Reimbursement of retiree Medicare premiums found to be a form of deferred compensation may not be unilaterally discontinued by the employer

Reimbursement of  retiree Medicare premiums found to be a form of deferred compensation may not be unilaterally discontinued by the employer

Holloway v City of Albany, 2019 NY Slip Op 00940, Appellate Division, Third Department

In 2012 the Firefighters' Union [Union] filed a contract grievance and demanded arbitration when the City of Albany [Albany] said that it was ending its longstanding practice of reimbursing retired firefighters for their Medicare Part B premiums with respect to those who enrolled in the program on or after January 1, 2010.  The Union alleged that Albany's action violated §27.1 of the Collective Bargaining Agreement [CBA].* 

An arbitrator ruled that the Medicare Part B premium reimbursement was a component of "the existing health insurance plan" and that it could not be ended absent compliance with the provisions set out in §27.1 of the CBA. Subsequently the same arbitrator conducted an expedited proceedings to determine whether a health insurance plan without the reimbursement of Medicare Part B premiums provided coverage "substantially equivalent" to one with such reimbursements. The arbitrator decided that it did not and directed Albany to make whole "all individuals affected by [the reimbursement's] elimination." The arbitrator's awards were confirmed in an action taken pursuant to CPLR Article 75.

However, the Union determined that firefighters either enrolled in Medicare Part B after January 1, 2010 or will be doing so and, notwithstanding the 2012 arbitration award, had not been and would not be reimbursed by the City for their Medicare Part B premiums. Accordingly, in 2015 the Union initiated the instant action contending that Albany [1] had breached whichever CBA was in effect at each such firefighter's retirement and [2] was collaterally estopped** by the 2012 arbitration award from arguing to the contrary.

Supreme Court, however, determined that the Doctrine of Collateral Estoppel did not apply, found ambiguities in the language of §27.1 of the CBA and denied the Union's motion for summary judgment. The Union appealed. 

Acknowledging that §27.1 of the CBA, as written, is ambiguous, the Union argued that the proceedings culminating in the 2012 arbitration award resolved, with preclusive effect, that ambiguity in its favor. The Appellate Division agreed, explaining that arbitration awards are entitled to collateral estoppel effect and, citing Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183, said such an award "will bar a party from relitigating a material issue or claim resolved in the arbitration proceeding after a full and fair opportunity to litigate."

Observing that it was undisputed that the arbitration proceeding afforded Albany  a "full and fair opportunity to litigate the issues therein," the Appellate Division said that the only question is whether the firefighters in this action, as the parties seeking to invoke collateral estoppel, satisfied their burden of showing the identity of the issues  "between those resolved in the arbitration awards and those in play here."

In the 2010 arbitration award, said the court, the arbitrator observed that Albany had reimbursed retired firefighters for their Medicare Part B premiums since the 1960's and did so for decades after it was no longer required, leading her to conclude that the reimbursement constituted part of the "existing health insurance plan" that could not be discontinued absent compliance with the provision set out in §27.1 of the CBA.

Albany had also contended that §27.1 had no applicability because retired firefighters were not "members of the bargaining unit" protected by that contract provision. The arbitrator also rejected this argument, holding that the reimbursement was a form of deferred compensation and was one of the health insurance benefits afforded to current employees.  In the words of the Appellate Division, although retirees are no longer part of the collective bargaining unit upon their retirement "the arbitrator determined that §27.1 applied because the reimbursement entitlement was earned by the retirees while they were working."

Noting that the 2010 and 2012 arbitration awards were never vacated and are binding and the firefighters  retired during the period that the reimbursement was provided to retirees under CBAs containing §27.1, the Appellate Division held that Albany "is obligated to reimburse retired firefighters for these payments under the CBA"

This, said the Appellate Division, Justice Mulvey dissenting, "is dispositive of the claims raised here" and thus the firefighters have met their burden of showing identity of issue, and their motion for summary judgment should have been granted by Supreme Court.

* §27.1 of the collective bargaining agreements at issue required the City to "present proposals to the [firefighters'] [u]nion for discussion and possible agreement" if it "wishe[d] to change the existing health insurance plan." In the absence of agreement, an arbitrator would be tasked with determining "whether the new . . . proposal grants substantially equivalent coverage to members of the bargaining unit" so as to be permissible.

** The Doctrine of Collateral Estoppel bars an issue that has already been litigated by the  parties from being later relitgated by those same parties..

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2019/2019_00940.htm

A public employee alleging that he or she has been "wrongful terminated" is required to bring a CPLR Article 78 proceeding seeking reinstatement and unpaid salary

A public employee alleging that he or she has been "wrongful terminated" is required to bring a CPLR Article 78 proceeding seeking reinstatement and unpaid salary

Village of Northport v Krumholz, 2019 NY Slip Op 00926, Appellate Division, Second Department

The Defendant in this action was appointed Treasurer of the Village of Northport and served in that capacity until the Village discovered that she had been appropriating Village funds to herself.*

The Village commenced this action against Defendant alleging that she had improperly written checks to herself from Village funds. Defendant filed a counterclaim alleged "wrongful termination and violation of Public Officers Law §36"** and asked the court to direct her reinstatement and payment of back salary.

Supreme Court granted the Village's motions summary judgment on its conversion and  its breach of fiduciary duty causes of actions, and dismissed, as time-barred, Defendant's counterclaim. Defendant appealed, contending that Supreme Court should not have granted Village's motion for summary judgment dismissing her counterclaim.

The Appellate Division sustained the Supreme Court's rulings, explaining that:

1. Defendant was required to bring a proceeding pursuant to CPLR Article 78 in order to pursue her claim of wrongful termination and to seek reinstatement and unpaid salary; and

2. Citing Austin v Board of Higher Educ. of City of N.Y. , 5 NY2d 430, a CPLR Article 78 proceeding is the exclusive remedy for a discharged public employee, who must seek reinstatement prior to seeking unpaid salary.

As the Village established its prima facie entitlement to judgment as a matter of law dismissing the Defendant's counterclaim as time-barred, the claim not having not been filed within the controlling four-month statute of limitations, the Appellate Division noted that Defendant "was effectively terminated" in March, 2009 but did not file her counterclaim until January 4, 2013.

* Earlier Defendant had brought an action United States District Court "seeking overtime pay under the Fair Labor Standards Act" and alleged that her employment with the Village should not have been terminated without notice and hearing. The federal court dismissed Defendant's Fair Labor Standards Act claim and declined to consider the state law questions she presented. The filing of her federal action, however, did not toll the running of the controlling statute of limitations with respect to the litigation of Defendant's state law issues. Similarly, neither the filing an appeal from an administrative decision in accordance with a grievance procedure [Matter of Matter of Hazeltine v City of New York, 89 AD3d 613] nor a request for reconsideration of a final administrative decision [Cappellino v Town of Somers, 83 AD3d 934] toll the running of the statute of limitations for bringing an Article 78 action.

** §36 of the Public Officer Law sets out the procedures for the removal of a town, village, improvement district or fire district officer other than a justice of the peace.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_00926.htm

Applying compensation limitations retroactively

Applying compensation limitations retroactively

People v Edward J. Murphy, 235 A.D.2d 554

In 1993 certain limitations on the amount of compensation that a BOCES Superintendent could receive were enacted into law [Chapter 295, Laws of 1993].

In the Murphy case the Appellate Division concluded that the limitations set out in Chapter 295 did not apply retroactively.

The case arose when the State attempted to recover a portion of what the Appellate Division described as an "overly generous BOCES compensation package (which included extensive sick and vacation leave time and the right to liquidate this leave at full-pay)" granted to its then BOCES Superintendent Edward J. Murphy,

The Court said that "while improvident, BOCES' offer to Murphy, and his acceptance of the overly generous BOCES compensation package ... did not violate any articulated public policy."

Further, the Court ruled that although the law now places a limitation on the amount of compensation that a BOCES superintendent may receive, "at the time Murphy began working at BOCES and continuing throughout his tenure as the BOCES district superintendent, the law provided for no such restrictions. Accordingly, the Court decided, Murphy's employment agreements with BOCES were neither illegal nor unauthorized.

The ruling suggests that all or part of a "compensation package" in place prior to the effective date of the enactment or the amendment of a law limiting the compensation of a public officer or a public employee then in service may survive judicial challenge even if the compensation package is in excess of that authorized by the law as enacted or amended.

The decision is posted on the Internet at:

https://www.leagle.com/decision/1997789235ad2d5541272

An appointing authority may formulate and implement procedures to be used to promote its employees

An appointing authority may formulate and implement procedures to be used to promote its employees

Sinopidis v Port Authority of New York and New Jersey, 2019 NY Slip Op 00830, Appellate Division, First Department

A candidate for promotion from Port Authority of New York and New Jersey Sergeant to Lieutenant  [Petitioner] received a failing grade he received based on his performance at a Qualifications Review Meeting [QRM]. Supreme Court denied his petition seeking a court order directing the Port Authority to effect his  promotion to Lieutenant and to award him back pay and benefits, or, in the alternative, to order the Port Authority "to reconvene [Petitioner's]  interview on a pass-fail basis".  

Petitioner appealed the Supreme Court's ruling. The Appellate Division, however, affirmed the lower court decision, explaining that Petitioner:

1. failed to demonstrate that the Port Authority lacked the discretion to formulate and implement the promotional procedures it had used;

2. failed to show that on its face the procedures were unlawful or arbitrary; and

3. did not demonstrate that the failing grade he received based on his performance at a QRM was arbitrary and capricious.

In the words of the Appellate Division the Port Authority had "broad discretion to select individuals for civil service appointment and promotion."

The Appellate Division said that it would not interfere with Port Authority's  exercise of that discretion "unless there is evidence of arbitrary or unlawful conduct by the appointing officer" and insofar as Petitioner's claim that he was "essentially informed" by his superior officers that he had performed well on the QRM is concerned, this representation "does not raise an issue as to the propriety of the failing grade [Petitioner] actually received."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_00830.htm

Statute of limitations for initiating administrative disciplinary action extended where the act or omission charged may constitute a crime

Statute of limitations for initiating administrative disciplinary action extended where the act or omission charged may constitute a crime

Folborg v Bratton, 227 A.D.2d 108

§75.4 of the Civil Service Law provides that disciplinary proceeding must be initiated "within 18 months of the alleged incompetency or misconduct ... provided, however, that such limitations shall not apply  where the  incompetency  or  misconduct  complained  of  and  described in the charges would,  if  proved  in  a  court  of  appropriate  jurisdiction, constitute a crime."

This exception became after a New York City police officer [Police Officer] was dismissed from his position after being found guilty of misconduct based on events that occurred more than 18 months before §75 disciplinary charges had been filed against him.

Essentially, Police Officer was alleged to have engaged in a scheme to defraud by "falsely representing that he would provide ... diamonds from Africa for manufacture and resale in this country...."

The Appellate Division said that because the allegations would, if proved in court, constitute the crime of larceny by false promise, the disciplinary actions was not time-barred under §75.4.

Making another point, the Court said that the fact that the District Attorney decided not to prosecute the police officer "was not tantamount to an assessment that [Police Officer] had not committed a crime." Accordingly, taking administrative disciplinary action against  Police Officer was not improper.

Assume an employee has been tried and acquitted of criminal charges. Courts have allowed the prosecution of administrative disciplinary action against an employee notwithstanding his or her acquittal of criminal charges involving the same acts or omissions.

Why would a court allow the disciplinary hearing to proceed in such a situation? Because the burden of proof is substantially different. An individual may be acquitted in the criminal action because his or her guilt was not proven beyond a reasonable doubt, but he or she may be found guilty under the less stringent substantial evidence standard usually applied in administrative disciplinary proceedings.

Where, however, an individual has been found guilty of criminal charges by a court, the courts have ruled that such a determination precludes a hearing body finding the individual "not guilty" in an administrative disciplinary action involving the same allegations.

In Kelly v Levin, 81 AD2d 1005, the court ruled that acquitting an employee in an administrative disciplinary action based on the same charges underlying the individual's  criminal conviction was a reversible error because the standard of proof in the criminal action was greater. The court said that an Education Law  §3020-a disciplinary hearing panel could not find an individual not guilty of a crime after he or she had been convicted of criminal charges involving the same allegations.

The Police Officer decision is posted on the Internet at:
https://www.leagle.com/decision/1996335227ad2d1081302

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