The high price of an ‘A’: Restaurants suffer spike in fines from health inspectors

Health Commissioner Tom Farley posts the city's first-ever inspection grade sign in summer 2010 at a deli in Long Island City. Yesterday he defended the system in the face of frustrated restaurant owners.AP Photo/Bebeto Matthews

Stories from restaurateurs slammed with penalty points and forced to throw out good food dominated yesterday’s City Council hearing on the Department of Health and Mental Hygiene’s letter-grade inspection system for dining establishments. But the bottom-line issue for restaurant owners appears to be fines that are spiraling upward.

Since July 2010, all of the city’s 24,000 food establishments have undergone annual review and received one of three letter grades. Currently, nearly three in four of them receive the Health Department’s highest grade, an “A.”

Yet meanwhile inspections and fines have increased substantially. Health inspectors visit all city restaurants once a year, but restaurants that fall short of an A grade on that inspection – meaning they receive more than 13 violation points – must be reinspected within three to seven months. According to the Department of Health, in 2009 New York City dining establishments received an average of 1.4 visits from inspectors a year. In 2011 that number had jumped to 2.5 and in 2013 the agency expects the rate to increase again, to 3.8.

Those that fail to make the “A” grade face heavy fines that can total hundreds of dollars for a single point. The fines for violation points have been in place since 2005, but along with the letter-grade system the 2010 overhaul of the restaurant inspection system has also created additional opportunities for restaurants to incur fines, complain restaurant owners, because inspectors now use a more extensive checklist of violations.

The Health Department’s fine collections have since risen sharply. In 2008, the agency took in $31.2 million in fine revenue from restaurants. By 2011, fines totaled $45.6 million. According to the department’s plan to help fill the city’s budget gap, fines collections are destined to increase further: the agency is banking on collecting an additional $3.8 million each year for the next three years.

“It can’t be both,” said Speaker Christine Quinn at the hearing. “ We can’t have more restaurants being ‘A’ but more fines coming in. It just raises questions and strains common sense.”

One reason, explained Health Department Commissioner Thomas Farley at the committee hearing, is that just 20 percent of restaurants account for most of the fines. What’s more, he said, the letter grades are making dining out safer. salmonella cases traceable to restaurants have fallen 14 percent since the law went into effect, while restaurant sales are up 10 percent. Farley called the Ietter grade program “an overwhelming success.”

“No businesses like regulations, but we have high standards for restaurants because we are charged with safeguarding the public’s health,” said Farley. “We will not lower our standards.”

But as a recent analysis published by City and State found, while most restaurants ultimately receive an “A,” the inspections themselves generated an average “B” grade. It was only after requesting re-inspections from the Department of Health that many restaurants boosted their scores to a coveted “A.” In the meantime, they have had to pay fines resulting from violation points scored against them in the inspections.

“You said that A restaurants don’t get fines, but a lot of these restaurants get fines. It depends on what you do to get the A,” Councilman Jimmy Van Bramer said to Farley. “You called it education several times. Some might call it extortion.”

The fines weren’t the only financial hit restaurant owners complained about at the hearing. Scott Rosenberg, who owns Sushi Yasuda in midtown, recalled an incident in 2011 in which an inspector appeared at his restaurant while chefs were working on a large tuna – without required plastic gloves. The inspector told the chefs to “shut up and stand back” while destroying the $10,000 fish by pouring bleach on it. Traditionally, sushi is processed bare-handed. “The tone and the energy was away from partnership, it was away from education,” Rosenberg said at the hearing.

Even those who make the grade report a high cost of compliance, according to a voluntary survey of restaurant proprietors circulated by the council, which received responses from 1,297 restaurant owners. More than two in three restaurateurs who received an “A” rating reported that their operating costs had increased significantly.

Many survey respondents described that their relationship with the Department of Health as adversarial, and expressed the view that inspectors more concerned with finding violations and generating fines than educating restaurants about new laws and protecting the public’s health. Many reported they’d been cited for violations they believed bore no threat to public health, such as open doors, plates and utensils improperly stored and leaky faucets.

A representative from the union representing health inspectors testified that his members are feeling pressured to find violations. Fitz Reid, President of District Council 37’s Local 768, said that while the Health Department had not explicitly asked inspectors to step up their fine collections, the perception among his members is that inspectors who find many violations are disproportionately rewarded in promotion decisions.

“Many of the inspectors believe that what is going on is revenue driven,” said Reid. “You can see the people they are promoting, the people who become supervisors and that tells you the type of people who are put in charge.”

Farley said city inspectors are not judged based on how much in fines they haul in for the city. “Inspectors’ productivity is the number of inspections they do, not the number of violations they write,” testified Farley. “If they conduct 100 inspections and they’re all A’s that’s wonderful.”

Quinn said she didn’t want to do away with the letter grade system entirely that it should be altered to be more straightforward, less punitive and more consistent.

“When there’s a letter on the door of a restaurant, we want a process behind it that means something,” said Quinn. “Where a customer can know that they can go in and they know that that restaurant is going to be clean and safe the degree to which the letter reflects.”

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