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Monday, July 08, 2013

A retiree is not affected by post-retirement collective bargaining negotiations concerning health insurance contributions absent specific contract language to that effect in place at the time of his or her retirement


A retiree is not affected by post-retirement collective bargaining negotiations concerning  health insurance contributions absent specific contract language to that effect in place at the time of his or her retirement
Warner v Board of Educ., Cobleskill- Richmondville Cent. Sch. Dist., Warner v Board of Educ., Cobleskill- Richmondville Cent. Sch. Dist., Appellate Division, Third Department

Samuel T. Warner, on behalf of himself and other former school administrators who retired from the Cobleskill-Richmondville Central School District [Warner] sued the District in this combined proceeding pursuant to CPLR article 78 and action for declaratory judgment contending that the District had breached its contractual obligations as a result of its reducing the District's share of the cost of the premium it paid towards Warner’s health insurance coverage.

The relevant provision in the collective bargaining agreements (CBAs) in effect from July 1993 to June 2003 provided:

"Individuals who retire during the term of the contract shall be covered at the rate of 100 percent of the charge for individual coverage and 75 percent of the charge for dependent coverage, as applicable. Employees hired after July 1, 1976 shall be required to satisfy ten (10) years of service in order to be eligible to continue the health insurance program in retirement as offered by the District."

According to the Appellate Division’s decision, successive CBAs in effect from July 2003 to June 2009 contained nearly identical language regarding the rate and eligibility for retiree health insurance coverage.

In June 2009, the Association and the District agreed to a CBA for the July 2009 through June 2012 CBA that provided that employees who retire during the 2010-2011 or 2011-2012 school year would receive health insurance coverage at the rate of 84% of the charge for individual or dependent coverage as the “District’s contribution,” while those who retire during the 2009-2010 school year would continue to receive the rates of 100% for individual coverage and 75% for dependent coverage as the “District’s contribution.”

In March 2010, Warner received a letter from the District stating that, "[a]s of July 1, 2010, the rate of contribution for both eligible active and eligible retired [Association] employees shall be 16% of the charge for individual and dependent coverage." He filed a combined proceeding pursuant to CPLR Article 78 and action for declaratory judgment alleging seeking, among other things, a declaration that District is obligated to contribute to the cost of his health insurance throughout his retirement.

Supreme Court granted Warner’s motion for summary judgment, finding that the plain language of the CBAs unambiguously obligated the District to provide lifetime health insurance coverage for those bargaining unit members who retired prior to the 2010-2011 school year at a rate of 100% for individuals and 75% for dependents. The District appealed.

The Appellate Division commenced its review by noting that “A written agreement that is clear and complete on its face must be enforced according to the plain meaning of its terms” and that “Extrinsic evidence may be considered to discern the parties' intent only if the contract is ambiguous, which is a question of law for the court to resolve.”
In determining whether an ambiguity exists, said the court, the entire contract must be examined and consider the relation of the parties and the circumstances under which it was executed. “Particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby."

The Appellate Division said that considering the CBAs as a whole and in accordance with these principles, it found no ambiguity, pointing out that pursuant to the CBAs in effect at the time Warner and his co-plaintiffs retired, an employee who had completed 10 years of service was entitled to health insurance coverage "in retirement." In order to receive that coverage at a rate of 100% per individual and 75% per dependent, the only requirement was that the individual "retire during the term of the contract."

Despite the District’s argument to the contrary, the court said that “nothing in the provisions at issue suggests that the coverage was limited to the time period of the CBA in effect at the time of an individual's retirement.”

Significantly, the Appellate Division pointed out that Warner and his co-plaintiffs, as retirees are not involved in subsequent collective bargaining negotiations and that "it is logical to assume [from the absence of any such durational language] that the bargaining unit intended to insulate retirees from losing important insurance rights during subsequent negotiations by using language in each and every contract which fixed their rights to coverage as of the time they retired."

Accordingly, the Appellate Division concluded that the CBAs at issue “unambiguously provide lifetime health insurance coverage to [Warner and his co-plaintiffs] pursuant to the terms of the CBA in effect at the time of their retirement, and therefore consideration of the extrinsic evidence submitted is unnecessary. Further, notes the opinion, were the court to have found that there was an ambiguity, the extrinsic evidence introduced to aid in the construction of the CBAs fully supports the interpretation proffered by Warner and his co-plaintiffs.

The court then ruled that Supreme Court had properly award summary judgment to Warner.


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