Opinion
Index No. 307484/13
05-16-2022
B.D., Plaintiff, v. E.D., Defendant.
Counsel for Plaintiff Berkman, Bottger, Newman & Schein LLP Counsel for Defendant Cavallo Law, PLLC
Counsel for Plaintiff Berkman, Bottger, Newman & Schein LLP
Counsel for Defendant Cavallo Law, PLLC
Hon. Ariel D. Chesler
This post-judgment proceeding raises novel questions regarding the Age 29 Law and its interplay with the specific language utilized in the parties' 2015 Stipulation of Settlement. For the reasons explained below, it is the determination of this Court that the parties' Agreement does not require Plaintiff to pay for Age 29 health insurance coverage for the parties' children.
Defendant Mother commenced these proceedings by filing an order to show cause seeking to adjudge Plaintiff Father in contempt of the parties' May 13, 2015 Judgment of Divorce which incorporated their February 17, 2015 Stipulation. Defendant also seeks an order directing Plaintiff to maintain and pay for Age 29 Law health insurance coverage for the parties' 26-year-old daughter, and for their 25-year-old son when and if he becomes eligible, for reimbursements of health insurance premiums paid by the daughter, for an award of counsel fees, and the issuance of sanctions and fines. Plaintiff cross-moves for an order denying Defendant's Order to Show Cause entirely and for an award of counsel fees and costs.
BACKGROUND
Under the Affordable Care Act (42 USCA § 18001 et seq.), effective September 23, 2010, plans and insurers that offer coverage to children on their parents' plan were required to make the coverage available until the adult child reaches the age of 26. In other words, nation-wide children are treated as dependents under insurance plans until the age of 26.
In 2009, the New York State Legislature passed the Age 29 Law (Chapter 240, Laws of 2009), which, inter alia, amended Insurance Law 3216, in order to provide for insurance coverage for unmarried children of an insured person through the age of twenty-nine years old. In order to be eligible, the child must meet certain criteria, including being unmarried, being under 29, living, working or residing in New York State, not being insured or eligible for insurance as an employee, and not being eligible for Medicare (see Insurance Law 3216 [a][4][C]).
The Age 29 Law permits eligible young adults to continue or obtain coverage through their parent's policy through the age of 29. However, while the employer/insurer must make this optional coverage available (See Insurance Law 4235[f][1]), the parent's employer is not required to pay for the cost of coverage (see Insurance Law 4304[m]). In order to participate in Age 29 coverage, the parent must be covered under a group policy as an employee or member of the group, and the coverage must be a group or group remittance health insurance policy that includes coverage for dependents.
As explained by M.B., the Senior Vice President of Human Resources for Plaintiff's employer, the parties' daughter could no longer be a dependent on Plaintiff's group health coverage plan since she reached the age of 26 in January 2022 (see OSC Ex. G). M.B. presented two options for the daughter: 1) obtaining COBRA coverage, which would continue her same plan she currently has for 36 months; or 2) Age 29 coverage, which could be purchased if the daughter met the eligibility requirements. Each of these had different monthly premium amounts and the Age 29 coverage did not include dental and vision coverage. Further, each of these operates as a separate plan for the daughter.
M.B. provided further information regarding Age 29 coverage which explained the eligibility and enrollment process, that the law permitted "young adults to continue or obtain coverage under a parent's policy through the age of 29," and that coverage would be retroactive to when the young adult would have aged off the policy as a dependent. Notably, if the Age 29 option were selected there would a separate premium and the employer would pay no portion of the cost.
There is no dispute that the parties' daughter is currently 26 and meets the eligibility requirements for the Age 29 law. However, due to an apparent misunderstanding as to whether Plaintiff's employer provided Age 29 coverage, the daughter initially enrolled in and obtained COBRA coverage (See Cross-Motion Exs. 5, 6). The COBRA election notice stated that the daughter qualifies for such coverage because of the loss of dependent eligibility (Cross-Motion Ex.5 at page 2).
After further communication with M.B., the daughter provided a signed letter to M.B. demonstrating that she met all the requirements for Age 29 coverage, and asked to have her coverage changed over from COBRA to the Age 29 coverage (see OSC Ex. M). Ultimately, M.B. facilitated the change over and the daughter currently has Age 29 coverage through Plaintiff's employer (Aff in Opp Ex. 2).
THE STIPULATION
Article VI of the parties' 2015 Agreement obligated Plaintiff to pay basic child support for the parties' two children. Such basic child support would be reduced when the second of the two children was emancipated (Agreement 6.1). Notably, emancipation was defined as the earliest occurrence of a child's 22nd birthday, full-time employment, marriage, death, or enlistment in the Armed Forces (Agreement 6.10).
As for medical insurance and expenses, Plaintiff was obligated to keep and maintain for the children health and medical insurance plans greater than or equal to the coverage then provided by his employer until the latter of each child becoming emancipated pursuant to the Agreement or until "each child is no longer allowed by law to be covered under a parent's insurance" (Agreement 6.3). Defendant was then to be responsible for any and all unreimbursed medical expenses for the children.
Separately, the parties agreed as follows:
In the event that the Husband is no longer able to maintain health insurance coverage for the benefit of the child through his employer or any subsequent employer, the Husband agrees that he shall be 100% responsible for securing and paying for the continued coverage of comparable health insurance for the benefit of the children, for as long as required hereunder (Agreement 6.6.).
DISCUSSION
Although efforts were made to resolve this issue without court intervention, the parties disagree as to what Plaintiff's obligations are. Defendant contends that because their daughter is eligible for insurance coverage under Plaintiff's insurance through the Age 29 Law, Plaintiff is required to secure and pay for such coverage. She also notes that the Age 29 Law was in effect at the time of the 2015 Agreement and argues that therefore Plaintiff is bound to pay for such coverage since their daughter is "allowed by law" to be covered under his insurance.
Plaintiff asserts that the provision in the Agreement is ambiguous, and that it was never contemplated that he would pay what he calculates would be over $100,000 in premiums for both children should they be eligible for Age 29 Law coverage. He states that it was custom and practice for health insurance coverage to end at age 26 and that it was his understanding that his obligation would end at such time since the children could not be dependents after age 26. On this point, Plaintiff maintained that at the time of the Agreement all parties and counsel believed the children could only be covered under his plan until Age 26. He claims that he would not have agreed to pay for coverage until age 29 and that such agreement was not explicitly spelled out in the Agreement.
Plaintiff also argues that his daughter's coverage under the Age 29 Law does not trigger any obligation on his part since she is no longer listed as a dependent on his plan, has her own individual coverage under the policy and must fill out her own claims under that plan. He notes that like COBRA his daughter's Age 29 plan is a separate plan from his group health plan, and that his group premium contributions had changed after his daughter turned 26. He contends that his daughter's coverage under the Age 29 Law is not the same as being covered under his plan as she had been until the age of 26. At the same time, he recognizes that "Age 29 insurance is only made available to [his daughter] because I have an employer-provided plan."
Although he did not believe he had any legal obligations to pay for COBRA or Age 29 coverage, Plaintiff offered to help pay some of the cost. In any event, he stressed that he cooperated in speaking to his employer about his daughter's options and maintained that he should not be held in contempt as he did not disobey an unequivocal mandate.
As an initial matter, Plaintiff claims that Defendant does not have standing to bring the application on behalf of the parties' adult child, and that the daughter would have to commence a separate plenary action. However, while the authorities Plaintiff relies on stand for the proposition that children as third-party beneficiaries may maintain their own plenary action, there is no rule indicating they must pursue such an action. Rather, Defendant as party to the contract may sue to enforce the contract for the benefit of third parties (see Rosenblatt v. Birnbaum, 20 A.D.2d 556 [2d Dept 1963], aff'd 16 N.Y.2d 212 [1965]) and third-party beneficiaries may be joined if they are deemed a necessary party. In sum, this Court does not find this application procedurally barred or improper.
It is well settled that a stipulation of settlement in a divorce action is a contract subject to the principles of contract construction and interpretation and where the contract is clear and unambiguous on its face, the courts must determine the intent of the parties from within the four corners of the instrument (see Rainbow v Swisher, 72 N.Y.2d 106, 109 [1988]; see also Matter of Meccico v Meccico, 76 N.Y.2d 822, 823-824 [1990])." [W]hen interpreting a contract, the court should arrive at a construction which will give fair meaning to all of the language employed by the parties to reach a practical interpretation of the expressions of the parties so that their reasonable expectations will be realized"' (Herzfeld v Herzfeld, 50 A.D.3d 851, 851 [2d Dept 2008], quoting Fetner v Fetner, 293 A.D.2d 645, 645-646 [2002] [internal quotation marks and citations omitted]).
Further, "[a]n ambiguity exists only where the agreement on its face is reasonably susceptible to more than one interpretation"' (Chimart Assoc. v Paul, 66 N.Y.2d 570, 573 [1986]). In addressing the issue of whether an ambiguity exists, the Court of Appeals has explained that: "Whether or not a writing is ambiguous is a question of law to be resolved by the courts' (W.W.W. Assoc. v Giancontieri, 77 N.Y.2d 157, 162 [1990]). In deciding whether an agreement is ambiguous, the court "should examine the entire contract and consider the relation of the parties and the circumstances under which it was executed" (Kass v Kass, 91 N.Y.2d 554, 566 [1998], quoting Atwater & Co. v Panama R.R. Co., 246 NY 519, 524 [1927])."
The language in dispute obligated Plaintiff to "keep and maintain" for the children "health and medical insurance plans greater than or equal to the coverage" then provided by his employer until the latter of "each child becoming emancipated pursuant to the Agreement" or until "each child is no longer allowed by law to be covered under a parent's insurance" (Agreement 6.3). The emancipation of the children is clearly defined by the Agreement as the earliest occurrence of a child's 22nd birthday, full-time employment, marriage, death, or enlistment in the Armed Forces (Agreement 6.10).
In contrast to the clear and unambiguous definition of emancipation, the phrase until "each child is no longer allowed by law to be covered under a parent's insurance" does not have a clear and unequivocal meaning. For example, it could be read as for as long as the children are allowed by law to be dependents under Plaintiff's insurance, which at the time of the agreement was age 26. Of course, it does not say so definitively. Nor does it specify a date or age until which Plaintiff would have to provide insurance coverage. For example, it could have said until age 26 or age 29 but did not do so.
Nor does the disputed language specifically reference the Age 29 law which would have created an unequivocal obligation in line with Defendant's position. It is, however, possible to read the disputed language as a requirement to pay for the children's coverage under the Age 29 law, which was in effect at the time of the agreement, and which permits adult children to obtain special insurance coverage through a parent's employer-based coverage. But, considering the unique program that is the Age 29 law and the various eligibility requirements, to create an unambiguous or unequivocal obligation to pay for an adult child's optional (and contingent on eligibility) Age 29 insurance, in this Court's view, the clause would have to specifically reference such an obligation.
Further, the fact that Age 29 coverage is available through Plaintiff's employer does not clearly mean that the daughter's new separate coverage is therefore "under" Plaintiff's plan. Indeed, the daughter now has a separate plan from the group health plan offered by Plaintiff's employer, and "by law" she is not permitted to be under Plaintiff's plan as a dependent any longer. In sum, this Court concludes that the disputed language is ambiguous.
Notably, the context of the contract was the parties' divorce and specifically the desire to provide child support and health insurance for the children. In addition to basic child support, the parties desired for Plaintiff to continue to maintain health insurance for the children under his employer-based health insurance. As a practical matter, this agreement meant that the Plaintiff would maintain the children as dependents under his insurance, that he would pay a combined monthly premium for himself and his dependents, and that his employer paid a portion of the monthly premium. Indeed, at the time of the contract the children were in fact dependents under his plan. In addition, as the parties agreed, any expense not covered by Plaintiff's insurance would be covered by Defendant, and any reimbursements received by Plaintiff would be paid to Defendant. Reading the various clauses together contemplates an arrangement in which the children would be dependents and Plaintiff would receive reimbursements under their shared plan.
Thus, a practical and reasonable interpretation of the language is that Plaintiff would be obligated to maintain health insurance for the children so long as they could legally be dependents under his plan. Had the parties intended to obligate Plaintiff to pay the cost of a separate individual plan for the daughter potentially available to her from age 26 through age 29 (including the one she ultimately obtained through the Age 29 Law), the contract would have explicitly stated the same.
Indeed, Plaintiff provided an affidavit from Elliot Green, Esq., his attorney who represented him in connection with the Agreement (see Cross-motion Ex. 3). According to Green, in response to the Affordable Care Act, Plaintiff was willing to provide coverage for the children until age 26. Green further explained that at no point was coverage beyond 26 discussed or contemplated, nor was the Age 29 law discussed. In any event, Green maintained that had further coverage been discussed it would have been addressed in the Agreement. Plaintiff also states that during a settlement meeting with Green and Defendant's counsel when he asked what the disputed language meant all counsel agreed it meant "Age 26."
Critically, Defendant does not contest Green's affidavit with an affidavit from her prior counsel. Defendant agrees the parties did have a settlement meeting but she does not address whether all counsel agreed the disputed language meant age 26. Instead, Defendant explains her understanding of the provision. Specifically, she understood it to ensure the children would have coverage until at least the end of college (i.e. age 22). She also explains it was possible that the law would not allow coverage past the age of 21 and that the disputed language was chosen to provide for coverage to the full extent of the law.
However, even considering Defendant's understanding and explanation, it is clear that the parties did not specifically discuss or bargain for Age 29 coverage, and in fact may not have been aware of the Age 29 Law. Rather, the parties were concerned about whether the law would permit children to continue as dependents until age 26. Nor is this a case of unilateral mistake on Plaintiff's part as Defendant suggests.
Based on the foregoing, the motion to compel Plaintiff to pay the premiums on the daughter's separate Young Adult insurance plan obtained through the Age 29 Law is denied. Nor, for the reasons explained, is there any basis to direct Plaintiff to reimburse his daughter for premiums she paid for her coverage. Relatedly, the Court declines to direct Plaintiff to pay for Age 29 coverage for either of his children. However, to the extent necessary, Plaintiff must cooperate in ensuring his children have access to enroll in Age 29 coverage through his employer if they are eligible.
Moreover, because there is no unequivocal obligation or mandate to pay for Age 29 coverage, Plaintiff cannot be adjudged in contempt of Court (see Judiciary Law 753; Matter of McCormick v Axelrod, 59 N.Y.2d 574 [1983]).
In the view of this Court, because of the ambiguity of the language in the parties' contract and the novel questions raised by their contract and the Age 29 law, neither party is entitled to counsel fees. Nor should any party be sanctioned or fined as both parties made arguments which had some merit and which were not frivolous.
Any other relief not granted is denied.
This constitutes the decision of this Court.