Protecting health insurance benefits after retirement

Protecting health insurance benefits after retirement
Rocco v City of Schenectady, App. Div., 252 AD2d 82, Motion for leave to appeal denied, 93 NY2d 1000
[Decided with Andriano v City of Schenectady, motion for leave to appeal denied, 93 NY2d 999]

In McDonald Police Benevolent Association v City of Geneva, 92 NY2d 326, the Court of Appeals ruled that there was no legal impediment to the City of Geneva’s unilateral alteration of “a past practice ... unrelated to any entitlement expressly conferred upon retirees in a collective bargaining agreement.”

The fact that retirees were involved was critical. The decision noted that “where a past practice between a public employer and its current employees is established, involving a mandatory subject of negotiation, the Taylor Law would bar the employer from discontinuing that practice without prior negotiation.”

But for retirees, benefits may be rescinded, even if established by past practice, if the benefits are not codified in a collective bargaining agreement to which the retirees were party, according to the McDonald decision.

Citing that ruling, a majority of an Appellate Division panel ruled in the Rocco and Andriano cases that a lower court was correct in barring the City of Schenectady from unilaterally changing the existing health insurance benefits of retired police officers and firefighters.

The critical difference was that in the Schenectady case the court found that the benefits were protected by the terms of a collective bargaining agreement negotiated pursuant to the Taylor Law.

Since 1969 labor agreements in Schenectady contained identical language providing that the city was to furnish, at its own expense, health insurance for retirees and their dependents “presently in effect for each member of the Department....” The Appellate Division said this meant that “when a member ... retired the coverage to which that individual was entitled [at the time of his or her retirement] remained fixed in time and could not be changed.”

The Appellate Division pointed out that:

1. The contract at issue had a duration of one to two years.

2. Once employees retire they are no longer represented by their union and have no collective bargaining rights under the Taylor Law.

3. Since retirees are not involved in subsequent negotiations, it is logical to assume that the agreement under which they retired was intended to insulate them from losing important insurance rights during subsequent negotiations.

The Court also distinguished the Rocco and Andriano plaintiffs, whose benefits were set out in a Taylor Law agreement, to those involved in the Geneva case. In Geneva, the retiree’s health insurance benefits were provided pursuant to a resolution adopted by the City Council rather than under a collective bargaining agreement.
NYPPL