Former firefighters and the spouses of deceased former firefighters who retired from their employment with City of Albany [City] before October 20, 2015, [Plaintiffs], were advised that effective January 1, 2016, there would be changes to the health insurance plan and Plaintiffs would be required to pay annual $250 deductibles for insured individuals and $500 deductibles for insured families.
The Union filed a grievance on behalf of its members with respect this change's affecting active union members upon their eventual retirement and submitted the matter to arbitration. The Union contended that the City's unilateral change to retirees' health insurance violated the terms of §27.1 of the relevant collective bargaining agreements [CBA].
An arbitrator found that the City's failure to negotiate the new deductibles violated the CBA and a second arbitrator subsequently found that, by imposing deductibles, the City was no longer providing substantially equivalent coverage. The second arbitration award required the City to reimburse deductibles paid by all retirees who retired on or after October 20, 2015. Both arbitration awards were confirmed.
Plaintiffs in this action, however, were not included in the arbitration award because they or their deceased spouses had retired prior to October 20, 2015, the effective date of the award. Plaintiffs commenced the instant action against the City alleging a breach of contract and requested a declaratory judgment. Plaintiffs also sought reimbursement for their past and continuing payment of the deductibles. Plaintiffs moved for summary judgment while the City cross-moved for summary judgment dismissing the complaint.
Supreme Court found that Plaintiffs had a vested contract right under the CBA and that collateral estoppel precluded the City from relitigating the issue of whether §27.1 of the CBA was violated. Accordingly, the court granted Plaintiffs' motion for summary judgment and denied the City's cross-motion. The City appealed.
The Appellate Division affirmed the Supreme Court's ruling explaining:
1. Plaintiffs' right to health insurance without deductibles was a form of deferred compensation earned during their employment, to which they had a vested right as §27.1 of the CBA was "neither expressly limited to active union members ... nor does it clearly include retired former union members."
2. Given this ambiguity, the court may look to past practice to give
meaning to the contract; and
3. While it is true that past practice "is merely an interpretive tool and cannot be used to create a contractual right independent of some express source in the underlying agreement" there is an express source for Plaintiffs' claimed contractual right here, namely §27.1 of the CBA and its reference to the "existing health insurance plan."
Citing Holloway v City of Albany, 169 AD3d 1133, the Appellate Division noted the record revealed "that it was the longstanding practice of the City not to charge deductibles as part of the health insurance plan for retirees."
Indeed, said the Appellate Division, an affidavit submitted to Supreme Court by one of the Plaintiffs, a former Union president, reflected that no deductible had been charged to retirees for at least 20 years before his retirement in 2010, and the lack of a deductible was an important factor in his decision to opt into the City's health insurance plan when he retired. Additionally, opined the court, there is "no meaningful distinction between Holloway and the instant case".
Acknowledging what it characterized as "the well-established principle that 'the continuation of health insurance payments to current employees after their retirement ... constitute a form of compensation earned by the employee while employed'", the Appellate Division concluded that Supreme Court "correctly determined that plaintiffs have a vested contractual right under section 27.1."
Addressing the City's argument that the Doctrine of Collateral Estoppel did not bar them from litigating the issue of whether they were required to negotiate the imposition of deductibles for retirees with the Union in the instant matter, the Appellate Division said it agreed with Supreme Court that the issue of whether the City violated §27.1 of the CBA by unilaterally imposing deductibles upon retirees was already determined in arbitration, "where the City had a full and fair opportunity to argue its position." Citing Simmons v Trans Express Inc., 37 NY3d 107, the Appellate Division observed that notwithstanding the fact that Plaintiffs, as retirees, were not involved in the two underlying arbitrations, "the identity of parties is not an element of this doctrine".
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