Judge slams brakes on city’s Medicare plan for retirees.

The Adams administration’s plan to switch about 250,000 municipal retirees from their traditional Medicare coverage to a cost-saving, for-profit health plan has hit a significant roadblock. Story from The Chief by Richard Khavkine. July 9.

Finding that a lawsuit by the retirees claiming that city officials are forbidden from reducing retirees’ health benefits has “a likelihood of success,” a Manhattan Superior Court judge on Friday granted a group of retirees a request for a preliminary injunction, effectively putting on hold the administration’s efforts.

Manhattan Supreme Court Judge Lyle Frank’s decision followed a 90-minute hearing Thursday afternoon at which attorneys for the retirees and the city argued their respective cases about whether or not the city promised a level of health care to the retirees when they were first recruited, hired and even retained.

Frank, referring to a section of the municipal code, also said it was “likely” that he would conclude that the city had in fact made those assurances to the retirees, and that the administration would therefore be prohibited from moving the retirees to a private plan that, he further suggested, is inferior to what is currently available to them.

“The petitioners have shown that numerous promises were made by the City to then New York City employees and future retirees that they would receive a Medicare supplemental plan when they retired, and that their first level of coverage once that retired would [be] Medicare,” he wrote in his five-page decision.

Pushing back on the city’s arguments that the promises, in Frank’s words, “were not definite and were not forward looking,” the judge noted: “When words such as ‘will’ are used, that is to this Court a promise that is future looking.”

Marianne Pizzitola, the president of the New York City Organization of Public Service Retirees, one of the lead plaintiffs in the suit, alluded to past court successes in insisting that the city and the unions drop their plan.

“This is now the third time in the last two years that courts have had to step in and stop the City from violating retirees’ healthcare rights,” she said in a statement. “We call on the City and the Municipal Labor Committee to end their ruthless and unlawful campaign to deprive retired municipal workers of the healthcare benefits they earned.”

Frank found for the retirees in March 2022 when he ruled that the city cannot charge them for their health benefits. An Appellate Division panel upheld that finding in December.

Jacob Gardener, the attorney representing the Organization of Public Service Retirees and nine retired city workers in their lawsuit, said Frank’s decision recognized the value of the retirees’ current benefits.

“We are grateful to Justice Frank for recognizing the numerous ways in which the health and healthcare rights of retired City workers would be imperiled by the City’s new Medicare Advantage plan,” Gardener said in an emailed statement. “Because of Justice Frank’s well-reasoned decision, hundreds of thousands of senior citizens and disabled first responders will be able to continue receiving the medical care they desperately need and to which they are entitled.”

But a City Hall spokesperson indicated that the city would appeal what the administration considers an ill-considered decision.

“We are extremely disappointed by this misguided ruling. The city’s Medicare Advantage plan, which was negotiated in close partnership with the Municipal Labor Committee, improves upon retirees’ current plans, including offering a lower deductible, a cap on out-of-pocket expenses, and new benefits, like transportation, fitness programs, and wellness incentives,” the spokesperson said. “Further delay in implementing it will only cause greater uncertainty for our retirees and have a detrimental impact on our city’s budget. We are exploring our appellate options.”

Harry Nespoli, the chair of the Municipal Labor Committee, the umbrella group of city unions that greenlit the administration’s proposed switch in April, also questioned Frank’s rationale.

“The court’s disappointing decision on our proposed Medicare Advantage plan — a decision that misconstrued the appropriate legal standards and accepted unsubstantiated allegations as fact — is a setback,” Nespoli said in a statement. “But we will continue to work to ensure that high-quality, premium-free health care is available for city employees and retirees.

‘Irreparable harm would result’

The retirees’ suit, filed May 31, asserts that the city “is legally obliged” to cover costs of so-called Medigap supplemental insurance currently available to them but which would be discontinued if the switch to the Aetna plan goes ahead. “This obligation exists in statute and as a result of clear and unambiguous promises” made to the retirees on repeated occasions, the suit claims.

The plaintiffs had moved for a preliminary injunction to “immediately halt” the impending switch, which was scheduled for Sept. 1.

Adams administration officials in April signed a contract with Aetna to provide the retired city workers with health-care coverage after successive administrations maintained that a switch to a privately run Medicare plan was necessary given the escalating cost of health care. The city has said it expects to save about $600 million a year by moving the retirees into the private plan. The savings, in the form of federal subsidies, would in turn help replenish the city’s Joint Health Insurance Premium Stabilization Fund, which pays unions’ welfare-fund benefits, among other purposes.

Municipal retirees, though, have been adamant that a plan administered by a for-profit entity would by definition be a poor substitute for their current health-care benefits, including, notably, the supplemental Senior Care coverage.

Frank appeared to be swayed by their arguments — as well as by an admission from Aetna’s attorney, who at Thursday’s hearing noted that there would be instances, however few, when retirees would have their health-care needs turned down and that some medical facilities would be unavailable to them under the Medicare Advantage plan.

“To this Court, this demonstrates that should this plan go forward irreparable harm would result,” Frank wrote. “There can be no more specific irreparable harm than this.”