Collective bargaining agreements relied upon did not obligate the employer to maintain a retiree’s health insurance coverage at the level in place at the time of his or her retirement

Collective bargaining agreements relied upon did not obligate the employer to maintain a retiree’s health insurance coverage at the level in place at the time of his or her retirement

Kolbe v Tibbetts, 2012 NY Slip Op 08899, Appellate Division, Fourth Department

Certain retirees of the Newfane Central School District sued the District alleging that it had breached the terms of various collective bargaining agreements [CBA] with respect to their health insurance benefits in retirement. The retirees contended that their health insurance benefits were governed by each collective bargaining agreement (CBA) that was in effect at the time each plaintiff retired and that those benefits could not be changed or modified.

Each CBA in effect at the time of the retirees' respective retirements set forth a nominal co-pay for prescriptions in accordance with the health care plan that was in effect at that time. In December 2009, each retiree was notified that, pursuant to the CBA effective January 1, 2010, the co-pay for prescriptions would be significantly increased. Plaintiff-retirees alleged that they were not obligated to pay the higher co-pay but, rather, were obligated to pay only the co-pay rate that was in effect at the time of their respective retirements.

Supreme Court granted the retirees’ motion seeking summary judgment. The Appellate Division decided otherwise, Justices Lindley and Whalen dissenting, and ruled that Newfane was not obligated to maintain health insurance coverage equivalent to that in effect at the time each plaintiff retiree retired with respect to each such individual.

The Appellate Division said that the language at issue was set out in each relevant CBA and provided, in pertinent part, "[t]he coverage provided shall be the coverage which is in effect for the unit at such time as it is provided to the employee." In subsequent CBAs, said the court, the language at issue stated that "[t]he coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires."

The CBAs further provided that retired employees shall be eligible to "continue group health insurance" upon the payment of a monthly premium to the District.”

The Appellate Division said that Supreme Court erred in holding that the language of the respective CBAs provided that the prescription co-pay amount could not be altered in view of the several CBAs providing that unused sick leave could be used to pay for health care coverage.

The court pointed out that “The unambiguous language … provides that, at the time of his or her retirement, the retiree is entitled to the same coverage that is provided to the bargaining unit.” The language, said the court, does not specify that an equivalent level of coverage will continue during retirement. In other words, said the court, “the respective CBAs do not provide that the level of health coverage will not be reduced or that the annual cost will not increase.”

Finding that the benefits for represented employees were “likewise reduced,” the Appellate Division concluded that the School District complied with the statutory requirement that they not reduce the retirees’ coverage below the level of coverage provided to active employees.

The decision is posted on the Internet at:

http://www.courts.state.ny.us/reporter/3dseries/2012/2012_08899.htm