June 08, 2017 Conclusion of the NYSHIP Policy Memorandum 122R3 Litigation
KEEPING YOU INFORMED…
We are writing as a follow up to our March 10, 2017 client memorandum (attached) regarding the litigation challenging NYSHIP’s Policy Memorandum 122r3. That Memorandum prohibited participating employers and agencies from allowing buyouts from a NYSHIP plan for employees who were enrolled in other NYSHIP coverage during the buyout period.
The Appellate Division, Third Department, ruled in two separate lawsuits that the NYSHIP Memo was unenforceable, null and void. Last year, the State filed notices of appeal from these decisions. On Tuesday, the Court of Appeals denied the State’s motions for leave to appeal in each of the lawsuits. Thus, the two lawsuits have been finally resolved, and the litigations are over. This means that the Third Department’s rulings declaring the NYSHIP Memo unenforceable, null and void reflect the current state of the law.
As we advised in our March 10, 2017 client memorandum, your next steps will depend on the language contained in your buyout provisions. You should review all health insurance buyout provisions set forth in your collective bargaining agreements, employment agreements and terms and conditions of employment for non-union staff and any applicable policies.
1. If you have agreed to suspend any out of compliance buyout provisions pending a “final resolution” of the NYSHIP litigation, then you no longer need to continue that suspension because the litigation has been finally resolved (and your agreements do not have to comply with the NYSHIP Memo). In addition, if your buyout provision requires you to reimburse employees for any lost buyout payments due to your implementation of the NYSHIP Memo, then you should begin to do so.
2. If you have a CBA that: (a) was ratified and approved after May 15, 2012; (b) contains a buyout provision that complies with the NYSHIP Memo; and (c) the buyout provision is not suspended pending the “final resolution” of the NYSHIP litigation, then you may continue that provision or negotiate an out of compliance provision. You may unilaterally implement a new buyout provision for any non-union employee who does not have an employment agreement.
3. If you have a CBA that: (a) was ratified and approved after May 15, 2012; (b) contains a buyout provision that does not comply with the NYSHIP Memo; and (c) the buyout provision is not suspended pending the “final resolution” of the NYSHIP litigation, then you may continue that provision. You may unilaterally implement a new buyout provision for any non-union employee who does not have an employment agreement.
4. If you have a CBA that was in effect as of May 15, 2012 and a successor agreement has not been ratified and approved, then you can continue or negotiate buyout provisions that are out of compliance with the NYSHIP Memo. Again, for non-union employees not covered by an employment agreement, any change can be unilaterally implemented.
Going forward, new agreements do not have to comply with the NYSHIP Memo because it is no longer in effect.
Please be reminded that most buyout provisions, as well as NYSHIP’s Rules, require that an employee’s buyout remain in effect for a complete plan year or 12 month period. Thus, affected employees may not be affected by a change to some portions of a contractual buyout provision until the next buyout period.
If you have any questions regarding the Court’s decisions or your contractual or other health insurance buyout provisions or policies, please contact Lauren Schnitzer or one of our other attorneys by calling (631) 694-2300.
THIS MEMORANDUM IS MEANT TO ASSIST IN GENERAL UNDERSTANDING OF THE CURRENT LAW. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. THOSE WITH PARTICULAR QUESTIONS SHOULD SEEK THE ADVICE OF COUNSEL.
© Lamb & Barnosky, LLP 2017