Opinion
2015-1625
02-01-2016
Hinman Straub, P.C., Albany (Joseph M. Dougherty of counsel), for petitioners. Goldberger and Kremer, Albany (Brian S. Kremer of counsel), for respondent.
Hinman Straub, P.C., Albany (Joseph M. Dougherty of counsel), for petitioners. Goldberger and Kremer, Albany (Brian S. Kremer of counsel), for respondent. Robert J. Muller, J.
The individual petitioners — of whom there are 126 — are all Medicare eligible retirees of respondent City of Plattsburgh (hereinafter the City) and members of petitioner Plattsburgh City Retirees Association, a not-for-profit organization which advocates for the rights of City retirees. It is alleged that each was a member of a collective bargaining unit while employed by the City and worked pursuant to a collective bargaining agreement, thus receiving a vested contractual right to health insurance coverage under the terms of the collective bargaining agreement in place at the time of his or her retirement. To date, the individual petitioners have been covered under the City's self-insured health plan with claims processing through BlueShield of Northeastern New York (hereinafter the Blue Plan). On October 8, 2015, however, the City's Common Council passed a resolution transferring the health insurance coverage for all Medicare eligible retirees to a premium-based Humana Medicare Plan (hereinafter the Humana Plan), which transfer became effective on January 1, 2016. The resolution provides as follows:
" RESOLVED: That the City change the method of delivery of Health Insurance Benefits for Medicaid Eligible Retirees from the Self-Funded Traditional Plan to a Premium-based Humana Medicare Plan as described in Option 2 in the attached schedule of benefits and that prior authorization for services not exceed the current plan limits and that the network must be nationwide and comprehensive."
Petitioners thereafter objected to this transfer, asserting that the benefits available under the Humana Plan are significantly less than those available under the Blue Plan — which is still offered to active employees. The parties attempted to resolve the matter, but negotiations broke down on December 22, 2015. Petitioners then commenced this combined CPLR article 78 proceeding and declaratory judgment action on December 24, 2015, alleging three causes of action. First, petitioners allege that the City's actions in forcing the individual petitioners to transfer to the Humana Plan are not based on a valid resolution and are arbitrary, capricious and an abuse of discretion. Second, petitioners allege that the City's actions are in breach of the individual petitioners' respective collective bargaining agreements and are arbitrary, capricious and an abuse of discretion. Third, petitioners allege that the resolution must be declared null and void.
Simultaneous with the filing of the verified petition and complaint, petitioners filed a motion by Order to Show Cause for a preliminary injunction restraining the City from transferring the individual petitioners — and all others similarly situated — to the Humana Plan pending the outcome of the proceeding. Petitioners also requested a temporary restraining order (TRO) pending the return date of the motion, with the Court hearing oral argument relative to this issue on December 31, 2015 (see Uniform Rules for Trial Courts [22 NYCRR] § 202.7 [f]). The Court ultimately granted the TRO, including a provision in the Order to Show Cause which temporarily restrained the City from transferring the individual petitioners from the Blue Plan to the Humana Plan pending a determination on the motion. Having now heard oral argument on the motion, the Court turns its attention to whether petitioners are entitled to a preliminary injunction.
"A movant's burden of proof on a motion for a preliminary injunction is particularly high" (Council of City of NY v Giuliani, 248 AD2d 1, 4 [1998], appeal dismissed and lv denied 92 NY2d 938 [1998]); see Sync Realty Group, Inc. v Rotterdam Ventures, Inc., 63 AD3d 1429, 1430 [2009]). "To establish entitlement to a preliminary injunction, [petitioners are] required to demonstrate a likelihood of success on the merits, irreparable harm if the injunction is not granted and that the balance of the equities is in [their] favor" (Sync Realty Group, Inc. v Rotterdam Ventures, Inc., 63 AD3d at 1430; see CPLR 6301; Nobu Next Door, LLC v Fine Arts Hous., Inc., 4 NY3d 839, 840 [2005]; Emerald Green Prop. Owners Assn., Inc. v Jada Developers, LLC, 63 AD3d 1396, 1397 [2009]).
Turning first to the likelihood of success on the merits, petitioners contend that the resolution is void by its own terms because the Humana Plan is more restrictive than the Blue Plan with respect to prior authorizations. Specifically, petitioners contend that "although the Blue Plan requires prior authorization for certain services, the Humana Plan is much more restrictive and requires prior authorization for a number of additional important services, including all outpatient therapy (including physical, occupational and speech therapy), inpatient mental health services, partial hospitalization services, radiation therapy and home healthy agency care (the Blue Plan only requires prior authorization for a home health aide)."
The Court has reviewed both the "Evidence of Coverage" (hereinafter the EOC) for the Humana Plan and the "Employee Benefit Plan — Plan Document" for the Blue Plan. Based upon this review, it is evident that the Humana Plan requires prior authorizations for (1) CT scans, MRI and MRA; (2) home health agency care; (3) inpatient hospital care; (4) inpatient mental health care; (5) PET scans, PET scan registry (NOPR) and SPECT; (6) molecular diagnostic/genetic testing; (7) physical, occupational and speech therapies; (8) certain outpatient surgery, including services provided at hospital facilities and ambulatory surgical centers; (9) partial hospitalization services; (10) prosthetic devices; (11) radiation therapy; and (12) skilled nursing facility services. The Humana Plan may also require prior authorization for outpatient substance abuse services and for durable medical equipment and related supplies. The Blue Plan, on the other hand, requires prior authorizations for (1) diagnostic MRI/MRA/PET/CT; (2) some durable medical equipment; (3) home health aide services; (4) hospital inpatient acute physical rehabilitation facility services; (5) hospital inpatient substance abuse services; (6) hospital inpatient treatment of other covered conditions; (7) orthoptic therapy services; (8) private duty nursing services; and (9) skilled nursing facility services. It therefore appears that the prior authorization for services required under the Humana Plan exceeds that required under the Blue Plan in contravention of the terms of the resolution.
Petitioners further contend that the resolution is void by its own terms because the Humana Plan is not nationwide and comprehensive. In this regard, petitioners have submitted the affidavit of individual petitioner Brynn Boyer, who spends his winters in Pinellas County, Florida. Boyer states as follows:
"Upon reviewing the Humana Plan [EOC, my wife and I] learned that Pinellas County[,] Florida is not in Humana's plan service area, meaning that we would not have medical coverage, except for what Humana deems to be an emergency as per discussion with their representatives. A Humana [r]epresentative confirmed that we would have to travel 80 miles to reach the nearest coverage area."
Petitioners have also submitted the affidavit of individual petitioner Anita Gatlin, who is 91-years-old and suffers from congestive heart failure. She resides in Lee County, Florida, another County which falls outside of the Humana covered service area. Gatlin states as follows:
"Based upon conversations with representatives from Humana and First Niagara Benefits Consulting,my best understanding of the information I have garnered is that, because I live in Lee County, all providers I see would be treated as though they are out-of-network. . . . As such, I do not have the option of seeing an in-network provider. This exposes me to increased costs, increased administrative burden, and risks of denied coverage. I do not have any of these problems under the Blue Plan."
First Niagara Benefits Consulting is the City's healthcare broker.
Indeed, the EOC reveals that the Humana Plan is only available in a designated service area. Specifically, the EOC provides that, "[a]lthough Medicare is a federal program, Humana Medicare Employer PPO is available only to individuals who live in our plan service area." The EOC then proceeds to list "the counties covered in the Humana network," advising members that "if [their] county is not listed, [they] may still have coverage under [the] plan." They must, however, contact a plan representative for further details. Of the 67 counties in Florida, only 10 are included in the plan service area. To that end, it is no surprise that neither Boyer nor Gatlin reside in a covered county. Insofar as other states are concerned, only 38 of the 62 counties in New York, 6 of the 21 counties in New Jersey and 3 of the 10 counties in New Hampshire are included in Humana's designated service area. Moreover, according to the EOC, there is no designated service area in Alaska, California, Connecticut, Massachusetts, Rhode Island, Vermont or Wyoming. Thus, it appears that individual petitioners residing in any of these states must travel out-of-state to see an in-network provider. Under these circumstances, there exist substantial questions as to whether the Humana Plan is nationwide and comprehensive as required under the terms of the resolution.
In opposition to the motion, the City contends that petitioners have failed to demonstrate that each individual petitioner is entitled to maintain the Blue Plan under the terms of the collective bargaining agreement in place at the time of his or her retirement and, as such, petitioners have failed to demonstrate a probability of success on the merits. The collective bargaining agreements by which the individual petitioners are covered fall into two categories: (1) those that permit the City to obtain a different health insurance plan for retirees so long as the coverage is equivalent to that provided under the Blue Plan; and (2) those that direct the City to continue the health insurance coverage in effect as of the date of the collective bargaining agreement. Insofar as the first category is concerned — which category encompasses the vast majority of collective bargaining agreements — the City contends that the coverage provided under the Humana Plan is equivalent to that provided under the Blue Plan and, as such, the City's actions in switching the individual petitioners to the Humana Plan does not violate the terms of the collective bargaining agreements. For the reasons set forth above, however, the Court is not persuaded that the coverage provided under the Humana Plan is equivalent to that provided under the Blue Plan. With regard to the second category, the City contends that the insurance plan referenced in these collective bargaining agreements was the plan that preceded the Blue Plan and, as such, the individual petitioners covered under these agreements had to commence a proceeding within six years of the City's move to the Blue Plan — which occurred in the 1990s. While this may be true, it does nothing more than raise a question of fact, which " does not preclude a court from exercising its discretion in granting an injunction'" (Karabatos v Hagopian, 39 AD3d 930, 931 [2007], quoting Egan v New York Care Plus Ins. Co., 266 AD2d 600, 601 [1999]).
The City further notes that there are 13 individual petitioners who were managers and thus not members of any collective bargaining units. Of these 13, 5 had employment agreements directing the City to continue the City sponsored health plan. The City thus contends that any health plan can be maintained for these individual petitioners. In opposition to this contention, petitioners have submitted the affidavit of individual petitioner Cynthia Lasher-Graham, who was the City Chamberlain until her retirement in March 2007. Lasher-Graham states as follows:
"While serving as City Chamberlain, I was heavily involved in many facets of employee benefits, including health insurance.
"In 2006, I participated in developing employment agreement contracts to be executed between the City and management employees. In this capacity, I researched employee benefits offered to both union and management employees and participated in drafting the final agreements.
"With respect to health insurance, my intent was, and I understood the intent of others involved to be, that management employees would receive identical coverage and protections as guaranteed to union employees through their collective bargaining agreements."
Based upon this, the Court finds a question of fact as to what was intended by the phrase "City sponsored health plan" and, again, such questions of fact do not preclude the issuance of a preliminary injunction (see Karabatos v Hagopian, 39 AD3d at 931; Egan v New York Care Plus Ins. Co., 266 AD2d at 601). Additionally — and as noted above — only 5 individual petitioners are parties to these employment agreements with the City.
The other 8 individual petitioners who were managers and not members of any collective bargaining units retired without any employment agreement and, as such, appear to have no contractual right to health insurance from the City. To that end, petitioners have stipulated to removing these individual petitioners from the scope of the preliminary injunction in the event the motion is granted.
These individual petitioners are as follows: Bryon Bissonette, Matthew Booth, Aline Cote, Norman Langlois, Bruce C. Lavalley, Debbie Linney, John Linney and George M. Miller
In view of the foregoing, the Court finds that petitioners have demonstrated a likelihood of success on the merits.
The Court further finds that petitioners have demonstrated irreparable harm if the injunction is not granted. In this regard, petitioners have submitted the affidavit of individual petitioner Henry Daniel Froehlich, who was diagnosed with stage 4 lung cancer in 2011. Froehlich states as follows:
"I have enjoyed two long periods of remission and have surprised my providers with my recovery. However, my providers agree that continued treatment without delays is critical to my continued recovery.
"I am aware from reviewing the [EOC] that the Humana Plan requires more prior authorizations for medical services than the Blue Plan. I believe that such prior authorizations may delay my treatment. Additionally, my providers have advised me that
Humana has a history of limiting the number of tests a member may receive per year and denying coverage for tests that exceed their accepted number of tests of procedures. I receive a large number of tests in order to stay up-to-date with my cancer's development."
Petitioners have also submitted the affidavit of individual petitioner Wayne Spinks, who has "chronic issues with both hands requiring injections and several surgeries during the past 16 years." Spinks states as follows:
"I currently receive treatment through The Orthopedic Clinic Association (TOCA). In addition, on or about January 9, 2016, a specialist at TOCA advised me to seek treatment from the Mayo Clinic.
"I have consulted with my medical providers regarding how my coverage would change under the Humana Plan.
"The providers at TOCA are not part of the Humana network but are willing to bill Humana for services they provide me. However, they warned me that I would need prior approval from Humana for any surgeries I need on my hands to ensure that the surgeries will be covered . . . . Such prior authorizations would delay my needed surgeries and there is a chance that Humana will refuse to cover surgeries that have been covered without question under the Blue Plan.
"The Mayo Clinic advised me that they would accept my current coverage under the Blue Plan, but would not accept the Humana Plan. . . . As a result, I will be unable to pursue the course of treatment that my doctors believe is best for my well being if I am required to join the Humana Plan."
"Irreparable injury has been defined as that which cannot be repaired, restored, or adequately compensated in money, or where the compensation cannot be safely measured" (International Union of Operating Engrs., Local No. 463 v City of Niagara Falls, 191 Misc 2d 375, 380 [Sup Ct, Niagara County 2002], affd sub nom Bathurst v City of Niagara Falls, 298 AD2d 1010 [2002] [citations omitted]). Here, the loss of coverage under the Blue Plan cannot be recovered by an award of money damages alone — especially not for individual petitioners like Froehlich and Spinks who face significant health problems. A change in coverage may necessitate a change in health care providers and a change in course of treatment. Under the circumstances, "the irreparable injury to be sustained by the [individual] petitioners is far more burdensome than the harm to the City by the imposition of [a] preliminary injunction" (International Union of Operating Engrs., Local No. 463 v City of Niagara Falls, 191 Misc 2d at 381).
Insofar as a balance of the equities is concerned, the City contends that — if it is prevented from changing to the Humana Plan — it will suffer damages in the amount of $81,872.00 per month. According to James E. Calnon, the Mayor of the City, the cost of the Blue Plan for 2016 will be $917.55 per month for each member — which estimate is based upon the monthly cost for each member in 2015. The cost of the Humana Plan, on the other hand, will be $332.75 per month for each member, thus saving the City $584.80 per month for each member. Calnon contends that 115 of the individual plaintiffs and 25 of their spouses are eligible to move to the Humana Plan. Therefore, if a preliminary injunction is granted, the City stands to lose $81,872.00 per month. While this is certainly a substantial amount, the Court nonetheless finds that "[a] loss of or reduction in health care coverage outweighs any possible monetary loss to the City" ( id.). Based upon the figures presented in opposition to the motion, the City paid $917.55 per month for each member in 2015 and can presumably maintain these payments pending the conclusion of this litigation — which the Court intends to conclude in a timely manner.
Based upon the foregoing, the Court grants petitioners' motion for a preliminary injunction and restrains the City from transferring the individual petitioners — and all others similarly situated — to the Humana Plan pending the outcome of this proceeding. Upon the consent of petitioners' counsel, individual petitioners Bryon Bissonette, Matthew Booth, Aline Cote, Norman Langlois, Bruce C. Lavalley, Debbie Linney, John Linney and George M. Miller shall be excluded from the preliminary injunction.
Turning now to the issue of an undertaking (see CPLR 6312 [b]), the City contends that the Court should fix the undertaking at $584.80 per month for each individual petitioner who is subject to the preliminary injunction. According to the City, this amount will accurately reflect the monetary loss incurred as a result of the preliminary injunction. Petitioners, on the other hand, contend that this amount is too speculative because it is based upon claims paid out under the Blue Plan in 2015. According to petitioners, "the more appropriate methodology would be to consider the [City's] costs as they were experienced between the date of the TRO and the present date." Petitioners request that the parties be given an opportunity to submit additional proof relative to the amount of the undertaking "when the [O]rder granting [p]etitioners['] motion for preliminary injunction is settled."
"The amount of [an] undertaking is left to the sound discretion of the court, although it should be rationally related to the potential damages' that defendants could recover if an injunction is ultimately deemed unwarranted" (Cooperstown Capital, LLC v Patton, 60 AD3d 1251, 1253 [2009], quoting Bonded Concrete, Inc. v Town of Saugerties, 42 AD3d 852, 854-855 [2007]; see Livas v Mitzner, 303 AD2d 381, 383 [2003]). "Importantly, if it is ultimately determined that a party was not entitled to an injunction, recovery of resulting damages attributable to the injunction will be limited to the amount of the undertaking as fixed by the court" (Bonded Concrete, Inc. v Town of Saugerties, 42 AD3d at 855; see City of Yonkers v Federal Sugar Ref. Co., 221 NY 206, 211 [1917]; Honeywell v Technical Bldg. Servs., 103 AD2d 433, 434 [1984]).
Here, the City has submitted ample documentation in support of its contention that it would save $584.80 per month for each individual petitioner switched from the Blue Plan to the Humana Plan. While the City based the estimated cost of the Blue Plan in 2016 on the actual cost of the Plan in 2015, the Court declines to find that the estimate is speculative. Taking a monthly average of the amounts paid over the past 12 months is certainly more representative of the actual cost of the Blue Plan than taking a snap shot of the amount paid this past month — as petitioners would have the Court do. Insurance coverage is — by its very nature — for the unexpected and unforeseen, and there is no assurance that the amounts paid by the City in January 2016 will in any way reflect the amounts to be paid in February 2016.
Under the circumstances, the Court denies petitioners' request to submit additional proof on the issue of an undertaking. Petitioners are hereby directed to post an undertaking in the amount of $207,019.20, which amount was calculated as follows:
$584.80/month for each individual petitioner x 118 individual petitioners = $69,006.40/month
$69,006.40 x 3 months = $207,019.20
This undertaking shall be posted on or before February 12, 2016.
The Court further establishes the following briefing schedule in an effort to expedite this proceeding:
Answering papers shall be served on or before February 19, 2016; and
Reply papers shall be served on or before March 4, 2016.
The matter will then be deemed fully submitted with oral argument to be scheduled at the discretion of the Court.
Therefore, having considered the Verified Petition and Complaint with exhibits attached thereto, dated December 24, 2015; Affidavit of Joseph M. Dougherty, Esq., sworn to December 24, 2015, submitted in support of the motion; Memorandum of Law of Joseph M. Dougherty, Esq., dated December 24, 2015, submitted in support of the motion; Affidavit of Ann Giard-Chase with exhibits attached thereto, sworn to January 14, 2016, submitted in opposition to the motion; Affidavit of James E. Calnon with exhibits attached thereto, sworn to January 14, 2016, submitted in opposition to the motion; Affidavit of Cindy Wise with exhibit attached thereto, sworn to January 14, 2016, submitted in opposition to the motion; Memorandum of Law of Brian S. Kremer, Esq., dated January 15, 2016, submitted in opposition to the motion; Reply Affidavit of Brynn Boyer, sworn to January 18, 2016; Reply Affidavit of Gary Brandstetter with exhibits attached thereto, sworn to January 18, 2016; Reply Affidavit of John Brown with exhibit attached thereto, sworn to January 15, 2016; Reply Affidavit of Violet Feazelle with exhibits attached thereto, sworn to January 18, 2016; Reply Affidavit of Henry D. Froehlich, sworn to January 19, 2016; Reply Affidavit of Anita Gatlin, sworn to January 16, 2016; Reply Affidavit of Cynthia Lasher-Graham with exhibit attached thereto, sworn to January 15, 2016; Reply Affidavit of Joseph Makara, sworn to January 18, 2016; Reply Affidavit of Kevin Murphy with exhibit attached thereto, sworn to January 17, 2016; Reply Affidavit of Richard S. Perry with exhibit attached thereto, sworn to January 20, 2016; Reply Affidavit of Genevieve Rotella, sworn to January 17, 2016; Reply Affidavit of Wayne Spinks sworn to January 16, 2016; Reply Affidavit of James Squires with exhibit attached thereto, sworn to January 15, 2016; Reply Memorandum of Law of Joseph M. Dougherty, Esq., dated January 20, 2016; Bench Memorandum of Law of Joseph M. Dougherty, Esq., dated January 22, 2016; and Reply Memorandum of Law of Brian S. Kremer, Esq., dated January 26, 2016, and the Court having heard oral argument on January 22, 2016 with Joseph M. Dougherty, Esq. appearing in support of the motion and Brian S. Kremer, Esq. appearing in opposition thereto, it is hereby
ORDERED that petitioners' motion for a preliminary injunction is granted and the City restrained from transferring the individual petitioners — and all others similarly situated — to the Humana Plan pending the outcome of this proceeding; and it is further
ORDERED that, upon the consent of petitioners' counsel, individual petitioners Bryon Bissonette, Matthew Booth, Aline Cote, Norman Langlois, Bruce C. Lavalley, Debbie Linney, John Linney and George M. Miller shall be excluded from the preliminary injunction; and it is further
ORDERED that petitioners shall post an undertaking in the amount of $207,019.20 on or before February 12, 2016; and it is further
ORDERED that answering papers shall be served on or before February 19, 2016; and it is further
ORDERED that reply papers shall be served on or before March 4, 2016, following which the matter will be deemed fully submitted with oral argument to be scheduled at the discretion of the Court.
The original of this Decision and Order has been filed by the Court together with the submissions enumerated above. Counsel for petitioners is hereby directed to promptly obtain a filed copy of the Decision and Order for service with notice of entry upon respondent in accordance with CPLR 5513. Dated: February 1, 2016 Lake George, New York ROBERT J. MULLER, J.S.C. ENTER: