as more than 96.7 million square feet of total development construction since 2009. Also, a total of 45,332 residential units have also been constructed in The Bronx since 2009, with more than half of those units—23,110—having been developed with government subsidies.

Borough President Diaz will discuss this report at greater length at this evening’s 1010 WINS Neighborhood Spotlight Series. That event will take place at Manhattan College’s Smith Auditorium, 4513 Manhattan College Parkway, The Bronx. The event opens at 5:30 p.m., and the program begins at 6:30 p.m.

Attorney General James Obtains $105,000 For Homeowners Following Condo Developer's Failure To Disclose Deed Restrictions For City Island Properties

City Island Reserve LLC Withheld Critical Environmental Information Related to the Homes, Exposing Unsuspecting New Yorkers to Unnecessary Financial Risk

  Attorney General Letitia James today announced a settlement with City Island Reserve LLC and its principal Curtis A. Pollock based on their failure to disclose two consent orders, deed restrictions, and other regulations restricting the use of property at the On the Sound Condominium on City Island in the Bronx, New York. Under the terms of the settlement, the developer will pay $105,000 in restitution to the board of the On the Sound Condominium. 

“No developer should ever get away with deceiving homeowners,” said Attorney General Letitia James. “Failing to disclose the legal restrictions on someone’s home is not only unlawful, but can have long-term financial impacts on New Yorkers. My office will continue to take on developers or landlords who try to harm New York residents.” 

The On the Sound Condominium is a forty-three unit residential condominium on Island Point Road on City Island in the Bronx, New York. The developer failed to disclose a range of facts about legal restrictions on the use of land in the condominium, including that: 

• Portions of the condominium are designated as “Tidal Wetlands” under New York’s Tidal Wetlands Act, which imposes certain environmental regulations on the use of the land;
• The developer had entered into two consent orders with the New York State Department of Environmental Conservation (DEC) for violations of various environmental regulations during construction of the On the Sound Condominium; 

• The developer recorded a restrictive declaration on every unit in the condominium, which, among other things, prohibits unit owners from using herbicides or fungicides and which requires the homeowners to obtain permission from DEC before making any changes to the condominium’s layout or landscaping. 

Developers are legally required to submit all relevant information regarding property regulations and restrictions in advance of selling any units or property. When such information is withheld from homeowners, they could face significant and unnecessary fines. 

Former KPMG Executive And Former PCAOB Employee Convicted Of Wire Fraud For Scheme To Steal And Use Confidential PCAOB Information

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that DAVID MIDDENDORF, who was the National Managing Partner for audit quality at the accounting firm KPMG LLP (“KPMG”), and JEFFREY WADA a former employee of the Public Company Accounting Oversight Board (the “PCAOB”), were convicted of wire fraud charges in connection with their scheme to defraud the PCAOB by obtaining, disseminating, and using confidential lists of which KPMG audits the PCAOB would be reviewing so that KPMG could improve its performance in PCAOB inspections. 

U.S. Attorney Geoffrey S. Berman said:  “As this trial revealed, David Middendorf and Jeffrey Wada were two links in a chain of corruption, where confidential PCAOB inspection information was taken at the behest of high-level executives at KPMG so they could cheat on inspections.  This confidential information was critical to the PCAOB and its core mission of ensuring audit quality.  As a unanimous jury found, the actions of Middendorf and Wada defrauded the PCAOB.”

According to the evidence presented during the trial:

The PCAOB is a nonprofit corporation overseen by the SEC that inspects the audit work performed by registered accounting firms (“Auditors”) with respect to the financial statements of publicly traded companies (“Issuers”).  The PCAOB inspects the largest U.S. accounting firms on an annual basis.  As part of the inspection process, the PCAOB chooses a selection of audits performed by the accounting firm for a closer review, commonly referred to as an inspection.  Until shortly before an inspection occurs, the PCAOB does not disclose which audits are being inspected, or the focus areas for those inspections, because it wants to ensure that an Auditor does not perform additional work or modify its work papers in anticipation of an inspection.  Following the completion of an inspection, the PCAOB issues an Inspection Report containing any negative findings or “comments” with respect to both the specific audits reviewed and the accounting firm more generally. 

KPMG is one of the largest accounting firms in the world.  In recent years, KPMG fared poorly in PCAOB inspections, and in 2014 received approximately twice as many comments as its competitor firms.  By at least in or about 2015, KPMG was engaged in efforts to improve its performance in PCAOB inspections, including but not limited to recruiting and hiring former PCAOB personnel.  At the time, MIDDENDORF was head of KPMG’s National Office, also known as the Department of Professional Practice (the “DPP”), which was broadly responsible for the quality of KPMG’s audits and KPMG’s performance in PCAOB inspections. 

KPMG’s efforts to improve inspection results, however, were not limited to legitimate means.  Instead, between 2015 and 2017, MIDDENDORF and others worked illicitly to acquire valuable confidential PCAOB information concerning which KPMG audits would be inspected in an effort to game the system and improve inspection results.  For example, beginning in 2015, Brian Sweet, a former PCAOB employee who had joined KPMG, provided MIDDENDORF, Thomas Whittle, and others with the PCAOB’s confidential 2015 list of inspection selections, at MIDDENDORF’s request, so that the information could be used by MIDDENDORF, Whittle, and others, to improve KPMG’s performance on PCAOB inspections. 

WADA was an Inspections Leader at the PCAOB, who was obligated to keep confidential the PCAOB’s nonpublic information.  WADA joined the conspiracy in the fall of 2015 and began passing confidential information to KPMG.  In March 2016, WADA provided Cynthia Holder, a KPMG employee, with confidential information on certain of the PCAOB’s 2016 inspection selections.  Holder, in turn, provided the 2016 inspection selections to Sweet, who passed them to MIDDENDORF, Whittle, and others.  MIDDENDORF, Whittle, Sweet, and others then agreed to launch a stealth program to “re-review” the audits that had been selected, and agreed to keep their stealth re-reviews within their “circle of trust.”  In order to cover up their illicit conduct, other KPMG engagement partners were given a false explanation for the re-reviews.  The stealth re-review program allowed KPMG to strengthen its work papers.

In January 2017, WADA, who had been passed over for promotion at the PCAOB, again stole valuable confidential PCAOB information, misappropriating a preliminary list of confidential 2017 inspection selections for KPMG audits and passing it on to Holder, referring to it in a voicemail as the “grocery list.”  At the same time, WADA provided Holder with his resume and sought her assistance in helping him to acquire employment at KPMG.  Sweet internally shared the preliminary inspection selections provided by WADA with Whittle, another co-conspirator, who in turn shared it with MIDDENDORF, who approved its use to improve the audits on the list.

In February 2017, WADA texted Holder saying, “I have the grocery list. . . . All the things you’ll need for the year.”  WADA then spoke to Holder and provided her with the full confidential 2017 final inspection selections.  Holder again shared the stolen information with Sweet, who shared it with MIDDENDORF, Whittle, and others, so that it could be acted upon to improve the audits on the list. 

In 2017, a KPMG partner learned from Sweet that one of her audits was on the PCAOB inspection list, and she reported the matter to her supervisor.  The matter was then ultimately reported to KPMG’s Office of General Counsel.

MIDDENDORF, 54, was convicted of one count of conspiracy to commit wire fraud (Count Two) and three counts of wire fraud (Counts Three, Four, and Five).  WADA, 43, was convicted of one count of conspiracy to commit wire fraud (Count Two) and two counts of wire fraud (Counts Four and Five).  The conspiracy to commit wire fraud and wire fraud charges each carry a maximum prison term of 20 years.  MIDDENDORF and WADA were each acquitted of one count of conspiracy to defraud the United States (Count One). 

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Berman praised the outstanding investigative work of the United States Postal Inspection Service and also thanked the Securities and Exchange Commission.

Attorney General James And State Education Commissioner Elia Release Joint Report On Findings Of Civil Investigation Into The Tragic Death Of Trevyan Rowe

Systemic Failures Found in School Policies and Procedures  

Report Identifies 23 Recommendations for Rochester City School District to Prevent Future Tragedies 

  New York Attorney General Letitia James and State Education Department Commissioner MaryEllen Elia today announced the findings of a civil investigation into the facts and circumstances surrounding the tragic death of Trevyan Rowe, a 14-year-old student in the Rochester City School District (RCSD) who went missing on March 8, 2018. The investigation found that systemic failures in school policy and procedures existed at James P.B. Duffy School No. 12, the school Trevyan attended at the time of his death.  

“The death of Trevyan Rowe was a tragedy,” said Attorney General Letitia James. “In an effort to ensure that this never happens again, we engaged in a thorough and thoughtful investigation of the policies and procedures in place at the Rochester City School District. It is clear that there were systemic failures at the school and I strongly urge the school district to implement the recommendations outlined in this report. We all have a responsibility to protect our children and we must work together to keep our children out of harm’s way.”  

“The untimely death of Trevyan Rowe was a tragic loss that never should have occurred,” said Board of Regents Chancellor Betty A. Rosa. “The Board of Regents is committed to protecting the safety of all students because no parent should ever have to wonder if their child is safe at school.  I thank the Attorney General and the State Education Department for their commitment to getting answers for the child’s family and for the recommendations in the report that will help prevent tragedies like Trevyan’s death from happening in the future.” 

“The facts and circumstances surrounding Trevyan’s time at School 12 reveal an astounding lack of support from his school,” said State Education Department Commissioner MaryEllen Elia. “The investigation uncovered that Trevyan was failed at every level, from mental health and special education services to procedures to keep students safe at school. We must all learn from this horrific tragedy and recognize the gravity of our responsibility as educators to keep students safe. Every administrator and teacher across New York should read this report and ensure that every recommendation is implemented at their schools. We have a collective responsibility to New York’s children to do no less.” 

During the course of the joint investigation, the Office of the Attorney General and NYSED staff reviewed hundreds of pages of policy documents and email correspondence, conducted site visits, and interviewed approximately 50 staff members and members of Trevyan’s family.  

Investigation Findings 

The tragic facts surrounding Trevyan’s death present a clear picture of a student facing serious mental health issues. While Trevyan received some special education and related services, the investigation found school safety and climate were compromised and policies at all levels were lacking and not consistently implemented. Investigators focused on four main areas: mental health services, including behavioral intervention; special education; attendance policies; and school safety considerations, including transportation. In each area, investigators found systemic failures and inadequacies. 

Mental Health Services 

This investigation has raised serious questions as to whether adequate responses were taken to refer and provide mental health services to address Trevyan’s mental health issues, specifically his suicidal ideation and depression. The investigation found that there were potentially inadequate and delayed services for mental health treatment; an overly narrow application of behavioral intervention plans; and a consistent lack of documentation when behavior crises occur. 

Special Education Services 

With respect to special education, the investigation revealed that there were initial delays in providing Trevyan with special education services upon his transfer to RCSD from a school in Texas; an emotional disturbance classification does not appear to have been adequately considered and documented at his Committee on Special Education (“CSE”) meetings; and misunderstandings of disability classifications in a chaotic school climate exacerbated the inability of RCSD to provide assistance to Trevyan through the special education process. 

Attendance Policies 

The investigation found that RCSD employed overly permissive procedures that allowed school staff to submit their attendance records days, weeks, and sometimes even months after the class in question, and to freely make changes to those records even after submission without meaningful oversight; RCSD had an inadequate and untimely system for parental notification of unexcused absences; and school administrators failed to play any active or meaningful role in ensuring that attendance was taken in a timely and accurate manner.  

School Safety & Transportation 

The investigation concluded that RCSD employed insufficient procedures to ensure the safety of students during arrival and dismissal. Chronic staff turnover and the use of substitutes within the District, combined with inadequate creation and retention of student records, resulted in students falling between the cracks; RCSD either did not employ a centralized policy for creating or maintaining safety or emergency plans for individual students such as Trevyan, or has not adequately trained its staff on that centralized policy; the general building safety plan at School 12 was not sufficiently known to or understood by staff; and a chaotic school environment existed. 

The arrival and dismissal procedures in place at School 12 prior to Trevyan’s disappearance were inadequate to account for the whereabouts of the approximately 900 students milling about at the beginning and end of the school day. Just as it impacted the provision of special education and mental health services at School 12, frequent staff turnover also played a role in the lack of school safety procedures.    

Report Recommendations 

Trevyan's death does not appear to have been the result of any single event or single failure in school policy. Nevertheless, in an effort to ensure that this tragedy never occurs again, the report identifies policies and procedures that RCSD and other school districts should implement to help prevent and reduce the risk of tragedies from happening in the future. 

The report notes that while school districts cannot prevent all emergencies, injuries, or tragedies from occurring, the implementation of the recommendations in the report will reduce the likelihood of events such as the tragic death of Trevyan Rowe. School districts, and those who are employed by them, are in the unique position of having custodial supervision over massive numbers of children every day across New York State. That position comes with tremendous responsibility. It is only by recognizing the gravity of that responsibility, and by relentlessly seeking to improve upon the safety measures put into place on a day-to-day basis at each individual school, that school districts can best seek to avoid another tragedy. 

Comptroller Stringer Statement on the Charter Revision Commission’s Expert Panel on Procurement

   In advance of the Charter Revision Commission’s Expert Forum on Finance to evaluate focus areas for the 2019 Charter, Comptroller Stringer released the following statement urging the consideration of procurement reforms to address the City’s widespread problem of delayed contracts:

“Charter Revision is an opportunity to build a stronger city and tackle modern-day challenges that we just couldn’t have envisioned thirty years ago,” said Comptroller Stringer. “In 1989, a procurement system that ran like dial-up may have seemed cutting edge. But today, it’s a bottleneck for City government and simply unacceptable. There are widespread delays that are running organizations, especially non-profits, into the ground and that puts the vulnerable New Yorkers they serve – our seniors, children, and homeless families – in harm’s way. We need transparency and accountability in procurement, now. As the Charter Revision Commission defines its focus moving forward, I hope they’ll consider these necessary changes.”

In January, Comptroller Stringer released a report detailing rampant delays in the City’s procurement process:

• 80% of new and renewal contracts across all agencies and industries were submitted late for registration after the contract start dates had already passed in Fiscal Year 2018.
• These delays are especially rampant among human services contracts. 89% of new and renewal contracts human services contracts were submitted late and more than half of these contracts were late by more than six months.
• Delayed contract registration causes serious problems because vendors can only receive payment once a contract is registered. The situation is particularly dire for non-profit human service organizations that serve some of the City’s most vulnerable populations – including seniors, the homeless, and children.

Comptroller Stringer has called for significant Charter reforms focused on making the procurement process more transparent and efficient including:

• Instituting timeframes for every City agency with an oversight role in the procurement process, similar to the explicit 30-day timeframe for contract registration required for the Comptroller’s office.
• Requiring the City to create a public facing tracking system to bring additional transparency to the contracting process.

Deputy Comptroller for Contracts and Procurement Lisa Flores will testify at tonight’s charter expert forum on the need for procurement reform. To view the testimony as prepared, click here.

To see Comptroller Stringer’s full report on recommendations to the Charter Commission, click here.

To see Comptroller Stringer’s letter to the Charter Commission on procurement proposals, click here.

New Bronx Chamber of Commerce - upcoming Chamber Sponsored Events and Chamber Member Services!

r RSVP at events@bronxchamber.org or 718828--3900 Click here to download PDF to RSVP  and on specs for Journal ads You can also RSVP at  https://bronxchambergala2019.eventbrite.com Chamber Member Children's Corner Learning Center provides Day-Care Service for Children 6 weeks to 5 years

Van Nest Neighborhood Alliance Meeting

(L - R) 49th Precinct Sector A, NCO Officer Brancatelli, VNNA Treasurer John Messinger, NCO Officer Nicewicz, VNNA Trustee Shradhanend Pirtam, VNNA President Bernadette Ferrara, VNNA Secretary Marion Manfredi, Ted Pryor representing Councilman Mark Gjonaj, and VNNA Senior Advisor Bob Nolan.

  Last night was the monthly Van Nest Neighborhood Alliance meeting where Councilman Mark Gjonaj was the scheduled guest of this rescheduled meeting due to last Monday's snow storm. The VNNA meets on the first Monday of each month with the exception of January, July, and August.  

  Councilman Gjonaj was unable to attend as he was at  City Hall Budget meeting, and sent Ted Pryor of his staff to represent him. Mr. Pryor went over some of the many community events that are going on through Councilman Gjonaj's office, aad mentioned the Councilman's Newsletter listing the events. The subject of the new building going up on Blondell Avenue came up with a question of a possible charter school going in the building. VNNA President Ferrara stressed that the CB 10 and CB 11 areas  are short middle school seats, and did not need a charter school. Mr. Pryor answered that if the community rejects the current proposal before the community board that a homeless shelter could wind up being built on the site. That raised concerns from several people who objected the comment "if you don't take this building a homeless shelter could be built" attitude. 

NCO Officers Brancatelli and Nicewicz went over a few items of public safety. Not to leave your car running if you are parked to run into a store to get something, as two cars were stolen that way in the precinct. They took various individual questions from the audience taking down addresses to check on the problems. 

VNNA President Ferrara went over the agenda of the next few meetings, and that in June 2019 the VNNA will have elections for its officers. Bob Nolan went over the process stating members must be in good standing for six months to vote, nominate, run for any office, and must live in the area of the VNNA to run for office.

The Van Nest Neighborhood Alliance will be having their Annual Dinner on Friday  May 10th from 7 - 10 PM at Maestros. 

Above - Councilman Mark Gjonaj's representative Ted Pryor listens to VNNA President Ferrara's statement after he answered a question about the Blondell Avenue proposed building.

Below - 49th Precinct NCO Officers Brancatelli and Nicewicz spoke and took questions from the audience.