The Public Service Commission (PSC) Penalty Proceeding
In September 2001, the New York PSC issued an order to show cause why National Fuel Gas Distribution Company should not face a penalty arising from the denial of service to a customer, Velma Fordham, who later was discovered dead in her unheated apartment, and found by the Medical Examiner to have died from hypothermia. The potential fines from several alleged violations of the Home Energy Fair Practices Act (HEFPA) were $19 million. NFG denied having violated any HEFPA requirements. PULP intervened in the case and participated in discovery.
Eventually, after Staff filed a scoping statement with detailed allegations outlining its intended proof at hearing, a proposed settlement agreement was reached between DPS Staff and NFG.
Under the agreement, no penalties were imposed. National Fuel agreed only to add $1.5 million to a program designed to aid low income customers, and to fund an audit of its practices regarding the Home Energy Assistance Program.
PULP did not join in the settlement. PULP also objected to a lack of transparency regarding the proposed settlement, because the PSC had required any comments on the settlement proposal to be non public.
The proposed settlement was approved by the PSC in 2004, more than three years after Ms. Fordham’s death.
Buffalo Judge Makowski Dismisses the Private Tort Action for Wrongful Death
In 2006, a wrongful death action on behalf of Velma Fordham’s estate was dismissed by Buffalo Judge Joseph G. Makowski as having been brought too late. His decision apparently was influenced by testimony of Michael Baden, hired as a forensic expert by National Fuel, who estimated the time of Ms. Fordham’s death to have been more than two years prior to commencement of the lawsuit. The lawsuit was brought within two years of the date of death reported by the Erie County Medical Examiner.
The Appellate Division Reinstates the Action, Underscoring The Public Interest in HEFPA Compliance
In an April, 2007 decision, the Appellate Division, Fourth Department reversed Judge Makowski’s decision, and reinstated the case. The court said “the testimony of the Chief Medical Examiner undercuts both the credibility of National Fuel’s expert (Michael Baden) and the substance of his opinion with respect to the date of death.”
More importantly, moving on to discuss the plaintiff’s claims, the Appellate Division rendered a major decision regarding the effect of HEFPA violations.
The appellate court found sufficient evidence of negligence on the part of NFG for having violated Ms. Fordham’s rights to service under the Home Energy Fair Practices Act (HEFPA), Article 2 of the New York Public Service Law:
The evidence supports plaintiff’s allegations that National Fuel was negligent based on the violation of its obligations under the Public Service Law, the corresponding regulations, and its own procedures by denying the application of decedent for continuing service at her new residence (see § 31 ; 16 NYCRR 11.3 [a] ), and based on its failure to initiate service within five days of decedent’s original request for gas service or within a reasonable period thereafter, allowing for delays occasioned by the snow storm (see Public Service Law § 31 ; 16 NYCRR 11.3 [a] ). The Legislature has recognized that discharging those obligations in the provision of residential gas service “is necessary for the preservation of the health and general welfare and is in the public interest” (Public Service Law § 30; see 16 NYCRR 11.1).
The court rejected National Fuel’s defense that Ms. Fordham should have done more to get additional welfare assistance. (Ms. Fordham had obtained an Emergency HEAP payment of $700 which was rejected by National Fuel as insufficient).
Punitive Damages Claim Allowed for HEFPA Violations
The court also reinstated claims for punitive damages, to be determined by a jury, stating:
Here, there is evidence that National Fuel failed to discharge its obligation to decedent under the Public Service Law and its own procedures by failing to respond in a timely manner to her original request for gas service. In addition, National Fuel’s CBR erroneously treated decedent as a new customer rather than a continuing customer and led her to believe that the activation of her gas service was contingent upon her satisfaction of a 1997 judgment or qualification for direct payment by DSS. Those errors were given the apparent endorsement of a supervisor . . . . The alleged conduct of National Fuel implicates public health and safety concerns . . . as well as the policies permitting awards for punitive damages. Such awards “are intended as punishment for gross misbehavior for the good of the public and have been referred to as a sort of hybrid between a display of ethical indignation and the imposition of a criminal fine . . . . Punitive damages are allowed on the ground of public policy and not because the plaintiff has suffered any monetary damages for which [s]he is entitled to reimbursement . . . . The damages may be considered expressive of the community attitude towards one who wilfully and wantonly causes hurt or injury to another. . . . dismissal of plaintiff’s claim for punitive damages is premature, and the issue whether the actions of National Fuel warrant the imposition of punitive damages should be determined at trial.
Reversal of Judge Makowski’s Sealing Order
Finally, in a sharp rebuke to Buffalo trial court judge Joseph G. Makowski, the Appellate Division reversed his sua sponte order sealing all the records of the case from public disclosure, including his own decision dismissing the case, stating:
Plaintiff contends that the court erred in sua sponte directing that its decision and the moving papers upon which it is based be filed under seal. Here, the court made no finding of good cause, as required by the regulation…. Further, apart from the regulation, “[t]he right of access to . . . court records is also firmly grounded in common-law principles” . . . . Courts should be reluctant to seal court records even when all of the parties to the litigation have requested such sealing . . . and we perceive no legitimate basis for sealing any part of the record here . . . . To the contrary, this action raises serious issues of legitimate public concern, and “[t]he public interest in openness is particularly important on matters of public concern, even if the issues arise in the context of a private dispute” . . . . We therefore conclude that the sealing directive should be vacated.
Previously, Judge Makowski,without notice, made an ex parte order purporting to gag the Attorney General’s office and PULP from discussing or disclosing papers filed in the PSC penalty case. Makowski at the request of NFG issued subpoenaes in a pre litigation discovery order, in anticipation of the wrongful death action that had not yet been filed. The Attorney General submitted to jurisdiction of the court and then later made a motion to relax Makowski’s gag order, because the bulk of the papers filed at the PSC did not involve the subpoenaed papers which Makowsi had sealed in the judicial discovery proceeding. Judge Makowski did not timely decide the Attorney General’s motion. When some of the papers sealed by Makowski were included in NFG’s multi-volume filings at the PSC in response to the PSC Order to Show Cause, NFG argued that their entire response could not be made public and could not be provided to PULP. A PSC Administrative Law Judge eventually ruled that nearly all the papers filed by NFG in the PSC case, excepting for a few autopsy photographs, are publicly available documents under the Freedom of Information Law.
Confidential Settlement of the Wrongful Death Action
According to a 10-k report filed by NFG with the SEC on November 29, 2007, the wrongful death and punitive damages claims were scheduled for trial beginning in October, 2007, but then, more than six years after Velma Fordham’s death, a settlement was reached.
The amount of the settlement is not known. According to a Buffalo News article, the terms of the settlement apparently are being kept confidential by agreement of parties to the litigation.
Importance of the Case
Despite National Fuel’s steadfast insistence it did no wrong, the death of Velma Fordham, and the Appellate Division decision recognizing claims for damages, including punitive damages, arising from utility denial of HEFPA rights is significant judicial recognition of the potential life and death consequences of a lack of utility service. The Appellate Division decision constitutes a fitting postscript to this extremely sad matter involving the loss of a life, one which stands in contrast to lax PSC administrative enforcement of HEFPA and a lack of effective administrative sanctions for HEFPA violations. In the end, it was necessary for private litigants and their counsel to vindicate consumer rights under HEFPA.
For more papers in the case, see PULP’s webpage on the death of Velma Fordham.