Workplace Wellness Programs under the ACA: Drawing the Line between Effective Health Incentives and Employer-Imposed Infringements

By: Patrick Tyler, Albany Government Law Review

As part of the new requirements for employer-provided health plans, the Affordable Care Act (hereinafter, “ACA”) allows employers to offer employees incentives worth up to thirty percent of their health plan costs, a ceiling that the government may increase to fifty percent under select circumstances.[1] In order to receive these incentives, employees must participate in workplace wellness programs, which often involve extensive testing and may require employees to meet certain benchmarks in improving their health such as attaining a target bodyweight.[2] These programs appear to be keeping with the general spirit of the new healthcare law, as a major theme in the ACA is an increased reliance on outpatient wellness programs and data-driven care.[3]

However, these programs are also the object of growing scrutiny and criticism. The Equal Opportunity Commission (hereinafter, “EEOC”) argues that these plans have the potential to be used as a vehicle to discriminate against workers with disabilities.[4] Critics also allege that these plans appear to be a way for employers to shift the financial burdens of health care expenses onto the backs of their employees.[5] Therefore, in order for these plans to be successful in the long term, it must be clear that they are both effective in achieving their stated employee health goals and have adequate legal safeguards in place to protect against discriminatory practices on the part of employers.

I. Civil Rights Challenges

In August 2014, the EEOC filed a lawsuit against the Orion Energy Company for violating the Americans with Disabilities Act (hereinafter, “ADA”) through the misuse of its wellness plan.[6] The EEOC alleged that the company fired one of its employees for failure to participate in its plan.[7] Orion’s wellness plan, according to the EEOC, involved an examination that made impermissible disability-related inquiries that were unrelated to business necessity.[8]

However, the extent to which the EEOC has the ability to sanction misuse of wellness programs and define their contours may be limited. Recently a federal district court in Minnesota rejected the EEOC’s request for an injunction against Honeywell International based on the agency’s contention that the company’s healthcare plan violated the ADA as well as the Genetic Information Nondiscrimination Act (hereinafter, “GINA”).[9] Honeywell’s healthcare plan conditions its contributions to its employees’ health savings account (hereinafter, “HSA”) on participation in the company’s wellness program.[10] The central feature of the program requires participants to undergo biometric testing which screens health indicators such as blood pressure and cholesterol in order “to inform participants about their health status, encourage improvement of specific health goals and ultimately reduce claim costs.”[11] Employees can choose to opt out of the program, but this would result in significant financial loss with regard to their HSA accounts.[12] The court’s rejection of the injunction signals that deference to the EEOC in matters of ADA discrimination in employer wellness plans may be limited.[13] This rejection also suggests there may be an inherent conflict over these plans between the EEOC and Health and Human Services (“HHS”) with regard to the extent to which employment and labor law protections can trump the objectives of the ACA.[14] This conflict may become more prominent as new challenges to workplace wellness programs arise, and courts are compelled to draw the line between incentives for a healthier lifestyle and discrimination based on health-related, but protect factors such as age and disability.[15]

The ultimate outcomes of the cases against Orion and Honeywell, and ADA claims brought under similar theories, will depend upon of a few factors. First, whether the surcharges and lost contributions in an employer’s plan are significant enough to render it involuntary.[16] Second, whether the nature and scope of the testing is limited to information necessary to make actuarial decisions for the purpose of underwriting or administering the risks of a “bona fide benefit plan,” thereby placing the wellness program under the ADA’s health insurance safe harbor, which allows for health testing that would otherwise impermissible under the ADA.[17] So far, the stance of the Minnesota District Court appears to favor Honeywell’s argument that their program falls under the ADA’s safe harbor in light of the ACA’s expanded permissiveness with regard to what defines a bona fide benefit plan.[18]

In addition to disputes over whether participation in an employer’s health program is involuntary or impermissibly invasive, conflicts may arise over the question of whether obesity is a protected trait.[19] The Americans with Disabilities Amendments Act (hereinafter, “ADAA”) of 2008 broadened the definition of what constitutes a disability under the ADA, making it easier for overweight employees to bring discrimination claims.[20]

Should workplace wellness programs continue to expand in number and scope, claims could potentially arise from participating employees who experienced a denial or decline of health savings account contributions for failure to meet weight loss benchmarks.[21] This type of litigation would pit the outlook of the EEOC and those civil rights advocates pushing to establish obesity as a non-transitory trait for the purposes of the ADA[22] against the underlying public health philosophy of the ACA, which seeks to create a public perception of weight loss as the attainable result of lifestyle changes.[23]

 II. Are Wellness Plans Effective?

A recent study by the Rand Corporation, commissioned by the Department of Labor, undertook a comprehensive analysis of healthcare plans at various companies.[24] The study found that many of the features of wellness plans, including onsite exercise facilities and access to organic food, were often well-received by employees, although satisfaction varied depending on the employer and differences in occupation.[25] Additionally, some requirements of plans were perceived as being overly intrusive or unfairly burdensome to some employees as opposed to others.[26] Furthermore, with regard to issues such as weight loss or smoking cessation, the incentives programs put in place by employers only seemed to have, at best, a modest impact on the health-related behavior of employees.[27] The study recommended that companies take more comprehensive steps to communicate both the availability and benefits of their wellness programs.[28] Furthermore, it emphasized that companies must make greater strides to promote acceptance of the plans among management and to make sure that there are proper accommodations in place to ensure access to the plans for all employees regardless of scheduling conflicts or other logistical obstacles.[29] Although the measurable benefits have been limited so far, proponents of workplace wellness programs highlight the need to look beyond their short-term effectiveness and look and at the long-term goals of engagement and the benefits of a gradual shift toward a healthier workplace culture.[30]

III. Impending Clashes between Personal Freedom and Public Health

Although debates around the ACA often focus on its expansion of Medicaid and the intricacies of the state and federal insurance exchanges, another, almost equally important aspect of the law is its emphasis on finding ways to improve the health of the American public outside of the hospital and doctor’s office.[31] Public health measures, such as requiring restaurants to provide detailed nutrition labeling in their menus[32], have been controversial.[33] In National Federation of Independent Businesses v. Sebelius, the ACA’s individual mandate was compared, by way of analogy, to the government requiring the average citizen to purchase a certain quantity of broccoli.[34] This analogy was, for the purposes of the case, targeted at the discussion of the ACA’s scope under the commerce clause. However, the ‘broccoli’ themed argument also seems to reflect a larger uneasiness the American public has with the underlying philosophy of the law.[35]

A reoccurring feature of the healthcare reform discourse is the unfavorable comparison between the United States and other industrialized countries across a broad range of health outcomes and measurements.[36] However, what is often overlooked are the fundamental lifestyle differences, namely exercise and diet, between the average American citizen and people living in western European countries such as Scandinavia or France[37] which have a very significant impact on basic health measures and life expectancy, regardless of clinical healthcare access or quality.[38] Nevertheless, despite the massive problems the United States has with regard to issues such as poor diet, sedentary lifestyles, and obesity, there will likely continue to be resistance to any attempts by the government to directly influence the choices the average American makes in their personal lives with regard to their health.[39] Whether subtle, incentive-based approaches, like workplace wellness programs, can weather this resistance and slowly reshape the cultural landscape remains to be seen.

There is also the question of how these broad wellness policies put forward by the ACA will interact with legal protections within grey area of disabilities that are arguably the result of lifestyle choices. Will, for example, individuals with alcohol dependency receive protection under the ADA[40] within the novel context of wellness programs that collect employee biometric data and seek to eliminate alcohol-related health problems such as high blood pressure and heart disease? The answers are unclear, but the emerging debate will likely involve clashes between those advocating for employment protection and public health law interests and its resolution will likely require a paradigm shift in the legal and cultural landscape of the United States.

[1] Soeren Mattke et al., RAND Health, Workplace Wellness Programs Study: Final Report xx (2013), available at http://www.dol.gov/ebsa/pdf/workplacewellnessstudyfinal.pdf; Fact Sheet: The Affordable Care Act and Wellness Programs, U.S. Dep’t of Labor, available at http://www.dol.gov/ebsa/newsroom/fswellnessprogram.html.

[2] Michael Hiltzik, Does your Employer Really Care About your ‘Wellness’? Maybe not, LA Times, Nov. 4, 2014, http://www.latimes.com/business/hiltzik/la-fi-mh-wellness-not-especially-20141104-column.html.

[3] See, e.g., Gene Marcial, Obamacare Focuses On Prevention and Wellness by Spending More on Medical Tests, Forbes, Aug. 9, 2013, http://www.forbes.com/sites/genemarcial/2013/08/09/obamacare-focuses-on-prevention-and-wellness-by-spending-more-on-medical-tests/ (noting that the ACA seeks to provide widespread tests and health data collection in order to “identify areas where early treatment would avoid diseases that would require costly medical specialists or hospital stays.”); Health Res. and Serv. Admin., The Affordable Care Act and Health Centers, http://www.hrsa.gov/about/news/2012tables/healthcentersacafactsheet.pdf (last visited Apr. 13, 2015) (“The health center model also overcomes geographic, cultural, linguistic and other barriers through a team‐based approach to care that includes physicians, nurse practitioners, physician assistants, nurses, dental providers, midwives, behavioral health care providers, social workers, health educators, and many others.”).

[4] Dan Cook, EEOC Reviewing Wellness Programs for ADA Violation, Benefitspro, Oct. 2, 2014, http://www.benefitspro.com/2014/10/02/eeoc-reviewing-wellness-programs-for-ada-violation.

[5] Hiltzik, supra note 2.

[6] Complaint and Demand for Jury Trial at 1, E.E.O.C. v. Orion Energy Systems, No. 14–1019 (E.D. Wis. Aug. 20, 2014), available at http://www.littler.com/files/Wellness.pdf.

[7] Id. at 1, 5.

[8] Id. at 1, 6.

[9] E.E.O.C. v. Honeywell Int’l, Inc., 2014 WL 5795481, 1–2, 5 (D. Minn. Nov. 6, 2014).

[10] Id., at 1.

[11] Id. at 1.

[12] Not only would they lose out on any potential contribution on the part of Honeywell, they would also be expected to pay a five hundred dollar surcharge as a result of their failure to participate and a one thousand dollar “tobacco surcharge” for both them and their spouse regardless of whether their refusal to participate was based on tobacco use. The EEOC estimated that there could be up to a four thousand dollar penalty in both “surcharges and lost HSA contributions” for refusal to participate. Petition for a Temporary Restraining Order and Preliminary Injunction at ¶¶14–15, EEOC. v. Honeywell Int’l, Inc., 2014 WL 5462363 (D.Minn. Oct. 27, 2014).

[13] See generally Honeywell Int’l, Inc., 2014 WL at 1.

[14] See id. at 5.

[15] Id.at 2–5 (“Recent lawsuits filed by the EEOC highlight the tension between the ACA and the ADA and signal the necessity for clarity in the law so that corporations are able to design lawful wellness programs and also to ensure that employees are aware of their rights under the law.”)

[16] See 42 U.S.C. § 12112(d)(4)(B) (2014).

[17] 42 U.S.C.A. § 12201(c)(2) (2014).

[18]See Honeywell Int’l, Inc., 2014 WL at 5 (Honeywell’s argument in favor of the legitimacy of their program was based on “Congresses’ express approval of surcharges used in conjunction with wellness programs, as expressed in the Affordable Care Act”).

[19] Jane Korn, Too Fat, 17 Va. J. Soc. Pol’y & L. 209, 250 (2010).

[20] The ADA defines a disability as an impairment that substantially limits a major life activity. The ADAA significantly expands the definition of a major life activity. Furthermore, as a result of the ADAA, if an employer discriminates on the basis of a perceived impairment, it is sufficient to establish liability regardless of whether the impairment actually limits or is perceived by the employer to limit a major life activity. 42 U.S.C. § 12102(1)–(2); see also Notice Concerning The Americans With Disabilities Act (ADA) Amendments Act of 2008, U.S. Equal Emp’t Opportunity Comm’n, available at http://www.eeoc.gov/laws/statutes/adaaa_notice.cfm (last visited Apr. 13, 2015).

[21] See 26 CFR § 54.9802-1(f) (The current regulations allow for nondiscriminatory progress-contingent incentives, including losing a certain percentage of bodyweight. The rules regarding outcome-based plans require employers to craft reasonable alternatives, such as completing an educational course, for employees who don’t achieve the initial health outcome goal. The sufficiency of an employer’s alternative would likely be a determinative factor in an ADA discrimination claim).

[22] Korn, supra note 19, at 250 (arguing for the recognition of obesity as a protected trait on the basis that “while obesity may be somewhat mutable, it is not in the same category as getting one’s teeth straightened or putting on makeup. Most experts would agree that significant weight loss and maintaining that weight loss are extremely difficult although not impossible.”).

[23] See Christine Fry et al., Healthy Reform, Healthy Cities: Using Law and Policy to Reduce Obesity Rates in Underserved Communities, 40 Fordham Urb. L.J. 1265, 1286 (2013).

[24] Soeren Mattke et al., supra note 1, at iii.

[25]Id. at 96–98.

[26] See generally id. at 97–98.

[27] Id. at 87 (“Regression results suggest that incentives are associated with improvements in smoking, BMI, and exercise but not in cholesterol levels. Although the relationship between incentive levels and the three behaviors/outcomes is statistically significant, the magnitude of the effect is small.”)

[28] Id. at 97–98.

[29] Id.

[30] See Aetna, Creating an Effective Wellness Strategy: Plan Sponsor Wellness Guide, 3 (2008), http://www.aetna.com/employer/commMaterials/documents/Roadmap_to_Wellness/ps_wellness_guide.pd.

[31] See Fry et. al, supra note 23, at 1282–83.

[32] Food Labeling: Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments, Fed. Register, available at https://www.federalregister.gov/regulations/0910-AG57/food-labeling-nutrition-labeling-of-standard-menu-items-in-restaurants-and-similar-retail-food-estab (describing a proposed rule in the Federal Register to be codified as 21 CFR Parts 11 and 101).

[33] Bejamin Goad, Uproar Over ObamaCare’s Menu Rules, The Hill (Feb. 18, 2014), http://thehill.com/regulation/healthcare/198602-lawmakers-o-cares-menu-labeling-regs-go-too-far.

[34] See Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2591 (2012).

[35] See James B. Stewart, How Broccoli Landed on Supreme Court Menu, NY Times (June 13, 2012), http://www.nytimes.com/2012/06/14/business/how-broccoli-became-a-symbol-in-the-health-care-debate.html?_r=0 (“Before reaching the Supreme Court, vegetables were cited by a federal judge in Florida with a libertarian streak; in an Internet video financed by libertarian and ultraconservative backers; at a Congressional hearing by a Republican senator; and an op-ed column by David B. Rivkin Jr., a libertarian lawyer whose family emigrated from the former Soviet Union when he was 10.”); see also Daniel D. Duhame, What Does Broccoli Have to Do With Health Care? A Commerce Clause Justification, Brown Political Review (Dec. 20, 2012), http://www.brownpoliticalreview.org/2012/12/what-does-broccoli-have-to-do-with-health-care-a-commerce-clause-justification/.

[36] See, e.g., Lenny Bernstein, Once Again, U.S. Has Most Expensive, Least Effective Health Care System in Survey, Washington Post, (June 16, 2014), http://www.washingtonpost.com/news/to-your-health/wp/2014/06/16/once-again-u-s-has-most-expensive-least-effective-health-care-system-in-survey/ (citing a recent survey which found that compared to other developed western countries the U.S. had “inordinate levels of mortality from conditions that could have been controlled, such as high blood pressure; and lower healthy life expectancy at age 60.”).

[37] See Valerie Frankel, Secrets of the World’s Healthiest Women, CNN, (Jan. 13, 2012)

http://www.cnn.com/2012/01/13/health/secrets-worlds-healthiest-women/.

[38] “Americans, on average, have a higher body mass index (BMI) than people in many other comparatively wealthy countries. In 1998, the World Health Organization reported that 20% of American males and 25% of American females between twenty and seventy-four years of age were obese (identified as those with a BMI of 30 or higher). Contemporaneously, 15% of men and 17% of women in England were considered obese, and 5% of men and 9% of women in Sweden and 2% of men and 3% of women in Japan were categorized as obese.” Janet L. Dolgin & Katherine R. Dieteric, Weighing Status: Obesity, Class, and Health Reform, 89 Or. L. Rev. 1113, 1146–47 (2011).

[39] See Duhame, supra note 35 (describing how American healthcare consumers tend to make health decisions based on short-term, individualistic impulses rather than long term, utilitarian reasoning); see also New York Statewide Coal. of Hispanic Chambers of Commerce v. New York City Dep’t of Health & Mental Hygiene, 23 N.Y.3d 681, 698 (2014) (holding that New York City’s ban on large soft drink containers was an overreach of policy-making authority because it failed to consider non-health factors and attempted to limit the autonomy of citizens by influencing their choices and behavior).

[40] While the ADA’s protections for those with alcoholism do not currently extend to discrimination based on an employee’s consumption of alcohol at work or work misconduct committed while intoxicated, adverse employment action through workplace wellness programs on the basis of alcohol-related health problems accumulated outside of work could potentially form the basis of an ADA claim. See generally E.E.O.C. v. Exxon Corp., 967 F. Supp. 208, 209–12 (N.D. Tex. 1997), rev’d and remanded, 203 F.3d 871, 872–75 (5th Cir. 2000); Beth Hensley Orwick, “Bartender, I’ll Have a Beer and a Disability”; Alcoholism and the Americans With Disabilities Act: Affirming the Importance of the Individualized Inquiry in Determining the Definition of Disability, 20 St. Louis U. Pub. L. Rev. 195, 202–03 (2001).

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Terminating Gubernatorial Investigatory Commissions

By Bennett Liebman

Government Lawyer in Residence

In response to numerous indictments of state elected officials, convictions and a political climate where public corruption appeared to be running rampant, Governor Andrew Cuomo established a Moreland Act Commission[1] to review public corruption in June of 2013. [2] The purpose of the 25-member Commission, per Governor Cuomo, was that it was “critical that the laws, regulations and procedures regulating conduct by public officials, the electoral process and financing of campaigns are strong, effective and comprehensive, and are fairly and vigorously enforced to promote public confidence in State government.”[3] The Commission, however, was short-lived. As part of the 2014 budget arrangement with the legislature, the Governor terminated the operation of the Commission in April of 2014. The abrupt end of the Commission inspired numerous narratives that it was terminated due to unspecified political arrangements and/or due to efforts to avoid politically sensitive investigations. The investigation into the termination of the Moreland Commission by the United State Attorney for the Southern District seems to be ongoing.[4]

Yet, this is hardly the first time that New York State investigatory commissions have been terminated in the midst of allegations of political deals and efforts to quash sensitive investigations. New York State has seen a series of commissions and commissioners whose termination was alleged to have been caused by political arrangements and considerations.

Thomas Dewey – Daniel O’Connell 1943-1946

Perhaps the New York prototype for the controversial ending of an investigatory/prosecutory commission was Governor Thomas Dewey’s investigation of the Democratic machine of Albany County run by legendary boss Daniel O’Connell. Dewey had assailed the O’Connell machine in his unsuccessful campaign for election as Governor of New York in 1938.[5] He continued criticizing the O’Connell machine in his successful 1942 election for Governor. After becoming Governor, Dewey authorized investigations by the State Tax Commission into Albany County’s real estate assessment practices and by the State Attorney General into election matters. Dewey followed up on these preliminary investigations by establishing, via an executive order, a special prosecutor to investigate electoral abuses in Albany County.[6] In November of 1943, Dewey, in conjunction with Attorney General Goldstein, named attorney George Monaghan to head the investigation. Monaghan had been an assistant to Dewey when Dewey had served as the district attorney in New York County.

Monaghan indicted and convicted a series of low-level Albany  officials , but was largely unsuccessful in reaching O’Connell or the heart of the Albany machine. Dewey and Monaghan ended the investigation in early 1946 after more than two years of effort. The reason given for terminating the investigation was that the O’Connell administration’s control of the Albany jury system made it nearly impossible to assemble an impartial jury that would ever find O’Connell partisans guilty.[7] Monaghan had earlier claimed

The O’Connell machine survived the investigation largely intact.  The Herald Tribune reported that “the investigations failed to harm either the organization or its leader, and while a few key leaders were indicted, they were not convicted.”[9] 52 persons were indicted. One indictment was quashed by the Court of Appeals. There were 33 guilty pleas, no jury convictions and the acquittal of eight defendants. Of the guilty pleas, “31 were from ex-convicts charged with illegal voting.”[10]

Most everyone understood from the start of the investigation that the jury system in Albany County would be a major impediment to any successful prosecution of the O’Connell regime.[11] The legislature passed a bill changing the jury selection system only for Albany County,[12] but it was found to be an unconstitutional attempt by the State legislature to pass a local law.[13] An attempt by the Special Prosecutor to move the site of a trial from Albany County to New York County was denied in Murphy v. Extraordinary Special & Trial Term of Supreme Court, 294 N.Y. 440 (1945) based upon a finding that the prosecution had no authority on its own initiative to change the venue of a criminal trial.

Despite Monaghan’s stated reason that the flawed jury system in Albany County was the reason for terminating the O’Connell investigation, there has long existed a belief that the investigation was ended because O’Connell threatened the Dewey administration and the Republican legislative leaders with revealing criminal information about their operations. In short, the belief is that O’Connell effectively blackmailed the Dewey administration to end the investigation.

This legend/belief was probably best articulated by Pulitzer Prize-winning author William Kennedy in his book O Albany![14] Kennedy wrote, “The reason always given for Dewey’s failure to nail Dan, or anybody important, has been that Dan retaliated with his own investigation of the legislature [which sits in Albany County’s jurisdiction]. Well, yes. But a story goes with it.”[15]

The story is that an O’Connell loyalist found that a firm supplying contract services for the State Comptroller was sending checks to a number of top Republicans. The O’Connell loyalist made copies of the checks and informed O’Connell about the checks. O’Connell had the loyalist telephone him (O’Connell knew that his phones were being tapped by Monaghan) with this information.[16] Soon after this phone call, Dewey called reporter Leo O’Brien[17] – who was friendly with O’Connell – and “told him to tell Dan that if he called off his own investigation, he, Dewey, would call off his own investigation of Albany.”[18]

Leo O’Brien told his own version of the arrangement. As an Albany newspaperman in 1945 who was friendly with both the Dewey and O’Connell administrations, he was summoned by Dewey’s counsel to meet as an intermediary with Dewey at Dewey’s private home in Pawling in Dutchess County. There Dewey offered to end his investigation provided that some of O’Connell’s associates plead guilty and take suspended sentences. Dewey wanted to make certain that if he dropped his investigation, O’Connell would not continue with his own. O’Brien told Dewey that O’Connell would agree.  [19]

O’Brien returned to Albany after his Dewey meeting and told O’Connell, “’The investigation is over – provided if the one is closed you won’t keep the other one going.’ And Dan said, ‘That’s easy enough.’”[20]

There are other sides to this story. One review of the O’Connell administration states that “it seems reasonable to suppose that Governor Dewey gave up because there was no chance of accomplishing anything and the matter was hence becoming an embarrassment.”[21]

A biography of Albany Mayor Erastus Corning suggests that Leo O’Brien believed that Dewey’s motivation to terminate the investigation “had less to do with fear or intimidation from O’Connell and more to do with the fact that it had gone on too long, produced too little, cost too much and that the public tide had turned completely against it.”[22] In any event, if O’ Brien’s word – and O’Brien in theory would not appear to have any significant motive to  fabricate[23] – is to be credited at all, there was some likelihood that a form of quid pro quo was involved in the termination of the O’Connell investigation.

Nelson Rockefeller – Robert Wagner 1959-1961

Soon after being elected as Governor in 1958, Nelson Rockefeller commenced an effort to investigate the government of the City of New York. Governor Rockefeller viewed this as a “Little Hoover” commission which would provide a serious objective study of New York City government. The New York City Democrats – especially Mayor Robert Wagner – (who would be up for reelection in 1961) – viewed it as a “witch hunt.”[24]  This commission – formally the Commission on Governmental Operations of the City of New York – was established by the legislature in connection with the 1959 budget.[25] The Commission was a nine-member body headed initially by Otto Nelson, who was an executive with the New York Life Insurance Company. Mr. Nelson left after a year and was replaced as chairman by former State Comptroller Frank Moore. Its investigations were handled by attorney Whitney North Seymour.

Much to the displeasure of the New York City Democrats, the Commission’s investigations functioned largely in a manner designed to assail the government of New York City.[26] Its preliminary report in February of 1960 found that New York City officeholders “lack ‘the appetite, willingness, or capacity’ to do the job.”[27] The Commission thus injected “itself unquestionably into the political arena in 1961.”[28] After the report, Seymour focused on investigations that involved possible bribes in the awarding of construction contracts and broad invitations of inspectors at city agencies.

According to Nelson Rockefeller’s biographer, Richard Norton Smith, there were backdoor discussions in 1960 between the city and state administration on limiting the Commission’s role. These discussions “produced an agreement whereby Wagner would provide sufficient Democratic support in the legislature to pass a Rockefeller-favored banking bill stymied in the previous year’s session. In return, the Seymour Commission would quietly fold its tent. In the event, enough Democrats switched their votes to enact the legislation sought by Chase and other big banks.”[29]

A review of the legislation passed in 1960 shows that Democrats produced enough votes to pass a bill authorizing New York City banks to expand their branches into New York City’s suburbs.[30] While in the past the Democrats in the legislature had been opposed to this particular measure, nearly all the Democrats in the Assembly from the Bronx and Brooklyn voted for the measure.[31] Only with Democratic support could this legislation be passed as many of the Republicans in the Assembly voted against the bill. The legislation passed by a vote of 91-56 at a time when the Republicans had a 92-58 membership edge in the Assembly.

Only after the branch banking legislation had been passed was legislation introduced to change the membership on the Temporary State Commission to study the governmental operations of the City of New York. The bill was introduced on March 28, 1960 and passed both houses after a message of necessity on March 31.  The bill increased the number of members on the Commission to 11, giving the mayor of New York City from two to four appointments.[32] Additionally, the mayor was free to pick whomever he wanted for these posts. Under the original legislation in 1959, the mayor had two appointments who could not be city or state employees. Governor Rockefeller in his message approving the changes in the Commission stated that the Commission would now place a greater emphasis on the revision of the New York City Charter.[33]

Besides increasing the number of mayoral appointees, Governor Rockefeller announced that the Whitney North Seymour investigatory arm of the Commission would no longer be on its own. Instead, it would be placed under the supervision of the Temporary State Commission of Investigation as a special unit.[34] The Temporary State Commission was a bipartisan organization that was not subject to the direct control of the executive.[35]

In early 1961, despite whatever agreement that may have been previously reached in 1960, it appeared that the Seymour investigations of New York City would continue aggressively.[36] The Seymour unit announced that there was corruption throughout the planning division of the City Department of Buildings.[37] In return, Mayor Wagner accused Seymour of a smear campaign.[38] The legislature increased the funding for Mr. Seymour’s investigation for the fiscal year.

Nevertheless, the State Investigation Commission soon began to close down the Seymour investigations unit. State Investigation Commission Chairman Jacob Grumet announced in late January of 1961 that the Seymour unit would be out of business in June of 1961.[39] Seymour continued his investigation including a report that a steamship executive with business before the City was providing favors to the Mayor.”[40]

Nonetheless, The State Investigation Commission ended the Seymour unit’s existence in July of 1961.[41] While no final formal report of the investigatory unit was planned or issued, Seymour, acting on his own, issued a personal report. He pointed fault both at the State Investigation Committee and the City.[42] He wrote that many of the municipal services of the City were for sale and that the city leadership operated in a “complete vacuum of moral leadership.”[43] Mayor Wagner’s response was that the Seymour investigation “has gone out of business in the same way it started – in a blaze of mud.”[44]

Little became of the Seymour charges, and Mayor Wagner handily won both the Democratic primary and the general election in route to his third term as mayor. Yet it is hard, on its face,  to dismiss the votes, the legislation, and the reduction of the status of the Seymour investigatory unit to the State Investigation Commission in 1960 as being totally coincidental.

Maurice Nadjari-Hugh Carey 1975-1976

In the wake of the report of the Knapp Commission[45] finding substantial corruption in the police department of the City of New York, Governor Rockefeller, by executive order in September of 1972, created a special prosecutor’s office to investigate crimes “connected with the enforcement of law or administration of criminal justice in the City of New York.”[46] Named as the Special Prosecutor was Maurice Nadjari who had served for 14 years in the Manhattan County District Attorney’s Office and had been the chief assistant district attorney in Suffolk County.[47] “This new, somewhat unique Office was given exclusive jurisdiction and feared power, on a virtually open-ended scale, with almost on-demand resources in money and personnel.”[48] Nadjari had the reputation of being a tough and aggressive prosecutor, and he lived up to his reputation during his time as special prosecutor.[49]

He brought charges against numerous public officials. After two years in office, he had indicted 110 people including five judges, the Queens County district attorney Thomas Mackell, defense attorneys, and police officers. The Queens county district attorney had been convicted along with his two top aides.[50] Starting in 1975, however, Special Prosecutor Nadjari’s methods and activities were the subject of heavy criticism. The conviction of district attorney Mackell was reversed on appeal with a strong rebuke of Nadjari’s methods. No members of the judiciary had been convicted. Nadjari was criticized for his frequent leaks of prosecutorial information,[51] and “he suffered a series of legal defeats in his major cases.”[52] As Time Magazine put it: “To his detractors he was unorthodox, ruthless, overzealous, tyrannical and inept.” [53]

On December 23, 1975, Governor Hugh Carey tried to remove Nadjari from his position as Special Prosecutor. Carey named Manhattan district attorney Robert Morgenthau as his replacement. Governor Carey, however, had failed to deal with Attorney General Louis Lefkowitz who had the formal authority to appoint a special prosecutor. Lefkowitz agreed to let Nadjari stay on his job for an additional six months to complete his work.[54]

At the same time, Nadjari went on the attack against Governor Carey. Nadjari alleged that his firing was due to highly placed, self-motivated people misleading the Governor about Nadjari’s work.[55] He also suggested that Governor Carey had dismissed him because he was investigating high-ranking figures in the Democratic Party.[56]  He implied that the Governor had learned of his investigation into State Democratic Party chairman Patrick Cunningham selling judgeships.[57] “His aides begin ‘leaking’ reports that he was investigating influential Democrats, that a wiretap had been compromised, and, as a result, Democrats including the Governor knew that Nadjari was ‘closing in.’”[58] In May of 1976, Nadjari did, in fact, indictCunningham for selling a judicial nomination.

In response, Carey asked Attorney General Lefkowitz to review Nadjari’s allegations against him. In January of 1976, the Attorney General named former judge and former State Investigation Commission chairman Jacob Grumet to review Governor Carey’s charges against the Special Prosecutor.

Things turned poorly for Nadjari in June of 1976. At the Court of Appeals, he lost a major case which restricted his jurisdiction strictly to the criminal justice system.[59] Governor Carey was cleared of any misconduct by Justice Grumet.[60] The Grumet investigation found that “Governor Carey’s decision to replace Mr. Nadjari was based upon his independent judgment, in the official discharge of his duties and responsibilities of his office.”[61] Attorney General Lefkowitz soon named Robert Morgenthau’s chief assistant, John Keenan, to replace Nadjari.

Subsequent commentaries on the Nadjari tenure have not been kind to the erstwhile special prosecutor. The Cunningham indictment was dismissed. “In his last six months in office, Maurice H. Nadjari exceeded his authority, that he stretched his jurisdiction, that he engaged in wholesale and unjustified wiretapping and that he and his aides misused grand juries.”[62] He was criticized by the State Investigations Commission[63] “which accused Nadjari and his former chief assistant of deliberately disclosing and leaking information to the press and of tarnishing the reputations of numerous officials.”[64]He lost an election in 1977 for district attorney in Queens County. Former Court of Appeals judge Joseph Bellacosa has stated of Nadjari:

“By the time Nadjari was ‘fired’ by Governor Carey after the Mackell case debacle, with the eventual and needed acquiescence of the New York State’s Attorney General Louis Lefkowitz (a different check-and-balance mechanism), the Special Prosecutor’s office had done a lot of damage to individuals, and to the torn tapestry of ordered process. Despite a scant record of successful prosecutions, the annual budget of that exceedingly privileged Office averaged about $ 2 million. The wreckage left behind in the wake of this prosecutorial hurricane was enormous: lives and reputations were wrongly ruined; regularized and legitimate criminal processes, including innocent judicial officers and the judicial system itself, were scarred with cynical suspicion; and some corruption intended to be rooted out, instead, festered, with a nefarious new Special Prosecutorial form of official mischief fostered. That is one lousy legacy!”[65]

While the Carey-Nadjari fight was the one that had the most extensive media coverage of the issue of whether a governor acted improperly in taking action against a government investigator, it is also the one instance where there is a clear verdict on whether or not a governor acted properly in terminating a prosecutor or investigation. Justice Grumet’s investigation concluded clearly that Governor Carey did not act improperly. The same cannot be said conclusively about the Dewey-O’Connell inquiry or the Rockefeller-Wagner inquiry. We will need to await more data on Governor Cuomo’s termination of the Moreland Act Commission.

[1] The Moreland Act – which is Section 6 of the Executive Law – authorizes the Governor or his appointees to investigate and examine the management and affairs of any state agency.

[2] 9 NYCRR § 8.106, dated July 2, 2013, which created the Commission to Investigate Public Corruption with twenty-five members.
[3] Id.

[4] Kenneth Lovett, “Andy Foe’s Got to Love This Confab,” New York Daily News, March 4, 2015.

[5] “Dewey Assails O’Connell Machine,” New York Herald Tribune, October 25, 1938.

[6] Governor Dewey later extended the reach of the special prosecutor “to include crime and corruption of public officers in Albany County or any subdivision thereof, crimes affecting the administration of justice, the collection of public revenues and crimes committed by persons and corporations having business dealings with Albany County or its subdivisions.” See People v. Prior, 294 N.Y. 405, 409 (N.Y. 1945).

[7] See “Monaghan Charges Jury Balked Probe, New York Post, February 16, 1946.

[8] “4 State Court Justices Flayed by Monaghan,” Associated Press, Buffalo Courier Express, November 11, 1944.

[9] “Albany County Inquiry Ends; Jury Set-Up Hit,” New York Herald Tribune, February 16, 1946.

[10] “Dewey-urged Albany Probe Ends Today, Many Indicted,” United Press, North Tonawanda News, February 15, 1946.

[11] “Albany Jury Ends 2-Year Crime Hunt,” New York Times, February 16, 1946.

[12] Laws 1944, Chapter 206.

[13] Stapleton v. Pinckney, 182 Misc. 590 (Sup. Ct. Albany County 1944) aff’d 293 N.Y. 330 (1944).

[14] William J. Kennedy, O Albany!, Penguin Books (1985).

[15] Id. at 288. This blackmailing of the Dewey administration by O’Connell was the basic plot in Kennedy’s play, Grand View. See generally Michael Patrick Gillespie, Reading William Kennedy (2002).

[16] Id. at 289-290.

[17] O’Brien later served for many years as the Democratic congressman from Albany.

[18] Id. at 290.

[19] Id. at 290 -291.

[20] Id. at 291. O’Brien added in his version that O’Connell would not agree to have any of his associates plead guilty. Dan O’Connell told a version of this story to television newscaster Ernie Tetrault in an interview after Dewey’s death in 1971. Id. at 291.

[21] Frank S. Robinson, Machine Politics: A Study of Albany’s O’Connell’s (1977) p. 93. If the jury issue was the only Dewey/Monaghan concern, it would not have been particularly difficult to craft constitutional legislation that would have applied to more counties in addition to Albany County. In short, any jurisdictional issues that plagued the investigation could have easily been cured if the Dewey administration truly wanted it.

[22] Paul Grondahl, Mayor Erastus Corning, Albany Icon, Albany Enigma (2007) p. 242. Frank Robinson quotes the New York Times in noting that the Monaghan investigation had “some of the aspects of a boomerang. The constant use of the State Police and wiretapping, and the constant pressure to produce evidence of criminality that would stand up in court has produced a sympathy and an objection to what is called further ‘persecution’.” See Robinson, note 21 supra. See Warren Moscow, “O’Connell Takes Albany Party Post,” New York Times, October 30, 1945.

[23] O’Brien’s situation would seem to be different than that of Daniel O’Connell. O’Connell could conceivably have wished to augment his reputation by showing how he outsmarted and outmaneuvered the seemingly all powerful Thomas Dewey.

[24] “’Little Hoover’ Probe No Witch Hunt: Rocky,” Associated Press, Newsday, May 7, 1959; Douglas Dales, “Inquiry on City Approved,” New York Times, March 26, 1959.

[25] Laws 1959, Ch. 368.

[26] Leo Egan, “Nelson Charges Stir Talk of Fusion In ’61,” New York Times, February 7, 1960. See also Michael Kramer and Sam Roberts, “I Never Wanted to Be Vice-President of Anything,” 1976 p. 218.

[27] Robert Poteete, “State Assails City’s Government Sees Waste in Millions,” New York Herald Tribune, February 1, 1960.

[28] Martin G. Berck, “State Probe Hotly Debated From Start,” New York Herald Tribune, February 10, 1960.

[29] Richard Norton Smith, On His Own Terms (2014) p. 335.

[30] L. 1960, Ch. 237. See generally, McKinney’s 1960 Session Laws of New York, Memorandum of Joint Legislative Commission to Revise the Banking Law at p. 1886.

[31] “Democratic Split Led To Bank Law,” New York Times, March 23, 1960.

[32] Laws 1960, Ch. 1030.

[33] Public Papers of Governor Nelson A. Rockefeller (1960) p. 582.

[34] Id. at 1012.

[35] The next year, the Herald Tribune noted that in May of 1960 the Mayor and the Governor “reached a truce on several issues.” Laurence Barrett, “Hamstrung By the State Prober Says,” New York Herald Tribune, July 17, 1961.

[36] Smith notes that there were “recriminations over the commission’s continued existence.” Smith, supra note 29.

[37] Edith Evans Asbury, “Graft Is Charged in Building Unit,” New York Times, January 11, 1961.

[38] John Sibley, “Mayor Calls on Governor To Curb ‘Smear’ Inquiry,” New York Times, January 24, 1961.

[39] Laurence Barrett, “Heads of 2 State Inquiries at Odds,” New York Herald Tribune, January 27, 1961. See also John Sibley, “Grumet Defends Inquiries in City,” New York Times, January 27, 1961.

[40] David Miller, “Wagner Didn’t Know Who Paid the Hotel Bill, Aid Says,” New York Herald Tribune, April 30, 1961.

[41] Peter Kihss, “Seymour Unit Ends Inquiries After a Stormy Two-Year Life,” New York Times, July 2, 1961.

[42] Laurence Barrett, See note 35 supra.

[43] “State Prober Says City Hides Scandals,” Newsday, July 17, 1961.

[44] Charles G. Bennett, “Mayor Sees ‘Mud’ in Seymour Study,” New York Times, July 18, 1961.

[45] The Knapp Commission – formally known as the Commission to Investigate Alleged Police Corruption – was established by New York City Mayor John Lindsay in 1970 to review the overall issue of police corruption. Its reports were issued in 1972. Its popular name derives from Whitman Knapp, who was the chairman of the Commission.

[46]  9 NYCRR § 1.55. This office was continued by successor governors including Governors Wilson and Carey until it was ended by Governor Mario Cuomo in 1990. See Selwyn Rabb, “State to End New York City Corruption Office, New York Times, January 19, 1990.

[47] William E. Farrell, “Take-It-or-Leave-It Prosecutor: Maurice Hyman Nadjari,” New York Times, September 20, 1972. A Newsday columnist had once described Nadjari thusly: “He is too good. He would refuse to be managed by the politicians. They fear him for that and for his relentless pursuit of wrong-doers, no matter who they are.” Art Bergmann, “A Driving Prosecutor Who Cares,” Newsday, May 8, 1969.

[48] Joseph W. Bellacosa, “The Honorable Hugh R. Jones Fifth Memorial Lecture: Cogitations Concerning the Special Prosecutor Paradigm: Is the Cure Worse than the Disease?” Court Of Appeals Courtroom, Albany, New York, Monday, October 16, 2006, 21 St. John’s J.L. Comm. 615, 629 (2007).

[49] “Fighting Prosecutor: Maurice Nadjari,” New York Times, January 9, 1965. See also Maurice H. Nadjari,” New York State’s Office of the Special Prosecutor: A Creation Born of Necessity,” 2 Hofstra L. Rev., 97 (1974).

[50] Marcia Chambers, “Critics Now Cooperative As Nadjari Ends 2d Year,” New York Times, September 15, 1974.

[51] See Anthony Lewis, “The Zeal of Maurice Nadjari,” New York Times, March 28, 1976.

[52] Selwyn Rabb, “The ‘Superprosecutorm’” New York Times, December 24, 1975.

[53] “New York: An Abrupt Exit for the Superprosecutor,” Time, January 5, 1976.

[54] Carey was also faulted for failing to deal with the general issue of how Morgenthau could serve simultaneously as both the Manhattan district attorney and the special prosecutor.

[55] Edward Hershey, “Nadjari Fighting Carey Ouster,” Newsday, December 27, 1975.

[56] Selwyn Rabb, “Carey Denounces Hints by Nadjari about a Cover-Up,” New York Times, December 31, 1975.

[57] Tom Goldstein, “Carey Knowledge of an Inquiry Tied to Nadjari Ouster,” New York Times, December 25, 1975. See also Marcia Chambers, “Nadjari Calls Cunningham a Salesman of Judgeships,” New York Times, January 7, 1976. Governor Carey in a public statement said, that Mr. Nadjari “engaged in a public campaign to impugn my motives for acting, and to attempt to discredit me in the eyes of the public.” Public Papers of Governor Hugh L. Carey (1959) p. 790.

[58] Frank Lynn, “Carey-Nadjari Dispute, “New York Times, January 2, 1976.

[59]  Matter of Dondi v. Jones, 40 N.Y.2d 8 (1976).

[60] Edward Hershey, “Carey Is Cleared on Nadjari,” Newsday, June 23, 1976.

[61] Public Papers of Governor Hugh L. Carey, (1960) pp. 903-904.

[62] Tom Goldstein, “Nadjari’s Indictment Record,” New York Times, December 23, 1976.

[63] State of New York, Commission on Investigation, “The Nadjari Office and the Press” (November 18, 1976).

[64] Frank Anechiarico and James B. Jacobs, The Pursuit of Absolute Integrity, 1996 p. 100.

[65] Bellacosa, supra at note 48, pp. 634 -635.