Monday, December 29, 2014

An employer’s unilaterally adopted policy providing health insurance benefits to employees upon retirement may be rescinded with respect to employees retiring after the effective of the rescission

An employer’s unilaterally adopted policy providing health insurance benefits to employees upon retirement may be rescinded with respect to employees retiring after the effective of the rescission  
Covel v Town of Peru,2014 NY Slip Op 08686, Appellate Division, Third Department 

Donald E. Covel Jr., a former elected official and employee of the Town of Peru, commenced a CPLR Article 78 proceeding contending that the employee benefit policy unilaterally enacted by the Town in 1991-1992 served as an implied promise requiring the Town to pay his health insurance benefits after he retired in 2009 with 33 years of service as a part-time employee. 

The 1991-1992 policy provided, as relevant in this action, that a part-time employee eligible for the Town's health insurance plan "who subsequently retires with 20 years' continuous service will be allowed to carry health insurance into retirement for both the employee and the spouse with the premium being paid by the Town."

Supreme Court granted Peru’s motion to dismiss Covel’s petition, concluding, among other things, that the Town’s 1991-1992 policy did not constitute a contract and the Town's 2009 policy, which rescinded all prior policies and did not provide for payment of part-time employee's health insurance premiums upon retirement, was applicable. The Supreme Court noted that the 1991-1992 policy relied on by Covel was a unilateral offer from the Town that had been revoked prior to Covel's performance of the acts required for acceptance – retirement from service with the Town.

The Appellate Division affirmed the Supreme Court’s ruling, rejecting Covel argument that once he achieved 20 years of service his right to this retirement benefit vested no matter when he retired.

The Appellate Division disagreed and said that, in its view, the language of the 1991-1992 policy is susceptible to only one reasonable interpretation and should be enforced according to its plain terms. 

The court then said that the plain terms of the policy “require 20 years of continuous service and retirement in order for part-time employees to be entitled to have the Town pay insurance premiums.”

Concluding that Supreme Court's interpretation reflects "a practical construction of the language used so that the reasonable expectations of the parties are realized” the Appellate Divsion dismissed Covel’s appeal.

The decision is posted on the Internet at:
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Handbooks focusing on State and Municipal Public Personnel Law continue to be available for purchase via the links provided below:

The Discipline Book at http://thedisciplinebook.blogspot.com/

Challenging Adverse Personnel Decisions at http://nypplarchives.blogspot.com

The Disability Benefits E-book: at http://section207.blogspot.com/

Layoff, Preferred Lists at http://nylayoff.blogspot.com/

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