Supreme Court, Broome County, September 3, 2010

APPEARANCES OF COUNSEL

James R. Sandner and James D. Bilik, Latham, for petitioners. Coughlin & Gerhart, LLP, Binghamton (Lars P. Mead of counsel), for respondent.

Phillip R. Rumsey, J.

{**29 Misc 3d at 707}Petitioners commenced this CPLR article 78 proceeding seeking to annul respondent's determination to stop reimbursing its retirees for payment of Medicare Part B premiums. Petitioners, who are either retired teachers formerly employed by respondent Chenango Forks Central School District, or spouses of retired teachers, contend that respondent's action violates a statutory moratorium against reducing the health insurance benefits of school district retirees, or the contributions made to obtain such benefits, in the absence of a similar decrease in benefits or contributions for active employees (see L 2003, ch 48, amending L 1994, ch 729 [herein moratorium]).^[FN1] By decision, order and judgment dated May 18, 2004, this court granted the petition, annulled the challenged determination, and directed that respondent continue to reimburse petitioners for payment of Medicare Part B premiums (see Matter of Bryant v Board of Educ. of Chenango Forks Cent. School Dist., 4 Misc 3d 423 [2004]). On September 1, 2005, the Appellate Division, Third Department, reversed, finding that the record was insufficient to support judgment for either party, and remitted the proceeding for further development of the record (see Matter of Bryant v Board of Educ., Chenango Forks Cent. School Dist., 21 AD3d 1134 [2005]). The parties now request that the matter be determined based on the additional facts that they submitted by written stipulations in 2009.

All petitioners are 65 years of age or older, and are eligible to receive Medicare benefits, including Part B, which provides coverage for physician and outpatient services. A monthly premium for Part B coverage is deducted from the Social Security benefits payable to an enrolled individual. In 1987 and 1988, in accordance with a collective bargaining agreement, respondent provided health insurance to teachers and eligible retirees through the New York State [*2]Government Employees' Health Insurance Program (Empire Plan), which required that eligible individuals enroll in Medicare Part B and that respondent reimburse Part B premiums paid by enrolled individuals. In 1988, the collective bargaining agreement between respondent and the Chenango Forks Teachers Association was amended to replace the Empire Plan with a Blue Cross/Blue Shield Plan (Plan), which does not require that eligible individuals enroll in Medicare; however, it does not cover services that would be provided to a Medicare recipient, even if an eligible individual{**29 Misc 3d at 708} fails to enroll in Part B. No collective bargaining agreement in effect at the time of, or prior to, respondent's determination required that respondent reimburse participants—whether retirees or active employees—for Part B premiums. Nonetheless, respondent has reimbursed retirees for payment of Part B premiums continuously since at least 1980.

On June 12, 2003, respondent sent a notice to faculty and staff, advising that it would cease reimbursing retirees for Medicare Part B premiums as of July 1, 2003. On June 24, 2003, a similar notice was sent to individuals then receiving Part B reimbursement from respondent—all of whom were retired teachers or spouses of retired teachers. No other change was made in the health insurance benefits provided to active employees or retirees, or in the level of contributions made by respondent toward payment of health insurance premiums under the Plan for either group. When respondent made its determination to cease reimbursement, no active teachers were eligible for Medicare.

The moratorium precludes any diminution in health insurance benefits provided to retirees or their dependents, or contributions made toward the payment of retiree health benefits, "unless a corresponding diminution of benefits or contributions is effected from the present level during this period by such district or board from the corresponding group of active employees for such retirees" (L 2003, ch 48, § 1 [emphasis supplied]). To determine whether a modification of benefits or contributions provided to retirees violates the moratorium, the effect of any changes on the retirees must be compared to the effect of any changes to comparable benefits or contributions provided to a corresponding group of active employees—the effect on the employer is not relevant to the determination.

The record now before the court establishes that cessation of reimbursement for Part B premiums constitutes a reduction in respondent's contribution toward health benefits provided to retirees. Specifically, an eligible individual must enroll in Part B to maintain the same level of coverage afforded by the Plan to individuals who are not eligible for Medicare. The cost of maintaining that coverage for retirees had been paid by respondent at all times since at least 1980 as a contribution toward the cost of maintaining their health benefits. On July 1, 2003—the effective date of the challenged determination—the cost of obtaining Part B coverage was $58.70 per month, or $704.40 per{**29 Misc 3d at 709} year.^[FN2] Under such circumstances, unilateral discontinuance of Part B premiums plainly constitutes a decrease in contributions made by respondent to provide health benefits to Medicare eligible retirees. Alternatively, respondent's decision to cease reimbursement could indirectly result in a decrease in health benefits for any retirees forced to [*3]terminate Medicare Part B enrollment due to an inability to pay the premiums.

By contrast, the record shows no corresponding diminution of benefits afforded under the Plan or contributions during the relevant period for the corresponding group of active employees, here, the active teachers. No active teachers were Medicare eligible or were receiving reimbursement for Part B premiums, and there was no decrease in the contributions made by respondent toward payment of the premiums necessary to provide health insurance to the active teachers under the Plan.^[FN3] Respondent's argument that active teachers are affected by the challenged determination because it impacts their right to receive benefits in the future, i.e., upon becoming Medicare eligible, is misplaced, because it does not reduce contributions made on their behalf "from the present level during [the same] period" (L 2003, ch 48, § 1 [emphasis added]; see also Matter of Baker v Board of Educ., 29 AD3d 574 [2006], lv denied 7 NY3d 708, 709 [2006];^[FN4] see generally Matter of Jones v Board of Educ.{**29 Misc 3d at 710} of Watertown City School Dist., 30 AD3d 967, 970 [2006] ["during this period" means only the period that the moratorium is in place (which, under the most recent law—Laws of 2009 [ch 30]—ended May 15, 2010)]). Accordingly, respondent's decision to cease reimbursement of Part B premiums violates the moratorium.

The petition must be, and hereby is, granted; the challenged action of respondent (curtailment of its reimbursement of the cost of Medicare Part B premiums to retirees paying [*4]such premiums, commencing July 1, 2003) is annulled; and respondent is directed to pay petitioners the amounts of such premiums that would have been so reimbursed, in the absence of the challenged determination.