March 10, 2017 NYSHIP Litigation Update
KEEPING YOU INFORMED…
We are writing to update you regarding the litigation challenging NYSHIP’s Policy Memorandum 122r3. The NYSHIP memo prohibits 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 NYSHIP memo contains limited exceptions for out of compliance collectively negotiated and administratively established buyout programs.
The Appellate Division, Third Department, has issued two decisions finding that the NYSHIP memo is null and void (see our attached December 5, 2016 memorandum). Appellate Division decisions may be appealed to the Court of Appeals either by the filing of a notice of appeal in those cases in which an appeal may be taken as a matter of right, or by the filing of a motion for permission to appeal.
Last year, the State filed notices of appeal from the Appellate Division decisions. The Court of Appeals recently dismissed the State’s appeals because it concluded that the appeals could not be taken as a matter of right. The State now has until approximately March 27, 2017 to seek permission to appeal to the Court of Appeals.
In the interim, the Appellate Division’s decisions finding the NYSHIP memo null and void are still in effect and the NYSHIP memo remains unenforceable. Until we advise you otherwise, you should continue to abide by our below outline of next steps that depend on the language contained in your buyout provisions. This outline is also set forth in our June 17, 2016 memorandum (attached).
1. 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.If you have agreed to suspend any out of compliance buyout provisions pending a “final resolution” of the NYSHIP litigation, then you should continue that suspension until one of the following events occurs: (a) The State fails to seek permission to appeal and its time to do so expires; (b) the Court of Appeals denies a request to appeal; or (c) the Court of Appeals hears an appeal and issues a final decision affirming the Third Department’s decisions. If the Court of Appeals reverses the Third Department, you would continue to suspend the buyout provisions.
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.
If the Court of Appeals reverses the Third Department’s decisions, you would be required to comply with the NYSHIP memo.
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.
If the Court of Appeals reverses the Third Department’s decisions, you would be required to comply with the NYSHIP memo.
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. If the Court of Appeals reverses the Third Department’s decisions, you would be required to comply with the NYSHIP memo in a successor agreement.
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, the employee would not be affected by a change to that provision until the next buyout period.
Please do not hesitate to contact Lauren Schnitzer at LS@lambbarnosky.com, or any of our other attorneys, if you have any questions regarding the information contained in this memorandum.
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
12/5/2016 Client Memo re Health Insurance Buyout Bill Vetoed by Governor