N.Y. State Corr. Officers & Police Benvolent Ass'n, Inc. v. New York

THE NEW YORK STATE CORRECTIONALOFFICERS & POLICE BENEVOLENT ASSOCIATION,INC., DONN ROWE, individually, and as Presidentof the New York State Correctional Officers & PoliceBenevolent Association, Inc., on Behalf of Themselvesand All Others Similarly Situated, Plaintiffs,

v. THE STATE OF NEW YORK, ANDREW M. CUOMO,individually, and in his official capacity as Governor ofthe State of New York, NEW YORK STATE CIVILSERVICE DEPARTMENT, PATRICIA A. HITE,individually, and in her official capacity as ActingCommissioner, New York State Civil Service Department,NEW YORK STATE CIVIL SERVICE COMMISSION,CAROLINE W. AHL and J. DENNIS HANRAHAN,individually, and in their official capacities as Commissionersof the New York State Civil Service Commission, ROBERT L.MEGNA, individually, and in his official capacity as Directorof the New York State Division of the Budget, and THOMAS P.DiNAPOLI, individually, and in his official capacity as Comptrollerof the State of New York, and NEW YORK STATE AND LOCALRETIREMENT SYSTEM, Defendants.

1:11-CV-1523

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

Dated: December 3, 2012

(MAD/CRH)

APPEARANCES:

SHEEHAN GREENE GOLDMAN &

JACQUES LLP

Attorneys for Plaintiffs

ERIC T. SCHNEIDERMAN

Attorney General of the State of New York

The Capitol

Attorney for Defendants

OF COUNSEL:

Jeffrey P. Mans, Esq.

Charles J. Quackenbush, Esq.

Asst. Attorney General

Mae A. D'Agostino, U.S. District Judge:

MEMORANDUM-DECISION AND ORDER

INTRODUCTION

Plaintiffs commenced the within action alleging that defendants unilaterally increased the percentage of contributions that plaintiffs, active and retired employees, are required to pay for health insurance benefits in retirement and, thereby, violated the Contracts Clause and Due Process Clause of the United States Constitution, impaired plaintiffs' contractual rights under the terms of their Collective Bargaining Agreement, and violated state law. Plaintiffs seek injunctive relief, declaratory judgments and monetary damages. Presently before the Court is defendants' motion to dismiss plaintiffs' complaint pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). See Dkt. No. 13. Plaintiffs have opposed the motion.¹ Dkt. No. 17.

BACKGROUND²

Plaintiff, New York State Correctional Officers & Police Benevolent Association, Inc. ("NYSCOPBA" or "the Union") is the collective bargaining representative for members of the Security Services Unit of State Employees including, inter alia, Correctional Officers, Correctional Sergeants, Institution Safety Officers and Community Correctional Center Assistants employed by the State of New York and the New York State Department of Corrections and Community Supervision ("DOCCS").

Plaintiff Donn Rowe ("Rowe") is the President and member of NYSCOPBA and an active employee of the State of New York and a vested member in the New York State Employees Retirement System ("NYS ERS"). Plaintiff Al Mothershed is an active employee of the State of New York and a member of NYSCOPBA enrolled and receiving health benefits through the New York State Health Insurance Program and a vested member in the NYS ERS. Plaintiffs Art W. Jolley, Louis Giampaglia, David Faile, William West and Diane Davis are former State employees and former members of NYSCOPBA now retired and receiving health benefits through NYSHIP. During the relevant time, defendant Patricia Hite ("Hite") was Acting Commissioner of the Civil Service Department and Acting President of the Civil Service Commission. Defendants Caroline W. Ahl ("Ahl") and J. Dennis Hanrahan ("Hanrahan") were members of the Civil Service Commission. Defendant Robert Megna ("Megna") was the Director of the New York State Division of the Budget. Defendant Thomas P. DiNapoli ("DiNapoli") was the Comptroller of the State of New York responsible for the administration of the New York State and Local Retirement System. The New York State and Local Retirement System is responsible for making monthly pension payments to eligible retired State employees less any deductions for the payment of retiree health insurance.

Article XI of the New York State Civil Service Law ("CSL") provides for a statewide health insurance plan for eligible State employees and retired State employees known as the New York State Health Insurance Plan ("NYSHIP" or "Empire Plan"). New York Civil Service Law § 167(1) assigns the State contribution rate towards the cost of health insurance premium or subscription charges for the coverage of State employees and retired State employees enrolled in NYSHIP. Prior to 1983, the State was required to pay the full cost of premium or subscription charges for the coverage of State employees and retired State employees enrolled in NYSHIP.Chapter 14 of the Laws of 1983 amended Civil Service Law § 167(1)(a) to limit the amount that the State was required to pay towards the cost of premium or subscription charges for the coverage of State employees and retired State employees enrolled in NYSHIP, by providing that the State was required to contribute only ninety percent (90 %) of the cost of such premium or subscription charges for the coverage of State employees and retired State employees retiring on or after January 1, 1983. The State would continue to contribute seventy-five percent (75 %) for dependent coverage for State employees and retired State employees.

The Governor's Program Bill Memorandum regarding the 1983 amendment provided that "[t]he State and the employee organizations representing State workers have agreed to a reduction of the State's contribution for the premium or subscription charges for employees enrolled in the statewide health insurance plan."

The Division of the Budget's Report on Bills also acknowledged that the rates were the product of an agreement:

1. Subject and Purpose: This bill would implement certain unenacted portions of collectively negotiated health insurance benefit and cost agreements between the State and the employee organizations representing certain State employees.

* * * * *

4. Arguments in Support: This measure provides the necessary authorization to implement negotiated agreements between the State and the employee organizations representing State employees. This action is appropriate in view of the "good faith" efforts of the State and the employee organizations to reach agreement on this critical issue.

* * * * *

9. Recommendation: Because this measure would implement certain unenacted portions of collectively negotiated health benefit and cost agreements between the State and employee organizations representing certain State employees and resultin significant direct cost savings to the State, we recommend its approval.

Between 1983 and 2011, Civil Service Law § 167(8) provided, inter alia,

[n]otwithstanding any inconsistent provision of law, where and to the extent that an agreement between the state and an employee organization entered into pursuant to article fourteen of this chapter so provides, the state cost of premium or subscription charges for eligible employees covered by such agreement may be increased pursuant to the terms of such agreement.

NYSCOPBA and the State of New York entered into a Collective Bargaining Agreement ("CBA") and Interest Arbitration Award effective April 1, 2007 through March 31, 2009. Article 12 of the CBA governs the coverage of Health, Dental and Prescription Drug Insurance. Section 12.1 of the CBA provides as follows:³

The State shall continue to provide all the forms and extent of coverage as defined by the contracts and Interest Arbitration Awards in force on March 31, 2007 with the State health and dental insurance carriers unless specifically modified or replaced pursuant to this agreement.

Section 12.8 of the 2007-2009 NYSCOPBA CBA is entitled Premium Contribution and provides:

(a) The State agrees to pay 90 percent of the cost of individual coverage and 75 percent of dependent coverage, provided under the Empire Plan. The State shall pay 90 percent for individual prescription drug coverage and 75 percent for dependent prescription drug coverage under the Empire Plan.

(b) The State agrees to pay 90 percent of the cost of individual coverage and 75 percent of dependent coverage, toward the hospital/medical/mental health and substance abuse components of each HMO, not to exceed, 100 percent of its dollar contribution for those components under the Empire Plan. The State will pay 90 percent of the cost of individual prescription drug coverage and 75percent of the cost of dependent prescription drug coverage under the Health Maintenance Organizations.

(c) The unremarried spouse of an employee, who retires after April 1, 1979, with ten or more years of active State service and subsequently dies, shall be permitted to continue coverage in the health insurance program with payment at the same contribution rates as required of active employees.

(d) The unremarried spouse of an active employee, who dies after April 1, 979 and who, at the date of death was vested in the Employee's Retirement system and within ten years of his/her first date of eligibility for retirement shall be permitted to continue coverage in the health insurance program with payment at the same contribution rates as required of active employees.

On August 17, 2011, the legislature passed Chapter 491 of the Laws of 2011 ("Chapter 491"). Chapter 491 amended § 167(8) and replaced the word "increased" with the word "modified." The amendment further provided that

[t]he president [of the Civil Service Commission], with the approval of the director of the budget, may extend the modified state cost of premium or subscription charges for employees or retirees not subject to an agreement referenced above and shall promulgate the necessary rules or regulations to implement this provision.

In August 2011, the New York State Civil Service Department issued an Empire Plan Special Report announcing the implementation of new reduced State contribution rates in NYSHIP for New York State Retirees,...