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October 20, 2014

Appellate Courts differ regarding the State’s reduction of its employer contribution towards health insurance premiums for certain State retirees

Appellate Courts differ regarding the State’s reduction of its employer contribution towards health insurance premiums for certain State retirees
Bransten v State of New York, 117 AD3d 455
Retired Pub. Empls. Assn., Inc. v Cuomo, 2014 NY Slip Op 07044, Appellate Division, Third Department

In course of collective bargaining for Taylor Law agreements for the period 2011-2016, the State and several collective bargaining units representing State employees agreed to reductions in the State's employer contribution towards State employee health insurance premiums to avoid laying off State employees during the life of these several collective bargaining agreements.

As a result, the State's employer contributions towards State employee health insurance premiums were reduced by between 2% and 6% depending upon the State employee's salary grade. The President of the State Civil Service Commission adopted a regulation,* approved by the Director of the Budget, reducing the State’s employer contributions for State employees and for State employee who had retired before the effective date of these new collective bargaining agreements [pre-contract State retirees]. 

The Bransten v State of New York decision

In September 2011 the New York State Department of Civil Service notified sitting judges that the State would reduce its contributions for health insurance premiums by 6% and reduce its contributions to retired judges' health insurance premiums by 2%. 

The Bransten court explained that the reduction in the State’s employer contribution to health insurance premiums occurred in 2011 when the State, faced with a serious budget shortfall, threatened to lay off thousands of workers unless employees in State's several collective bargaining units made wage and benefit concessions that included bearing more of the cost of their health care insurance.

However, the Bransten court said that the judiciary “had no power to negotiate with the State with respect to the decrease,” and they “received no benefit from the no-layoffs promise because their terms of office were either statutorily or constitutionally mandated.” Thus, said the court, “§167.8 uniquely discriminates against judges because it imposes a financial burden on them for which they received no compensatory benefit.”

Accordingly, said the Appellate Division, the State’s motion to dismiss the Bransten action was properly denied by Supreme Court. 

The Retired Public Employees Association, Inc. [RPEA]  v Cuomo decision

The Retired Public Employees Association [RPEA] challenged the State's reduction of the percentage of its employer contribution towards health insurance premiums with respect to “pre-contract” State retirees, contending that:

 [1] Civil Service Law §167.1 sets out the ratio of employer contributions the State was required to make on behalf on these pre-contract State retirees and that provision was not amended to provide for a different ratio;

[2] The State’s effort to set out any different ratio of State's employer contributions made on behalf of  pre-contract State retirees by adopting a regulation, 4 NYCRR 73.3 [b], under color of §167.8, as amended, was a nullity; and

[3] The reason advanced by the State for reducing the State’s employer contributions towards employee health insurance premiums in the course of collective bargaining – to avoid layoffs – was irrelevant insofar as pre-contract State retirees were concerned as pre-contract State retirees are neither employees nor, as retired employees, subject to layoff from employment.

The Appellate Division, Third Department, however, ruled that Civil Service Law §167.8 “plainly and unambiguously" permits modification of the fixed contribution rates for retiree health insurance premiums set forth in Civil Service Law §167(1)(a) by regulation" with respect to employees of the State and the pre-contract State retirees.

The court explained that: “Given the Legislature's expressed intent** to authorize a modification in the state's contribution rate towards retiree health insurance premiums under the circumstances present here, we conclude that [the State’s] actions in effectuating the reduced state contribution rates was both lawful and in compliance with the statute".

It then dismissed RPEA's complaint on the ground that the Complaint "failed to state a cause of action ... except that the John and Mary Does 1-2,000, current and retired Judges and Justices of the Unified Court System of the State of New York are dismissed from this action, without prejudice."***

As to the retired judges represented by RPEA in its action, it would appear that pre-contract State retirees are similarly situated as pre-contract State retirees have no power to negotiate with the State and they received no benefit from the no-layoffs promise because retirees are not employees subject to layoff pursuant to §§80 or 80-A of the Civil Service, which provisions address “Suspension or demotion upon the abolition or reduction of positions..”

* 4 NYCRR 73.3 [b].

** The SPONSORS MEMO in support of Senate S5846, which was enacted into law as Chapter 491 of the Laws of 2011, states that the purpose of the bill was “amend the civil service law and the state finance law, in relation to compensation and other terms and conditions of employment of certain state officers and employees.” With respect amendment to Civil Service Law § 167(8), the Sponsor’s memo stated that the purpose of the amendment is “to provide authority to modify the employer and employee shares of health premium and subscription costs under the New York State Health Insurance Plan [emphasis supplied].”

*** Retired State judges and retired State legislative personnel were among the pre-contract State retirees included in RPEA's action.

The Bransten decision is posted on the Internet at:

The RPEA decision is posted on the Internet at:


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