March 12, 2018

A resolution increasing a NYSHIP participating employer's contribution for health insurance premiums is temporary absent a manifest intent to create a permanent right


A resolution increasing a NYSHIP participating employer's contribution for health insurance premiums is temporary absent a manifest intent to create a permanent right
Bruckman v New York State Thruway Auth., 2018 NY Slip Op 01526, Appellate Division, Third Department

The complainants [Petitioners] in this CPLR Article 78 action are retired employees of New York State Thruway Authority [NYSTA]. NYSTA, a participating employer in the New York State Health Insurance Program [NYSHIP] as set out in Article 11 of the Civil Service Law, provides health insurance benefits to its employees and retirees.

A participating NYSHIP employer must pay at least 50% of the cost of the premium for individual coverage and not less than thirty-five% of the cost of premium or subscription charges for the coverage of dependents of such employees and retired employees. A participating NYSHIP employer, however, may elect to pay higher rates of contribution towards the employees' health insurance premiums for employees, retired employees, and the dependents of employees and retired employees. Further, a participating employer may elect to pay a higher or lower rate of contribution for its retired employees or their dependents, or both, than that paid by the State for its retired employees or their dependents, or both.

NYSTA's policy governing payment of health insurance premiums for retirees, last amended in 1976, provided that retirees would not be required to make any contribution toward the cost of individual coverage and each Petitioner received individual health coverage at no cost pursuant to the policy as it then existed upon his or her retirement.

In November 2015, NYSTA amended this the policy to require that retirees who had been retired for less than 25 years, and whose health insurance premium contribution rates were not subject to the provisions of a collective bargaining agreement negotiated pursuant to Article 14 of the Civil Service Law, commonly referred to as the Taylor Law, were to contribute six percent of the cost of the premiums for their individual coverage effective April 1, 2016.* As Petitioners served in positions designated "managerial or confidential" within the meaning of the Taylor Law, neither their employment nor their retirement was subject to the provisions of a collective bargaining agreement.

In March 2016, Petitioners commenced this Article 78 action seeking to, among other things, have the court annul NYSTA's decision to modify the contribution amount Petitioners had to pay for health insurance, contending that the revised policy breached "their vested right to receive individual health insurance coverage in retirement at no cost" and that the NYSTA's adoption of the revised policy was arbitrary and capricious.

Supreme Court dismissed the petition and Petitioners appealed.

Essentially Petitioners argued that the NYSTA policy that was in effect when each of them retired constituted "a unilateral offer by NYSTA to provide them with lifetime individual health insurance coverage in retirement at no cost," and that their right to such coverage vested and became an enforceable contract upon retirement.

Citing Aeneas McDonald Police Benevolent Assn. v City of Geneva, 92 NY2d 326, the Appellate Division disagreed with Petitioners, holding that "A municipal resolution is, in general, a unilateral action that is temporary in nature and, thus, it does not create any vested contractual rights."  The court explained that it is presumed that such resolutions do not "create private contractual or vested rights but merely declare a policy to be pursued until the legislative body shall ordain otherwise" and "[p]rivate contractual rights are created by municipal resolution only where the language of the resolution and the attendant circumstances clearly manifest the intent to create such rights."

Noting that there was nothing in the language of NYSTA's 1976 policy that would create private contractual rights, the decision pointed out that the rules and regulations governing NYSHIP specifically provide that a participating employer "that increases its rate of contribution toward the cost of health insurance benefits may thereafter decrease its rate of contribution to the statutory minimum."

* In Lippman v Board of Educ. of Sewanhaka Cent. High School Dist., 66 NY2d 313,  the Court of Appeals held that health insurance upon retirement is not a retirement benefit subject to the provisions of Article V, §7 of the State Constitution [Membership in retirement systems; benefits not to be diminished nor impaired].

The decision is posted on the Internet at:

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