City to pay 100% of the cost of health insurance
for retired firefighters
Matter of Gooshaw v City of Ogdensburg, 2009 NY Slip Op 08738, decided on
November 25, 2009, Appellate Division, Third Department
Thomas W. Gooshaw, a retired City of Ogdensburg firefighter, was the lead plaintiff
in an action that alleged that the City had violated the terms of the
collective bargaining agreement [CAB] in place at the time they retired. That
agreement provided that the City would pay "100 percent of the cost"
of their health insurance plus the employee contribution for health insurance
for their dependents.
The City had been paying these premiums for health insurance for all retired
firefighters and, in addition, had reimbursed them for any cost incurred in
obtaining health coverage under Medicare Part B.
In 2005, petitioners filed a complaint claiming that the City had breached the CBA by refusing to cover the cost of these
Medicare Part B premiums and sought a declaratory judgment to the effect that
the City, under the CBA, was required to
reimburse them for these payments.
Supreme Court, converted the action into a CPLR
article 78 proceeding, applied a four-month statute of limitations and
dismissed the petition as untimely. Gooshaw
appealed.
The Appellate Division said that the principal claim made by Gooshaw was that the City breached the CBA by failing to honor their contractual
obligation "to pay for one hundred percent (100%) of the cost of retirees'
health insurance, including Medicare Part B premiums."
"[W]here the focus of the controversy is on an agency's breach of an
express contractual right,” said the court, a contract action is the
recommended remedy. Accordingly, said the court, "The proper vehicle for
seeking damages arising from an alleged breach of contract by a public official
or governmental body is an action for breach of contract, not a proceeding
pursuant to CPLR article 78,"
citing Kerlikowske v City of Buffalo,
305 AD2d 997. Thus the six-year statute of limitations applies here (see CPLR 213). Therefore, the court erred in
granting Ogdensburg’s motion for summary
judgment and dismissing the petition as untimely.
In support of their motion, Gooshaw
claims that because an arbitrator in an earlier similar grievance found that
the CBA required the City to make these
payments. In view this earlier determination, Gooshaw
contended that the City should be estopped
here from denying the existence of this contractual obligation.
The City, on the other hand, argued that “the doctrine of collateral estoppel” did not apply in this instance
because the CBA has undergone extensive
revisions as a result of ongoing negotiations between the City and the
firefighters' union and that the contract that was before the arbitrator was
not identical to the CBAs that were in
effect when all of the Gooshaw
petitioners retired.
The Appellate Division noted that the City was correct: the firefighters had
not all retired at the same time and that the provisions of the CBAs in place on the date of their respective
retirements were not, in each instance, entirely the same.
However, said the court, while the CBA
as renegotiated limited the choice that retired firefighters had regarding
their health plan, it did not alter or modify the City's obligation to provide
them with a fully funded health insurance program. Further, the arbitrator
concluded that the "City payment of Medicare reimbursement did not change
with the changed language and for many years, through several contracts, so
that the meaning of the contract remained the same after the language
change."
Lastly, the arbitrator took specific note of the fact that while these CBAs had been the subject of extensive
renegotiation during the 15-year period immediately preceding the arbitration,
the City continued its practice of reimbursing retired firefighters for the
payment of these premiums, and at no time was a provision included in the CBA to the effect that the City was not
obligated to make these payments.
Accordingly, the Appellate Division ruled that the arbitrator's decision and
her finding that the City is obligated to reimburse retired firefighters for
these payments under the CBA “is dispositive of the claims raised here and the
City is estopped from claiming otherwise
in this litigation.” The court that Ogdensburg
was required to reimburse retired firefighters for Medicare Part B premiums.
NYPPL
Comments: A similar issue was
considered by the Appellate Division in Myers v. City of Schenectady, 244
A.D.2d 845.
Decided over a decade ago, the decision explains the rational underlying Civil
Service Law Section 167-a which provides, in pertinent part for the
reimbursement for Medicare premium charges, as follows:
“Upon exclusion from the coverage of the health insurance plan of supplementary
medical insurance benefits for which an active or retired employee or a
dependent covered by the health insurance plan is or would be eligible under
the federal old-age, survivors and disability insurance program, an amount
equal to the premium charge for such supplementary medical insurance benefits
for such active or retired employee and his dependents, if any, shall be paid
monthly or at other intervals to such active or retired employee from the
health insurance fund.”
In effect, this transfers to charges associated with providing medical and
hospital benefits from the employer’s health insurance carrier to Medicare,
which results in a reduction in the cost of providing health insurance directly
through the employer’s health insurance plan.”
As the Myers’ court observed:
“Participation in part A of the Medicare program is mandatory at no cost to the
retiree. However, participation in part B of the Medicare program is optional
and if a retiree opts to participate therein, he or she must pay a premium. The
City encouraged plaintiffs' class to enroll in Medicare part B because Medicare
then became the retirees' primary insurance and the employer-provided health
insurance became secondary, with a resultant reduction in premium cost to the
City. If a retiree did not elect to participate in Medicare part B, the City
continued to provide the retiree with the same fully paid health insurance
coverage as it provided to its eligible employees. On the other hand, if a
retiree opted for the Medicare part B coverage, the premium was automatically
deducted from his or her social security benefits and the retiree was
reimbursed by the City.
”In March 1994, the City unilaterally determined that it only would reimburse
its retirees 50% of the cost of Medicare part B coverage and, in June 1994, the
City ceased making reimbursements altogether. As a consequence, plaintiffs
commenced this action seeking, inter alia,
full reimbursement retroactively as a vested contract benefit.”
The court's conclusion:
“In this regard, we agree that the City's own 19-year practice of continuing to
provide fully paid health insurance coverage to plaintiffs' class, even after
the expiration of the various collective bargaining agreements pursuant to
which they obtained such benefits, constitutes very substantial evidence that
the provisions in question were intended to provide benefits to retirees for
the entire period of their retirement. Clearly, one of the more important aids
in the interpretation of a contract is the construction placed upon the
agreement by the contracting parties (see, Atwater
& Co. v Panama R. R. Co., 255 NY 496, 501; Matter of Mencher [Geller & Sons], 276 App Div 556,
565). As has been observed, " '[t]here is no surer way to find out what
parties meant, than to see what they have done' " (Town of Pelham v City of Mount Vernon, 304 NY 15, 23,
quoting Insurance Co. v Dutcher, 95 US
269, 273).”
N.B.
Although the Gooshaw and other court decisions noted above refer to
"renegotiated collective bargaining agreements," the employee
organization and the employer could only agree upon the health insurance
benefits available to active employees upon their retirement in the context of
renegotiated or successor collective bargaining agreement or a "memorandum of understanding." Such
discussions could not serve to diminish or impair the health insurance benefits
available to those individuals already retired based on earlier collective
bargaining agreement or "past practice" as such individuals are not
employees for the purposes of the Taylor Law and thus the employee
organizations may not represent those already retired in its collective
bargaining with the employer.
Public Employment Law Press