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Under certain circumstances, a municipalilty may modify or discontinue providing health insurance benefits to retirees

Under certain circumstances, a municipalilty may modify or discontinue providing health insurance benefits to retirees
Matter of Kapell v Incorporated Village of Greenport, 2009 NY Slip Op 05134, decided on June 16, 2009, Appellate Division, Second Department

David E. Kapell served as the mayor of the Incorporated Village of Greenport from 1994 through 2007.

On March 8, 2007 the Village Board adopted a resolution whereby ?any Village mayor or Village Board member who completed 10 years or more of full time service was entitled to health and hospitalization insurance benefits at the Village's expense upon retirement.? On April 22, 2007, Kapell "retired."

On April 27, 2007, however, the Village Board rescinded its March 8, 2007 resolution and reinstated its ?previous health insurance policy? which did not provide health insurance benefits to retirees.

Kapell filed a petition pursuant to CPLR Article 78 and asked Supreme Court to annul the Village Board's April 27, 2007 resolution rescinding the March 8, 2007 resolution, contending that such action denied him due process and equal protection. Supreme Court rejected Kapell?s claim and granted the Village?s motion for summary judgment.

The Appellate Division affirmed the lower court?s ruling, holding that the Village Board had acted within its ability to exercise its discretion when it terminate the health insurance benefit it had earlier provided to eligible retired mayors and board members and thus its decision was neither arbitrary nor capricious.

The court also agreed with Supreme Court?s dismissing Kapell?s 42 USC §1983 claims seeking to recover damages for the Village?s alleged violation of his due process rights. The Appellate Division held that the resolution dated March 8, 2007, creating the retirement health insurance benefits, did not establish a constitutionally protected, vested property interest in those benefits.*

Further, the Village Board's policy of treating retired Village mayors and Village Board members differently from active Village mayors and Village Board members did not unconstitutionally deny Kapell the equal protection of the laws, ?as it reflects an orderly and rational basis for municipal expenditures.?**

* The Court of Appeals has already decided that health insurance for retirees is not a retirement benefit protected against being diminished or impaired by the State's Constitution [Lippman v Sewanhaka Central High School District, 66 NY2d 313].

** Regarding a municipality's providing health insurance benefits to its retirees, in McDonald PBA v City of Geneva, 92 N.Y.2d 326, a decision that could significantly affect a municipal retiree's participation in a municipality's health insurance program, the Court of Appeals concluded that "there is no legal impediment to the municipality's unilateral alteration of the past practice" regarding its providing health insurance benefits to its retirees and their dependents where there was neither a Taylor Law agreement nor some other contract or provision of law granting retirees a vested right to such a benefit.

The Kapell decision is posted on the Internet at:
http://www.courts.state.ny.us/reporter/3dseries/2009/2009_05134.htm

Full post as published by New York Public Personnel Law on June 22, 2009 (boomark / email).