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.