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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