City retirees await state high court decision on Medicare matter

In what likely were the final arguments in the years-long battle over whether the city is obligated to provide its 250,000 municipal retirees with no-cost Medicare and supplemental insurance, attorneys for both sides presented their cases before the state’s highest court last week. 

Much of the 45-minute hearing at the Court of Appeals last Thursday revolved around whether assurances by city officials of lifetime benefits in retirement for , made as part of recruitment and retention efforts but without a formal agreement or contract, could carry the day in favor of the retirees. 

And from the hearing’s outset, Richard Dearing, the city’s chief assistant corporation counsel, characterized the retirees’ efforts to buttress their argument on that theory of promissory estoppel as “remarkable” in several ways, among them that the guarantees, whatever they might have been, were not negotiated as part of contract agreements. 

The city, accordingly, was not obliged to provide the current benefits in perpetuity, as the retirees have argued, Dearing told the judges. “Therefore they’re trying to override the outcome of those collective bargaining agreements,” he said. 

The retirees, he said, were trying to secure “a lifetime guarantee … based on a record that is deeply inadequate.”

Dearing also based his argument on health program descriptions issued to employees every year. Those descriptions did not amount to “a promise-making document," he said. Any assurance, he continued, would have to be “clear, unambiguous.” 

In response to questioning from among the panel of seven judges, he said that guarantees by government entities made outside of collective bargaining agreements require “an even higher showing.”

Asked by Judge Madeline Singas about an affidavit submitted by Lilliam Barrios-Paoli, a retired longtime city official who headed several departments, in which she asserted that for decades the city’s human resources administrators had promised city employees and would-be employees that as retirees they would have a choice of health plans, Dearing took issue with her expertise, saying she “pretty clearly is” wrong about her understanding of the health program description. 

While Barrios-Paoli headed various departments, Dearing argued that did not necessarily make her an authority on the city’s benefits program, saying that fell to the Department of Labor. 

Judge Jenny Rivera appeared unconvinced. “She states unequivocally for more than 50 years this was a promise. If she was that wrong, one would think such a high level representative would be corrected given the stakes,” the judge said. 

Dearing, in answer to a question from Judge Anthony Cannataro about similar affidavits from other retired employees, argued that those statements do not meet the legal threshold of promissory estoppel. “A low-level official is not in a position to do that,” he said. 

The affidavit from Barrios-Paoli, who for a time served as a deputy mayor for health and human services and also headed the city’s former Department of Personnel, was among hundreds cited by a State Supreme Court Appellate Division panel decision  that in May 2024 upheld a trial court finding that switching the retirees to the private plan and stripping them of their Medigap coverage would break the long-ago guarantees by city officials. 

“The City has made clear, consistent, unambiguous representations — oral and written — over the course of more than 50 years, that New York City municipal worker-retirees would have the option of receiving health care in the form of traditional Medicare with a City-paid supplemental plan,” the Appellate Division’s First Division four-justice panel concluded. “Consequently, the City cannot now mandate the proposed change eliminating that choice.”  

Mayoral contest could play role

While lower courts have been unambiguous in deciding in the retirees’ favor, questioning from the Appeals Court judges reflected some doubt about the alleged promises. Interrupting the opening from the attorney representing the retirees in the matter, Jacob Gardener, Rivera asked, “What are the sources of the promise?”

Recalling the Appellate Division finding, Gardener said, “the promise was made not just in writing, in the SPDs, it was made in person, orally, by the highest levels of city government. And pursuant to that policy, that essential recruiting and retention tool, it was communicated in person.”

In answer to a question from Judge Caitlin J. Halligan, Gardener added that the city’s benefits administrators were conveying “a policy that was blessed by mayors and the deputy mayor for health and human services.” 

“They were clearly acting within the scope of their authority. These weren't rogue employees talking about something that they weren't responsible for. Obviously, any city policy has to be communicated by people on the ground,” he said. 

The judges peppered Gardener about how those promises were made and the extent of the assurances. “It was a statement for 59 years, just continuously,” he replied. 

Returning to one Dearing’s opening arguments, Chief Judge Rowan D. Wilson asked Gardener whether the guarantees could have been included in collective bargaining agreements, Gardener replied that since they could have been, but were not, amounted to powerful evidence in favor of the retirees’ claims.

“The reason has to be, it's clear, that because it was so fundamental to working for the city that you would get Medicare plus supplemental insurance, not a single one of these 102 unions thought it necessary to address that fact in a second single collective bargaining agreement,” he said, noting that the contracts were so detailed as to include standards for stationary. 

The court will likely decide the matter within weeks, or even within days. But any outcome following the majority's finding would still be far from certain. The proposed switch, while strongly advocated for by the Adams administration, has been roundly criticized by a number of mayoral hopefuls.

richardk@thechiefleader.com