Bleak House: Finding Six


FINDING SIX

TO ATTEMPT TO DEAL WITH THE MASSIVE DISARRAY AND CHAOS OF DHCR'S
CASE-PROCESSING SYSTEM TENANTS AND OWNERS HAVE BEEN APPEALING
DHCR DECISIONS AND SUING THE AGENCY IN COURT IN RECORD NUMBERS.
ALMOST ONE THIRD OF DHCR'S INITIAL DECISIONS ARE OVERTURNED OR
MODIFIED WHEN THEY ARE APPEALED THROUGH DHCR'S ADMINISTRATIVE
PROCEDURES AND THIS FIGURE MAY ACTUALLY UNDERESTIMATE THE ACTUAL
ERROR RATE OF THE AGENCY. DHCR IS ALSO BEING SUED IN COURT ON THE
AVERAGE OF ALMOST THREE TIMES A DAY.


The PAR Process

The rent regulation laws provide that tenants or landlords who
feel that their cases have been decided incorrectly by DHCR may
appeal those decisions to the Commissioner through a formal
process known as a Petition for Administrative Review (PAR).
Under this procedure, a party to a DHCR order, within 35 days of
a formal decision, may submit a PAR which will then be decided by
DHCR legal staff. The law provides that parties must go through
the PAR process before seeking judicial review of DHCR decisions
in the courts through "Article 78" proceedings.

The PAR process was intended by the Legislature as a way in which
those relatively few cases where errors in processing might occur
could be corrected internally by DHCR without forcing parties to
go to court. According to testimony at the hearing, however, the
prevailing philosophy at DHCR is to treat the right to file for
administrative review as both a procedural safeguard and a
justification for the unacceptably large error rate of the
initial case-processing system. Rent examiners testified that the
prevailing mood in their offices was that errors in processing
were not considered serious since if a tenant or landlord were
really concerned they could always submit a PAR. As rent examiner
David Saphire testified about the instructions he received from
his supervisor, Stuart Dabbs, "I was told that if nine out of ten
cases slipped through, the tenant can always file an appeal."

Statistics for 1986 show that DHCR reversed or modified its
initial decisions 29% of the time when PARs were filed. The PAR
statistics, on their face, seem to corroborate what is documented
in other sections of this report -- that DHCR is making errors in
processing in a significant percentage of its cases. We believe
in fact, as will be discussed later, that the 29% figure may
actually underestimate DHCR's case error rate and may paint an
overly rosy picture of what is going on in the case-processing
system.

The Division argues in reviewing PAR statistics that only a small
percentage of tenants or landlords ever file PARs and so the fact
that almost one-third of PARs overturn or modify DHCR orders is
not as significant as it appears. What needs to be understood,
however, is that not everyone whose case has been improperly
processed files a PAR. The burdens which the system impose on
tenants and landlords in initial case processing continue to
discourage tenants and owners from seeking their rights through
administrative review.

First, as was documented earlier, it is extremely difficult and
time-consuming for tenants or owners to find out if DHCR has made
an error in a particular case and thus to decide if filing a PAR
would be beneficial. Reconstructing the decision-making process
in a case will often involve at least two trips to DHCR's
Jamaica, Queens office to obtain access to case files, assuming
the files can be located at all. Even then, deciphering how the
case was processed, and whether the law was applied correctly can
be impossible without the help of an attorney or other
professional with knowledge about DHCR's case-processing system.

Many cases are never appealed because the issues involved in them
are relatively minor. Tenants and owners do not find it worth the
effort, even if they know their cases have been processed
incorrectly, to file a PAR. Those who have the motivation, time,
money, sophistication and willpower to file PARs face a number of
obstacles.

First, an application form must be obtained, a routine task in
most governmental agencies, but as was documented earlier,
between unanswered telephone calls, wrong information,
inaccessible rent offices and lost mail, often far from routine
at DHCR. Next, the owner or tenant must comply with the
instructions for filling out the PAR application. Many tenants
and owners find they must hire attorneys to fill out the form and
comply with its affidavit and service requirements.

If the tenant or owner wishes to cite any specific information
which he/she believes should be considered in the appeal rather
than simply stating their belief that the decision was wrong, an
inspection of their actual case file will often be necessary.
Even the best prepared and most knowledgeable people can find the
process daunting. As one tenant wrote about her case:

     "I was repeatedly given wrong information by
     telephone representatives of the DHCR. For
     example, I was told by a telephone representative
     of the Jamaica Office that I must submit to that
     office a request form in order to review documents
     submitted by my landlord. I submitted this "File
     Request Form" by mail on February 19, 1987.
     Although I was told that I would be contacted
     within ten days to two weeks in order to make an
     appointment to review these files, I have not yet
     heard from the Jamaica Office.

     In further telephone inquiries, I learned that the
     file I wish to review is at 10 Columbus Circle,
     and that no "File Request Form" or appointment
     need be made in order to review the file.
     Unfortunately, I did not learn the latter until
     after the 35 day limit for filing a "Petition for
     Administrative Review." Thus, as a result of
     repeated misinformation, I have filed a Petition
     for Administrative Review which is incomplete in
     terms of the statement of Errors of Law and Fact.
     In other words, due to the utter chaos plaguing
     the administration of the DHCR, I was unable to
     obtain the information I required in order to
     exercise my legal rights as the party leasing a
     rent-stabilized apartment in Manhattan.

     If you want to confirm the fact that the DHCR is a
     total mess, just try to call that agency to ask
     how one should proceed in order to submit
     additional evidence pertinent to a Petition for
     Administrative Review of a decision on a rent
     overcharge complaint. My own experience suggests
     that you will have to spend several hours
     listening to busy-signals, and that, if you
     finally manage to speak to someone, he or she will
     give you more information that is wrong."

Another tenant, Robert Susser, noted:

     "I can well understand why there are relatively so
     few appeals, and it has nothing to do with people
     being satisfied with the outcome, and everything
     to do with people giving up in disgust -- having
     concluded that an agency which has been so
     derelict and dishonest in handling their original
     complaint can hardly be expected to be less so in
     dealing with the appeal."

As was suggested earlier, the 29% PAR reversal rate may actually
underestimate DHCR's case processing errors. The PAR unit appears
to be more consistent and uniform in its processing and employ
more highly competent staff than DHCR units responsible for
initial case processing. A number of tenants and owners
testified, however, that initial errors were often repeated in
the PAR unit and thus did not show up in the 29% figure. Given
the general disorganization of the agency and the systematic
violations of law documented earlier, this is not surprising.

A second factor which may make the 29% error rate unrealistically
low is that the cases which are appealed may actually be those in
which the least errors, rather than the most errors have been
made in initial processing. This is because those tenants and
owners who have the resources and motivation to appeal decisions
are more likely than others to have undertaken substantial
efforts during initial case processing to ensure that their cases
were handled correctly.

The chaos of the initial system puts a premium on the cases of
tenants and owners who are willing to undertake herculean efforts
to ensure that lost documents are refiled, wrong information is
corrected, files are inspected and missed deadlines are extended.
Those who undertake these efforts, by the nature of the system,
will wind up with cases which are processed with less errors than
those who do not. Yet persons who diligently follow initial case
processing, and thus are more likely to correct initial
processing errors, may also be the same persons who continue to
work to correct errors through administrative review. Thus,
although no concrete statistics are available, cases which are
appealed may actually have less errors than the DHCR caseload as
a whole.


Piling UP the PARs -- DHCR's New Case Backlog

DHCR's PAR statistics, besides documenting massive errors in
initial case-processing, also point up another disturbing fact --
DHCR is accumulating a large and unmanageable new backlog in the
PAR unit even as it reduces its initial case processing backlog.
Statistics for 1986 show that the number of PARs pending at DHCR
nearly tripled in calendar year 1986, from 5,980 to 15,341. The
average monthly PAR intake also jumped significantly from 605 in
December of 1985 to 1,110 by December of the next year.

In its rush to dispose of its caseload, DHCR is reducing initial
backlog at the price of a large new PAR backlog being created by
tenants and owners trying to correct the errors DHCR is routinely
making in initial case processing. There is no indication that
DHCR will be able to reduce this large and growing PAR backlog,
or the long waits for PAR resolution which go along with it in
the near future. As William Rowen of the New York State Tenant
and Neighborhood Coalition testified:

     "The PAR unit ... has currently a backlog of
     15,000 cases.  This is more than the CAB (DHCR's
     predecessor agency) ever had as a backlog of all
     of their cases, and I can't believe for one minute
     without a serious plan to correct the mistakes
     that the Processing Unit is currently making, has
     been making all this time, that the PAR situation
     is going to get any better; it's going to get much
     worse."


Forcing DHCR to Act -- Going to Court

For tenants and owners with important cases, the ultimate answer
is to take DHCR to court. Some court actions are brought by
tenants and owners seeking to overturn decisions made by DHCR in
the administrative review process. Many other court actions are
brought simply to force DHCR to act on PARs in the first place.

The rent regulatory laws provide that if a PAR is not decided by
DHCR within 90 days, it is "deemed denied" for the purposes of
judicial review. DHCR may grant one extension of 30 days to the
90-day limit with the consent of the party filing an
administrative review petition and grant an additional extension
with the consent of both parties in a case.

In the course of our investigation, we did not come across a
single PAR which had been acted on by the agency within the
statutory 90-day period. Many PARs, in fact, now take more than a
year to process. What this means in practice, according to DHCR,
is that once the 90 days passes, DHCR continues to process the
PAR but the party bringing the petition has the right to bring an
Article 78 proceeding against DHCR on the basis that their case
has been "deemed denied" because it has not been acted on. The
courts will remand such cases back to DHCR and direct them to
make a decision in the case, thereby moving the particular case
up the work order ladder. Statistics show that DHCR was brought
to court, many times in order to force it to process PARs and
other types of cases, on the average of almost three times daily
in 1986.

What do tenants and owners gain by incurring the expense and
making the effort to bring a court action against DHCR? Often,
they simply get the court to order the agency to do its job in
something approaching a timely fashion. For an owner who needs a
Major Capital Improvement rent increase or a tenant who is being
charged an illegally high rent, the effort and expense may be
worth it. Those who do not sue are doomed to wait, sometimes for
a year or more, in order to have their PARs or initial complaints
or applications processed.

It is important to note that tenants or owners may spend years
filing PARs and bringing Article 78 proceedings in court over
matters as basic as the fact that DHCR has lost their case files.
Owner Andrew Kerr testified that he was assessed an $8,500
overcharge penalty because DHCR had lost evidence he had
submitted. After spending three years, filing a PAR and spending
$3,000 in legal fees to bring an Article 78 proceeding, the
overcharge was reduced to $4,400. The owner believed he had
grounds to bring a second court action which would eliminate the
remaining overcharge entirely. Considering the time, expense and
effort he would have to expend, however, Mr. Kerr testified, "I
decided not to fight it again."

Those who survive the process are the lucky ones. Most tenants
and owners never bother. Their legal rights are simply lost when
DHCR fails to enforce them.