A New Interpretation of the Preaudit Requirement

UPDATE August 2013: The Court of Appeals reaffirmed this new interpretation in May 2013. Click here for more details.

In July 2008, the Jones County Department of Social Services (JCDSS) entered into an oral services contract with a medical transportation services company. The contract was for one year. It was renewed annually in July of 2009, 2010, and 2011. JCDSS terminated the contract in November 2011. The company sued for breach of contract. JCDSS subsequently filed motions to dismiss the case, arguing that no valid contract existed. The trial court denied the motions. On appeal, however, the North Carolina Court of Appeals reversed the trial court, holding that there was not a valid contract between JCDSS and the company because the provisions of G.S. 159-28(a), known as the preaudit requirement, were not properly followed. Exec. Med. Transp., Inc. v. Jones Cnty Dep’t. of Soc. Servs, No. COA12-573 (Nov. 6, 2012). Specifically, the court determined that the lack of a preaudit certificate rendered the contract void.

This certainly is not the first time a court has invalidated an agreement because a local government failed to follow G.S. 159-28(a). As I detailed in a previous post, North Carolina courts have taken a fairly hard line in enforcing the statute, often to the detriment of the entity contracting with the local unit. For this reason, it is commonly referred to as the “vendor or contractor beware” statute. The Executive Medical case is different, however, in that it appears to expand the preaudit certificate requirement. Read more »

Bad Employee? Suggest He Resign?

This guy is a bad employee.  His work is poor.  His conduct around other people is objectionable.  You (that is, the city or the county or other public employer) would be better off without him.

You could just fire him.  Grounds for dismissal seem reasonably clear.  But firing someone is so distasteful.  And it can be time consuming and awkward.  Will there be a hearing?  And maybe an appeal?  No, you think, it would be better not just for you but for him, too, if he would simply resign.  After all, who wants a record of dismissal in their personnel file?

Why not call him into your office and try to talk him into it?

Whoa.  That very kind of thinking recently cost a North Carolina school system $680,000.  Read more »

Animal Control: Recovering Sheltering Costs Under G.S. 19A-70

When animal control officials seize animals, local governments and animal welfare organizations can end up spending a lot of money to shelter, feed, and otherwise care for the animals. In 2005, the General Assembly enacted G.S. 19A-70, which allows animal shelters to recover costs related to housing and caring for animals that are the subject of certain civil cases and criminal prosecutions. Some local governments across the state have been testing out this new cost recovery tool and experiencing mixed results. Some have decided not to use it at all. I thought I would take a moment to review the law and highlight the primary area of confusion – jurisdiction.  I would also like to invite others who have traveled this road to offer tips and suggestions. How have you made it work? Read more »

Capital Reserve Funds Revisited

In a recent post, I discussed two ways through which a local government may save money over time to fund capital projects. The first is through fund balance and the second is by establishing a capital reserve fund. I received several follow-up questions about capital reserve funds that may be of interest to local government officials, including the following:

Is North Carolina a Dillon’s Rule State?

North Carolina is often described as a “Dillon’s Rule” state. What does that mean? Is it the opposite of home rule? Does it mean our courts apply Dillon’s Rule in interpreting the scope of local government authority? Or does it simply reflect the fact that local governments in North Carolina have no inherent authority and derive all of their authority from the state?

The answer is “none of the above.” North Carolina cases no longer apply Dillon’s Rule and we’re not a home rule state. Recent cases analyzing the scope of local government authority apply the “plain meaning” rule of statutory interpretation, which allows application of the legislative “broad construction” rule only in cases where the enabling legislation is ambiguous.  The most recent North Carolina Supreme Court case addressing this subject, however, gives me pause. For while the court cites with approval the line of cases rejecting Dillon’s Rule, it applies a rule that appears to be as strict, or perhaps even more strict, than Dillon’s Rule.

Confused? You’re not alone. This blog post summarizes the evolving case law in attempt to answer the question: What rule or standard should North Carolina courts use in determining whether a particular action by a local government is authorized under state law? Read more »

How Should Local Health Departments Respond to Requests for Medical Records for the Deferred Action Immigration Program?

Last summer, the United States Secretary of Homeland Security announced a new program called Deferred Action for Childhood Arrivals. Under this program, some unauthorized immigrants who entered the United States before the age of 16 may qualify to have immigration enforcement actions against them deferred, meaning that the US will not act to remove them from the country during the deferral period. An individual who qualifies for deferred action may also obtain authorization to work legally.

To be eligible for deferred action, an individual must provide evidence that he or she:

• Arrived in the United States before his or her 16th birthday;
• Was physically present in the US on June 15, 2012, and was both undocumented and less than 31 years of age on that date;
• Has continuously resided in the US since June 15, 2007;
• Is currently in school or has graduated from high school or obtained a GED, or is an honorably discharged veteran; and
• Has not been convicted of a felony or certain misdemeanors, and does not otherwise pose a threat to national security or public safety.

Demonstrating eligibility for deferred action requires individuals to provide a fair amount of documentary evidence, which may include medical records. US Citizenship & Immigration Services (USCIS) began accepting applications for deferred action in August. Since that time, a number of local health departments in North Carolina have received requests for medical records from individuals who want to apply. For answers to health departments’ most frequently asked questions about releasing medical records for the deferred action program, please keep reading. Read more »

School Impact Fees and Development Regulations: Another Round

In areas experiencing urban growth and development, two questions often arise for local governments.  Do we have the capacity to provide necessary public facilities to serve this development?  If not, how are we going to pay for the needed additional facilities?

A range of public services are needed for development — water, sewer, streets, schools, parks, fire, police, emergency medical service, waste collection and so forth.  Sometimes growth occurs where the public facilities to provide those services are in place to accommodate new development.  But it is not unusual for new development to be proposed where existing public facilities are already stretched to capacity or beyond.  In North Carolina this issue is particularly acute in high growth areas such as the small towns and counties surrounding our major urban areas. In these areas high rates of residential growth, combined with modest existing public facilities, quickly lead to significant economic, political, social, and legal controversies regarding the rate of growth and how to finance demands for new public facilities.
These controversies led to the most recent North Carolina Supreme Court pronouncement on land use law – Lanvale Properties, LLC v. County of Cabarrus, ___ N.C. ___, 731 S.E.2d 800 (2012).  The court invalidated the approach the county had taken to provide new school capacity.  The case has important lessons for cities and counties wrestling with issues of growth and public facility capacity. The key issue in this case dealt with financing the costs of adding school capacity, but the same issue must be addressed for the full range of public facilities needed to serve new development. Read more »