Monday, August 19, 2013

School district must offer its Medicare-eligible retirees the same health insurance benefits the district offers to its active employees

School district must offer its Medicare-eligible retirees the same health insurance benefits the district offers to its active employees
Anderson v Niagara Falls City Sch. Dist., 2013 NY Slip Op 23274, Supreme Court, Niagara County, State Supreme Court Justice Ralph A. Boniello, III

Medicare-eligible retirees of the Niagara Falls City School District [Plaintiffs] sued the school district alleging that the School District had diminished their health insurance benefits by placing them in the "Blue Cross/Blue Shield Forever Blue Medicare PPO 799 Plan" (Forever Blue Plan) without making a similar change in the health insurance plan in which the school district's active employees participated.

This, contended Plaintiffs, constituted a unilateral diminution of their benefits – i.e., additional or higher co-payment costs and medication costs -- as the result of the School District requiring that its Medicare-eligible retirees switch from the “Traditional Blue Plan” to the “Forever Blue Plan.”* In contrast, there was no corresponding diminution in the health insurance benefits provided the active employees. Indeed, said the court, it is undisputed that at the same time Plaintiffs were placed in Forever Blue, the active employees employed by the School District were placed in the NY-44 Health Benefits Trust Plan and as a result the active employees were provided with an increase or improvement of their overall health insurance benefits.

Plaintiffs alleged that this change violated the School District’s obligations under Chapter 504, Part B, §14 of the Laws of 2009 [The Moratorium provision]:

§14 addressed health insurance benefits available to retired employees of school districts and certain boards and, in pertinent part, provides that “a school district … shall be prohibited from diminishing the health insurance benefits provided to retirees and their dependents or the contributions such … district makes for such health insurance coverage … unless a corresponding diminution of benefits or contributions is effected from the present level during this period by such district or board [for] the corresponding group of active employees ….

Among the differences noted by Justice Boniello: the Traditional Blue Plan did not require co-payments for nearly all medical services that took place in-network while the Forever Blue Plan requires co-payments for medical services that occur, both in and out-of-network, and required significantly higher co-payments for prescription medications.

While the School District claimed that it had “offset the additional out of pocket expenses” incurred by the Plaintiffs resulting from their enrollment in Forever Blue by creating a medical reimbursement account for each Medicare-eligible [retiree]," this account was capped at $600.00. Justice Boniello found that “while in some cases the $600.00 may be sufficient, it is entirely possible, and indeed probable, that in most cases it will not be enough.”

Justice Boniello concluded that the School District’s actions violated the mandates set out in Chapter 504, Part B, §14 of the Laws of 2009 and that the School District’s actions were arbitrary, capricious and unlawful.

Justice Boniello then directed the School District[1] to pay each of the Petitioners the amounts, together with interest, "that each has incurred and/or will incur" by reason of the School District’s action to the date of its compliance with the Moratorium provision; and further ordered the school district [2] “to cover the costs and/or provide health insurance coverage that will place the Petitioners in the same position that they would have been in but for the actions of the [School District].”

* A number of school districts, rather then unilaterally imposing such a change upon its Medicare-eligible retirees, have offered its Medicare-eligible retirees the option of either [1] remaining in the district's health insurance plan available to its active employees or [2] electing to switch to different health insurance plan.

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2013/2013_23274.htm
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