In the Matter of Chenango Forks Central School District, Appellant,v.New York State Public Employment Relations Board et al., Respondents.BriefN.Y.April 25, 2013To be Argued by: LARS P. MEAD, ESQ. (Time Requested: 15 Minutes) Appellate Division Case No. 512983 Albany County Clerk’s Index No. 3444-10 Court of Appeals of the State of New York In the Matter of the Application of CHENANGO FORKS CENTRAL SCHOOL DISTRICT, Petitioner-Appellant, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules – against – NEW YORK STATE PUBLIC EMPLOYMENT RELATIONS BOARD and THE CHENANGO FORKS TEACHERS ASSOCIATION, NYSUT, AFT, AFL-CIO, LOCAL 2561, Respondents-Respondents. BRIEF FOR PETITIONER-APPELLANT November 9, 2012 COUGHLIN & GERHART LLP Lars P. Mead, Esq., of Counsel Attorneys for Petitioner-Appellant 1702 North Street, Building 32 Endicott, New York 13760 Mailing Address: P.O. Box 2039 Binghamton, New York 13902-2039 Tel.: (607) 723-9511 Fax: (607) 723-1530 TABLE OF CONTENTS Paper Page(s) TABLE OF AUTHORITIES ...................................................................................... i QUESTION PRESENTED ........................................................................................ 1 STATEMENT OF FACTS ........................................................................................ 2 ARGUMENT POINT I .................................................................................................................... 10 PERB IMPROPERLY REFUSED TO DEFER TO ARBITRATOR’S FINDING THAT THERE WAS INSUFFICENT EVIDENCE OF A BINDING PAST PRACTICE POINT II .................................................................................................................. 16 THE UNION DOES NOT HAVE A CONTRACTUAL RIGHT TO CONTINUED MEDICARE PART B REIMBURSEMENT, AS SUCH PERB’S DECISION IS BASED UPON AN ERROR OF LAW POINT III ................................................................................................................. 21 THE PROVISION OF MEDICARE PART B REIMBURSEMENT TO CERTAIN DISTRICT RETIREES DOES NOT CONSTITUTE A TERM AND CONDITION OF EMPLOYMENT, THUS PERB’S DETERMINATION WAS BASED UPON AN ERROR OF LAW POINT IV ................................................................................................................. 25 PERB ERRED IN FAILING TO FIND THAT THE IMPROPER PRACTICE CHARGE IS MOOT, AS THE DISTRICT AND UNION NEGOTIATED A NEW COLLECTIVE BARGAINING AGREEMENT WHICH CONTAINS A ‘COMPLETE AGREEMENT’ CLAUSE BUT DOES NOT PROVIDE FOR MEDICARE PART B BENEFITS POINT V .................................................................................................................. 29 DISTRICT’S CONTINUED PROVISION OF MEDICARE PART B BENEFITS WOULD CONSTITUTE AN IMPERMISSABGLE GIFT OF PUBLIC FUNDS AND PERB’S DETERMINATION WAS BASED UPON AN ERROR OF LAW POINT IV ................................................................................................................. 32 PERB’S DECISION IS NOT BASED UPON SUBSTANTIAL EVIDENCE CONCLUSION ........................................................................................................ 46 i TABLE OF AUTHORITIES CASES PAGE(S) 300 Gramatan Avenue Associates v. State Division of Human Rights, ................. 32 45 N.Y.2d 176, 181; 379 N.E.2d 1183 (1978) Aeneas McDonald Police Benevolent Association, Inc .................................... 15, 24 v. City of Geneva, 92 N.Y.2d 326, (1998) Allied Chemical & Alkali Workers v. Pittsburgh Glass .......................................... 24 404 U.S. 157 (1971) Berenhause v. Ward, 70 N.Y.2d 436, 443 (1987) ................................................... 33 Board of Education of Watertown City School District .................................... 10, 15 93 N.Y.2d 132 (1999) Bryant v. Board of Education, Chenango Forks Central School Dist, .............. 17, 18 21A.D.3d 1134 (3d Dept. 2005) City of Oneida Police Benevolent Association v. City of Oneida ..................... 22, 23 15 NYPER ¶3096 (1982) Chenango Forks Central School District v. New York State Public Relations Board, 944 N.Y.S.2d 665 (3 d Dept. 2012) ............................................... 10 FMC Corp. v. Unmack, 92 N.Y.2d 179, 188 (1998) ............................................... 33 Herkimer County BOCES, 20 NYPER (LRP) P3050 (1987) ................................... 4 Karp v. North County Community College, 258 A.D.2d 775, (3 rd Dept. 1999) ..... 30 New York City Transit Authority 4 PERB ¶3031 (1971) .......................... 10, 13, 16 People of the State of New York v. Smith, 66 N.Y.2d 130, 139 (1985) ................. 33 ii Pirro v. Bowen, 76 A.D.2d 392 (2 nd Dept. 1980) .................................................... 30 Appeal denied 52 N.Y.2d 702 (1980) Roma v. Ruffo, 92 N.Y.2d 489 (1998) .................................................................... 16 St. Lawrence County and St. Lawrence County Chapter of ................................... 16 Civil Service Employees, 10 PERB ¶3058 (1977) Troy Uniformed Firefighters Association v. City of Troy ...................................... 24 Waverly Association of Support Personnel v. Waverly Central School ................. 26 District, 20 PERB ¶4569 (1987) Village of Lynbrook v. PERB, 48 N.Y.2d 398 (1979) ...................................... 22, 23 STATUTES & OTHER AUTHORITIES Article VIII, §1 of NYS Constitution ...................................................................... 30 General Municipal Law 92-a ............................................................................. 30, 31 Civil Service Law 201(4) ......................................................................................... 21 Civil Service Law 204-a .......................................................................................... 31 Civil Service Law 209-a.1(d) ....................................................................... 6, 7, 9, 10 NYS CPLR Art. 78 .............................................................................................. 8, 11 1 QUESTION PRESENTED 1. Was PERB’s Decision finding that the Chenango Forks Central School District’s announcement of June 12, 2003, that it would discontinue reimbursement of Medical part B premiums to certain retirees, an improper practice in violation of § 209-a.1 (d) of the Public Employee’s Fair Employment Act, based upon an error of Law, arbitrary and capricious, and abuse of discretion, and/or not supported by substantial evidence? Answer: Yes, PERB’S determination, in refusing to defer to the arbitrators ruling that the District had not violated any past practice in terminating the provision of Medicare part B reimbursement, and in finding that Medicare part B reimbursement was a “Term and Condition of Employment” such that its provision could not be terminated without negotiation, was based upon an error of law, was arbitrary and capricious and/or an abuse of discretion, and was not based upon substantial evidence. 2 STATEMENT OF FACTS This matter comes before the Court on appeal from the Judgment of the New York State Appellate Division, Third Department, dated May 10, 2012. The appeal is taken as of right pursuant to C.P.L.R. §5601(a), based upon the dissent of two justices of the Appellate Division on a question of law. Appellant, the Chenango Forks Central School District (hereinafter “District”), brought the underlying Petition seeking judicial review under CPLR Article 78 of a final determination of the New York State Public Employment Relations Board (hereinafter “PERB”). PERB Board Decision and Order dated April 22, 2010, was served upon the District via Certified Mail post marked April 26, 2010, and delivered to the District on April 28, 2010. A copy of the PERB Board Decision of April 22, 2010, was attached to the Petition as Exhibit “A”. (Record at p. 15-24) (All reference to the Record on Review hereinafter “R.__”). Pursuant to CPLR § 505, this action was instituted in Albany County, the place where PERB has its principle offices. The Petition was transferred to the Appellate Division, Third Department, via Transfer Order dated November 29, 2010. (R. 2-3). At issue is PERB’s determination that the District committed an Improper Practice when it sent a notification dated June 12, 2003, to faculty and staff announcing that it would be discontinuing the provision of Medicare part B 3 reimbursement to retirees. A copy of the June 12, 2003 memorandum was attached to the Petition as Exhibit “B”. (R. 25). The Chenango Forks Teacher’s Association, NYSUT, AFT, AFL-CIO, LOCAL 2561 (hereinafter “Union”), is the recognized bargaining agent for a specified class of the District’s employees, including teachers. In response to the June 12, 2003 notification, the Union filed an Improper Practice charge. (R. 25). Litigation ensued, as described in more detail below. The “Union”, brought the underlying improper practice charge on or about September 12, 2003 (R. 64-69). This charge was brought in response to the June 12, 2003, memorandum to “faculty and staff” in which the District announced that it would be terminating reimbursement of Medicare part B premiums effective July 1, 2003 (R. 25). The Union’s charge alleged violation of Section 209-a 1(d) of the New York State Civil Service Law. The Union, on or about July 23, 2003, had also filed a grievance under the parties’ Collective Bargaining Agreement. The grievance regarding the July 12, 2003, memorandum alleged a violation of Article 8 of the Collective Bargaining Agreement. (R. 76). On or about October 6, 2003, the District filed a response to the Improper Practice charge. (R. 70) A teleconference was held before PERB ALJ David P. Quinn on or about October 29, 2003. On or about December 12, 2003, PERB deferred the instant matter to the arbitration which was proceeding under the 4 grievance pursuant to PERB’s jurisdictional deferral policy as stated in Herkimer County BOCES, 20 NYPER (LRP) P3050 (1987) (R. 80-81). The arbitration of the grievance was held on September 24, 2004, before Arbitrator Thomas N. Rinaldo. Arbitrator Rinaldo issued a written decision on or about November 6, 2004, finding that the District had no contractual obligation to continue to provide the Medicare part B reimbursement, and that there was “not sufficient evidence of a mutual agreement to establish a binding past practice.” (R. 82-92) As a result, Arbitrator Rinaldo concluded that the District did not violate the parties’ Collective Bargaining Agreement when it sent the letter of June 12, 2003. (R. 82-92) The Union did not challenge the propriety of the Arbitrator’s ruling, but, on or about November 16, 2004, filed a motion to reopen the Improper Practice charge with PERB. On or about December 31, 2004, Judge Quinn issued a decision granting the motion to reopen the matter before PERB. (R. 93) Judge Quinn found that, whereas the Arbitrator’s decision clearly found no contractual right, the Union was “not seeking to enforce an agreement in the context of the charge, and PERB has jurisdiction over the alleged failure to continue a non- contractual practice”. (R. 93) The parties proceeded before PERB upon stipulated facts, with the exception of one (1) issue upon which both parties made an offer of proof. (R. 132-138) Thereafter the parties submitted briefs to PERB. 5 The parties stipulated facts establish that the District has provided Medicare part B reimbursement to its eligible retirees since approximately 1980. (R. 135) The District and Union first entered into a Collective Bargaining Agreement in 1985, and have entered into successive Agreements since that time. (R. 135) The 1987–1990 CBA provided for health insurance benefits through the “Empire Plan”. (R. 135) Under the terms of the Empire Plan, the District was required to make Medicare part B reimbursement payments to any covered persons who were paying Medicare part B premiums. (R. 135; 439-568) In 1988, the parties agreed to a change from the Empire Plan to the Blue Cross/Blue Shield Super Blue Health Insurance Plan (R. 135) This switch was memorialized in the collective bargaining agreement entered into by the parties in 1990 (R. 135; 571-620) The parties stipulated to the fact that the Blue Cross Plan contained no requirement that the District make Medicare part B reimbursement payments (R. 136) While litigation of the Union’s Improper Practice charge was ongoing before PERB, the District and Union negotiated a new Collective Bargaining Agreement covering the period 2004-2007. (R. 94-131) At no time during the negotiation of the 2004-2007 CBA did the Union demand to bargain regarding Medicare part B reimbursement. The 2004-2007 CBA references a specific health care plan, but makes no reference whatsoever to Medicare part B reimbursement. (R, 94-131) 6 The 2004-2007 CBA also contains clauses which provide that the agreement constitutes the full and complete agreement between the parties (see Article 3.6) (R. 100) The CBA also provides that, “The provisions of this contract shall supersede any rules, regulations or practice of the District which shall be contrary to or inconsistent with its terms.” (R. 100) The PERB matter then proceeded to a hearing before a PERB Administrative Law Judge. The parties submitted extensive stipulated facts, with Exhibits thereto, to the PERB ALJ. The parties also submitted briefs regarding the matter. A copy of the parties’ Stipulated Facts, without exhibits, are contained in the Record. (R. 132-138) After submission of the Stipulated Facts and Briefs, the PERB ALJ issued a Decision, dated August 22, 2006, finding that the District had violated § 209-a.1(d) when it issued its June 12, 2003, announcement to discontinue Medicare part B reimbursement. (R. 139-144) In response, the District filed exceptions to the ALJ’s Decision and requested that the PERB Board reverse and rescind the August 22, 2006, Decision. (R. 145-146) Thereafter PERB’s Board reviewed the ALJ’s Decision of August 22, 2006, in light of various arguments made by the Parties. Oral argument was held before the PERB Board on June 6, 2007. Subsequent thereto, the PERB Board issued a 7 Decision, dated July 25, 2007, in which the matter was remanded for further development of the record before the ALJ. (R. 147-158) On March 17, 2008, an evidentiary hearing was held before the PERB ALJ in which witness testimony was presented by both the Union and the District. The primary issue was whether or not the Union had actual or constructive knowledge of the District’s provision of Medicare part B reimbursement, such that the Union had a reasonable expectation to continuation of said reimbursement. A copy of the transcript of the March 17, 2008, hearing is attached to the Petition. (R. 159-299) During the proceedings before PERB the Union failed to produce a single piece of documentary evidence that established knowledge on the part of bargaining unit members, none of whom had ever received Medicare part B reimbursement while still active employees and union members, of the existence of Medicare part B reimbursement. (R. 159-299) At the hearing before PERB the Union relied exclusively on the testimony of its witnesses, unsubstantiated by any documentary proof, to establish knowledge and reasonable expectation on the part of the unit members to continued Medicare part B reimbursement. (R. 159-299) Thereafter both the Union and District submitted written briefs to PERB’s ALJ. PERB’s ALJ then issued a Decision dated May 7, 2009, once again finding that the District violated § 209-a.1(d) when it unilaterally announced to employees that it would be terminating reimbursement of Medicare part B premiums. (R. 300-315) 8 Once again the District filed employer’s exceptions to the ALJ’s Decision of May 7, 2009 and requested that the Board review and rescind the Decision in its entirety. A copy of the employer’s exceptions to the ALJ’s Decision of May 7, 2009 was attached to the Petition. (R. 316-318) The PERB Board then issued the Decision dated April 22, 2010. (R. 15-24) Appellants now continue to seek judicial review and reversal of said Decision. In addition to the legal proceedings before PERB and the Arbitrator described above, certain District retirees, who are, upon information and belief, former Union members now retired, brought an action pursuant to NYS CPLR Art. 78 in Supreme Court, Broome County. In said action Petitioners therein alleged that the District’s announcement that it would discontinue Medicare part B reimbursement to its retirees represented a statutory violation. On May 18, 2004, Broome County Supreme Court Justice, the Honorable Philip R. Rumsey, issued a Decision, Order and Judgment finding that the District’s notification represented a statutory violation and directed the District to pay the Petitioners therein, and others similarly situated, the Medicare part B premiums that would have been so reimbursed in the absence of the challenged determination. A copy of the Decision of Judge Rumsey dated May 18, 2004 was attached to the Petition. (R. 319-325) 9 In response to the Supreme Court Decision of May 18, 2004, the District filed a Notice of Appeal and perfected same with the State of New York, Supreme Court, Appellate Division, Third Judicial Department. In a Decision decided and entered September 1, 2005, the Appellate Division reversed the judgment on the Law, and remitted the matter to Supreme Court for further proceedings. A copy of the Appellate Division Decision dated September 1, 2005, was attached to the Petition. (R. 326-332) On March 20, 2009, oral argument was held before Judge Rumsey in New York State Supreme Court, Broome County, on the remand of the retirees Article 78 action. On September 3, 2010, Judge Rumsey entered a determination finding that the District violated the statute when it announced that it was going to discontinue Medicare part B reimbursement. Bryant, et. al. v. Chenango Forks CSD, 907 N.Y.S.2d 415 (Sup. Ct. Broome. 2010). The District has filed a Notice of Appeal, with the Appellate Division, Third Department, which has been recently perfected. Proceedings on this appeal are currently pending before the Appellate Division, Third Department. The District now brings this appeal seeking reversal of Judgment of the Appellate Division which affirmed PERB’s Board Decision and Order finding that the District’s announcement that it would discontinue reimbursement of Medicare part B premiums to eligible retirees constituted a violation of Section 209-a.1(d). 10 It is the District’s position that PERB’s Decision is based upon an error of Law, arbitrary and capricious and or an abuse of discretion, and not supported by substantial evidence. Petitioner respectfully requests that the Court issue an Order reversing PERB’s determination, and finding that the District’s announcement does not constitute a violation of Civil Service Law § 209-a.1(d), and for such other and further relief as the Court may deem just and proper. LEGAL ARGUMENT POINT I PERB IMPROPERLY REFUSED TO DEFER TO ARBITRATOR’S FINDING THAT THERE WAS INSUFFICENT EVIDENCE OF A BINDING PAST PRACTICE It is the District’s position that PERB’S refusal to defer to Arbitrator Reinaldo’s finding that a binding past practice did not exist was arbitrary and capricious and/or an abuse of discretion. As noted by the dissent in the Court below, strong public policy supports permitting willing parties to frame their issues and resolve their disputes through arbitration. See: Board of Education of Watertown City School District, 93 N.Y.2d 132 (1999). As the dissent observed it has long been the policy of PERB to give post-arbitral deference to an Arbitrator’s decision so long as the disputed issue was presented and considered by the Arbitrator, the arbitration proceeding was fair, and the Arbitrator’s decision was not clearly repugnant to the purposes and policies of PERB. Chenango Forks 11 Central School District v. New York State Public Relations Board, 944 N.Y.S.2d 665, 673 (3d. Dept. 2012); New York City Transit Authority, 4 PERB ¶3031 (1977). As the Arbitrator’s decision herein clearly demonstrates that the parties argued the issue of past practice with respect to the at issue benefit, and as there is no allegation that the Arbitrator was biased or that the proceeding was otherwise unfair, PERB should have given deference to the determination of the Arbitrator. The Arbitrator determined that the District was not bound by any past practice with respect to the provision of Medicare part B reimbursement. It is respectfully submitted that this finding was not “clearly repugnant to the Act.” For these reasons, we respectfully request that the determination of the Court below be overturned and that the Petition be granted. Initially it must be pointed out that this issue was preserved for appellate review. This matter was commenced via Notice of Petition and Petition pursuant to CPLR Article 78. The underlying Petition contains as an exhibit the opinion and award of the Arbitrator dated November 6, 2004 (R. 82-92). The Arbitrator’s finding regarding past practice was also specifically referenced in the Petition at paragraph 14, which includes the following quotation from the Arbitrator’s ruling, “The voluntariness of the District’s conduct given the origin of the District’s Medicare part B reimbursements does not contain sufficient evidence of a mutual understanding and agreement to establish a binding past practice.” (R. 91) In 12 addition, in the Petition, based in part upon the Arbitrator’s finding, the Appellants argued that PERB’s decision was arbitrary and capricious. (R. 13). After first raising the issue in the Petition, Appellants once again cited to the Arbitrator’s finding that the District had not contractual obligation to provide the Medicare part B reimbursement, and that there was not sufficient evidence of a “mutual understanding and agreement to establish a binding past practice” in its brief to the Appellate Division. In addition, Appellant’s argued to the Appellate Division that the Arbitrator’s ruling involved the same parties presently before the Court and that the identical issue of past practice was fully litigated and decided. Thus, Appellant’s argued that the Arbitrator’s ruling should have been given deference. It is additionally noted that Respondent, PERB also argued in its brief to the Appellate Division regarding the issue of whether or not the Arbitrator’s findings on the issue of past practice were binding. As such, it is respectfully submitted that the issue has been preserved both in the Petition and on Appeal for review by this Court. PERB, and the majority below, argued that the findings of Arbitrator Reinaldo with respect to the past practice issue, are non-binding dicta and not worthy of deference. In addition, they argued that the Arbitrator’s Decision with respect to past practice was “clearly repugnant” to the Taylor Law, and thus not 13 binding upon PERB even if not dicta. It is respectfully submitted that these arguments are without merit. PERB’s long standing, self-stated policy with respect to deferral to abitral rulings was clearly set forth in the seminal New York City Transit Authority PERB Board decision of 1971. 4 PERB ¶3031 (1971). Therein PERB stated that deferral to the ruling of an arbitrator is appropriate where, “…the issues raised by the improper practice charge were fully litigated in the arbitration proceeding, that arbitral proceedings were not tainted by unfairness or serious procedural irregularities and that the determination of the arbitrator was not clearly repugnant to the purposes and policies of the Public Employees Fair Employment Act.” Id. As noted at length by the dissent below, it is clear from the Arbitrator’s ruling in this matter that the Association, after seeking arbitration, urged past practice in support of its position at the arbitration. The issue was clearly litigated by the parties before the Arbitrator who specifically noted the argument of the Union that, even if the parties Collective Bargaining Agreement was found to be ‘silent’ on the issue, “…various rulings of PERB mandate that the benefit is a ‘term and condition of employment and a mandatory subject of negotiations.’” (R. 86) Despite the fact that these arguments were clearly raised and considered during the arbitration, the Arbitrator made the specific finding that, “The voluntariness of the District’s conduct, given the origin of the District’s Medicare Part B reimbursements, does not contain sufficient evidence of a mutual 14 understanding and agreement to establish a binding past practice.” (R. 91) It is certainly clear that the issue was raised and considered by the Arbitrator. Most significant to the issue of deference, the Arbitrator’s ruling regarding the necessity of a ‘mutual understanding’ in order to establish a binding past practice nearly mirrors PERB’s own standard as stated in the very case at bar. While PERB clarified that ‘mutuality’ of understanding would not be required, PERB clearly required that the bargaining unit members must demonstrate, “…actual or constructive knowledge of the benefit...” and a reasonable expectation to continuation of the practice, in order for a past practice to be binding. (R. 158) The Arbitrator concluded that the District, “made voluntary Medicare Part B reimbursement payments to retirees.” (R. 91) Under these circumstances the Arbitrator reasonably concluded that there was insufficient evidence of a mutual understanding on the part of the either party to establish a binding past practice. In order to reach this conclusion the Arbitrator necessarily found that the bargaining unit members did not have a reasonable expectation to continued receipt of this benefit. This is precisely the analysis which PERB mandates. There is no allegation of impropriety or unfairness about the arbitration proceeding. In fact the ruling of the Arbitrator remains unchallenged by the parties. It is clear that the Association raised the issue of past practice and had the opportunity to fully litigate it during the arbitration. 15 It is further respectfully submitted that the Arbitrator’s finding that there was no binding past practice regarding the at issue benefits was not dicta. As argued at length in Points II and III below, the parties have had a series of collective bargaining agreements which include specific provisions regarding health care coverage. In fact, the right to Medicare part B reimbursement derived from a healthcare plan which was negotiated in a collective bargaining agreement, albeit in the 1980s. Thus, in order to determine whether or not the District was under a continuing contractual obligation to make Medicare part B reimbursement payments to retirees, the Arbitrator necessarily had to analyze the issue of past practice in order to give meaning to the contractual terms between the parties. As noted above it is clear that the parties, particularly the Association, argued to the Arbitrator regarding the issue of past practice and the extent to which those practices defined the agreement between the parties. It is well established that the issue of past practice may be considered by arbitrators. Aeneas McDonald Police Benevolent Association v. City of Geneva, 92 N.Y.2d 326, 332 (1998). It is equally undisputed that a strong and sweeping public policy favors the arbitration of disputes between parties such as the District and the Association. City of Watertown, supra. It is equally undisputed that arbitrators may do justice and are not bound by principles of substantive law or rules of evidence. 16 Under these circumstances, it is submitted that PERB has a long history of deferring to arbitral rulings. See e.g.: New York City Transit Authority, 4 PERB ¶3031 (1971); see also: St. Lawrence County and St. Lawrence County Chapter of Civil Service Employees, 10 PERB ¶3058 (1977); see also: Roma v. Ruffo, 92 N.Y.2d 489 (1998). PERB’s summary conclusion that the Arbitrator’s finding was “repugnant” to the Civil Service Law, without any explanation therefore, was arbitrary and capricious. (R. 152) For all of these reasons, and in keeping with the strong and sweeping public policy in favor of arbitration, the Appellants urge the Court to adopt a ruling that, under the circumstances of this case, PERB’s determination to ignore the ruling of the Arbitrator with respect to past practice was arbitrary and capricious, and/or an abuse of discretion. For all of these reasons, we respectfully request that the Court reverse the determination of the Court below and grant the Petition. POINT II THE UNION DOES NOT HAVE A CONTRACTUAL RIGHT TO CONTINUED MEDICARE PART B REIMBURSEMENT, AS SUCH PERB’S DECISION IS BASED UPON AN ERROR OF LAW The PERB ruling of April 22, 2010, confirms the ALJ’s Decision of May 7, 2009, which in turn confirms the earlier ruling of August 22, 2006. The parties’ 17 Collective Bargaining Agreement in effect at the time of the District’s complained of action does not provide a source of right to the Union. The contract contains references to health care benefits, and even to retiree health care benefits. However, the Agreement does not mention, in any way, Medicare part B reimbursement. This fact was cited by the Appellate Division, Third Department in its earlier Decision. The Court found that after 1990, “Under the new contract and the concomitant new health insurance plan, there was no obligation for Respondent to pay Medicare part B.” Bryant v. Board of Education, Chenango Forks Central School District, 21 A.D.3d 1134, 1135 (3d Dept. 2005). Specifically, Section 8.11 of the Agreement states that the District will provide employees with coverage under the Blue Cross/Blue Shield Super Blue Health Insurance Plan and will contribute 85% of the cost of same. (R. 42). In section 8.12 (1), the Agreement provides that retired employees will be covered at the “100/75 participation rate” (excluding employees who accept employment wherein they have equal or better health care coverage and also exclusive of employees hired after 10/1/92, who are covered at a rate determined by a formula contained in Section 8.12(3)) (R. 42-43). In Section 8.13, the Agreement contains limitations on maximum deductibles for Major Medical coverage and prescription co-pay amounts (R. 43). The Agreement further stipulates that the District will not take the position that any of the provisions contained in Section 8.13 are non- mandatory nor prohibited subjects of bargaining in an attempt to eliminate or 18 diminish said provisions (R. 43). Despite the detailed provisions regarding both employee and retiree health care benefits, nowhere in the Agreement is Medicare part B referenced. Nor is Medicare part B reimbursement required by the Blue Cross/Blue Shield Super Blue Health Plan. The Appellant’s argued tot the Court below that the principle of res judicata operates to preclude the PERB from finding that there is any contractual obligation on the part of the District to provide Medicare part B reimbursement. PERB should be estopped from making this finding based upon the decision of Arbitrator Rinaldo. As noted in Point I above the Arbitartor’s ruling involved the same parties as herein, and the identical issue was fully litigated and decided. (R. 82-92) Further, the decision of the Appellate Division in the related case of Bryant v. Board of Education, supra., should be binding on the issue as well. That Decision involved the exact same contractual provisions now at issue, and the Court makes clear that there is no current contractual obligation on the part of the District to provide Medicare part B benefits. Id. at 1135 – 1136. A review of the negotiating history of the parties as evidenced by their prior Collective Bargaining Agreements and prior health insurance coverage also reveals that there is no current contractual obligation on the part of the District to provide Medicare part B reimbursement. Specifically, the District had provided Medicare part B reimbursements historically. This provision was required by the ‘Empire Plan’ under which the District provided health insurance to its employees pursuant 19 to the 1987-1990 CBA. The parties have stipulated that the “Empire Plan” plan did require that the District reimburse any individual enrolled in the plan for Medicare part B expenses. (R. 135; 439-568) However, in 1988 the parties negotiated a change in health insurance carriers to the Super Blue Health Plan. This change was memorialized in the 1990-1992 CBA. (R. 135; 571-620) Furthermore, while the Agreement did not contain a ‘maintenance of benefits’ clause, the Agreement did contain a provision which stated, “The provisions of this contract shall supersede any rules, regulations, or practice of the District which shall be contrary to or inconsistent with its terms”. (R. 605) A similar clause limiting the effect of any prior practice has been contained in each Collective Bargaining Agreement entered into between the parties since that time. None of the documentation in evidence in this matter substantiates any claim that the District ever agreed to continue to provide Medicare part B benefits after 1988. Furthermore, once the health insurance provider was changed to Blue Cross/Blue Shield in 1988, the District no longer had any contractual obligation to continue Medicare part B reimbursement. Therefore, the Union members do not have any contractual right to Medicare Part B reimbursement. Moreover, given the ‘supersession’ clauses contained in each successive CBA which eliminate past practices, the Union members could not have a ‘reasonable expectation’ to 20 continued receipt of non-contractual benefits, and the Improper Practice charge should have been dismissed by PERB. To the extent that PERB’s Decision of April 22, 2010, finds that the District’s arguments in this regard are barred by the principal of res judicata, it is the District’s position that the prior PERB Board Decisions were interlocutory and not a final determination on the merits as those Decisions continued the matter for further proceedings. (R. 15-24; 13-144) The current contract, as well as the history of contractual negotiations demonstrate, while not specifically addressing the issue of retiree reimbursement for Medicare part B reimbursement, establish that the parties have, in effect, negotiated away any obligation that may have existed under the old Empire Plan to provide this reimbursement. Perhaps most importantly there is no evidence that the Union had knowledge of the continued provision of Medicare part B reimbursement as of June 12, 2003, when the District announced that said reimbursement would be discontinued. (See Point VI, below) For these reasons the District respectfully request that the Court reverse PERB’s finding as it was based upon an error of law and/or was arbitrary and capricious. 21 POINT III THE PROVISION OF MEDICARE PART B REIMBURSEMENT TO CERTAIN DISTRICT RETIREES DOES NOT CONSTITUTE A TERM AND CONDITON OF EMPLOYMENT, THUS PERB’S DETERMINTION WAS BASED UPON AN EROR OF LAW In the context of the present dispute, the provision of Medicare part B reimbursement does not constitute a term and condition of employment, and therefore, the District was within its rights when it unilaterally discontinued the provision of this benefit. Thus PERB’s determination that termination of said benefit constitutes an improper practice was based upon an error of law and was arbitrary and capricious. A. NOT A BENEFIT Civil Service Law § 201(4) defines ‘terms and conditions of employment’ to exclude “any benefits provided by or to be provided by a public retirement system, or payments to a fund or insurer to provide an income for retirees, or payment to retirees or their beneficiaries.” The Court of Appeals has held that “an employee organization may negotiate for the right of unit employees and their dependents to receive hospitalization benefits for the time specified in an agreement even if they retire 22 before the expiration of that agreement.” Village of Lynbrook v. PERB, 48 N.Y.2d 398 (1979); see also: City of Oneida Police Benevolent Association v. City of Oneida, 15 NYPER ¶3096 (1982). However, PERB has found that, “Lynbrook does not compel negotiation concerning the right of unit employees who have already retired, and their dependants to continue to receive… benefits that had been negotiated while they had been employed.” Oneida P.B.A, supra. In the present dispute, the District had at one time been under a contractual obligation to provide Medicare part B reimbursement. However, this contractual obligation terminated in May of 1988. Due in part to administrative turnover and accompanying oversight, the District continued to provide these benefits to District retirees aged 65 and older. The parties have stipulated that there is no evidence that a current employee has ever received Medicare part B reimbursement. (R. 136) This benefit was provided after May 1988 despite a lack of any contractual obligation whatsoever. There is no reliable indication that any current employee has entered into or remained in the employ of the District in reliance upon receipt of the Medicare part B reimbursement. In such circumstances, it is simply not possible to conclude that Medicare Part B benefits constituted a term and condition of employment such that the District ought to be required to negotiate prior to terminating the provision of this benefit. Moreover, there is no reliable evidence that any Union member had 23 knowledge of the benefit as of June 12, 2003. (See Point VI, below) Therefore improper practice charge brought by the Union should have been dismissed by PERB. B. NO DUTY TO NEGOTIATE Further, based upon PERB’s interpretation of Lynbrook, supra, as cited above in Oneida P.B.A, supra, the District is not compelled to negotiate concerning the right of “unit employees who have already retired.” The Medicare part B benefits at issue herein are not a benefit over which negotiation is mandatory. Thus it is not an Improper Practice for the District to unilaterally discontinue the gratuitous provision of this benefit. The June 12, 2003 memorandum which led to the current charge specifically stated that “The district currently reimburses retirees 65 years of age or older for the Medicare part B premiums withheld from Social Security Administration checks. Effective July 1, 2003, this practice will no longer continue” (R. 25). This action to discontinue Medicare part B reimbursement could only apply to person’s 65 years of age or older who were eligible for Medicare part B benefits. Upon information and belief, there is not a single member of the Union’s Bargaining Unit that has yet reached 65 years of age. In fact, the parties have stipulated that they are unaware of “any evidence that a current employee has ever 24 received Medicare part B benefits” (R. 136). Furthermore, the current employees (and retirees) had no contractual basis upon which to found any right to continued receipt of the Medicare part B reimbursement benefit. Retirees “plainly do not share a community of interests broad enough to justify inclusion of [them] in [a] bargaining unit.” Allied Chemical & Alkali Workers v. Pittsburgh Glass, 404 U.S. 157 (1971). Further, PERB has held that an employee organization’s right to negotiate is limited to the terms and conditions of persons in its negotiating unit. “It has no statutory right to represent any other person, be he a former employee or even a current employee who is not in the negotiating unit.” Troy Uniformed Firefighters Association v. City of Troy, 10 PERB ¶3015 (1977) In the present case PERB has found that that the District’s action resulted in the unilateral alteration of a term and condition of employment. However, the Court of Appeals has held that “a public employer’s statutory duty to bargain does not extend to retirees.” Aeneas McDonald Police Benevolent Association, Inc. v. City of Geneva, 92 N.Y.2d 326 (1998); citing: Allied Chemical, supra. Further, the Arbitrator has already decided the issue of past practice, determining that there was a lack of evidence of mutuality necessary to establish a past practice. (See Point I, supra.) Therefore, the District’s gratuitous practice of providing Medicare part B benefits was not a term and condition of employment such that negotiation was necessary prior to alteration of the practice. Thus, it was error for PERB to 25 conclude that the District had an obligation to negotiate before announcing its intention to terminate reimbursement of Medicare part B benefits. To the extent that PERB’s Decision of April 22, 2010, finds that the District’s arguments in this regard are barred by the principal of res judicata, it is the District’s position that the prior PERB Board Decisions were interlocutory and not a final determination on the merits as those decisions continued the matter for further proceedings. (R. 15-24; 139-144) Thus the District respectfully requests that this Court find that PERB’s Decision was based upon and error or law, and/or was arbitrary and capricious. POINT IV PERB ERRED IN FAILING TO FIND THAT THE IMPROPER PRACTICE CHARGE IS MOOT, AS THE DISTRICT AND UNION NEGOTIATED A NEW COLLECTIVE BARGAINING AGREEMENT WHICH CONTAINS A ‘COMPLETE AGREEMENT’ CLAUSE BUT DOES NOT PROVIDE FOR MEDICARE PART B BENEFITS The District and Union entered into a Collective Bargaining Agreement on January 19, 2003 covering the time period from 2004–2007 (R. 94-131). This Agreement contains a clause (Section 3.6) which states, “This agreement constitutes the full and complete commitments of the [parties] whether or not any item contained in this agreement was known or should have been known, or was or was not discussed by the parties at the moment when they entered into this 26 agreement” (R. 100). The Agreement also contains a clause providing that, “The provisions of this contract shall supersede any rules, regulations, or practice of the District which shall be contrary to or inconsistent with its terms” (R. 131). The 2004-2007 Agreement contains detailed provisions for health insurance coverage to be provided by the District. It even provides for health insurance to be provided to District retirees. However, the Agreement makes absolutely no mention of, or reference to, Medicare part B reimbursement. PERB has interpreted ‘supersession’ clauses to have significant impact on the rights of parties in the Collective Bargaining arena. In Waverly Association of Support Personnel v. Waverly Central School District, 20 PERB ¶4569 (1987), a District’s past practice of permitting bus drivers to take leaves of absence without pay but with benefits, was deemed superseded by a subsequent CBA provision. The CBA provision stated, “this agreement shall supersede any rules, regulations or practices of the District which shall be contrary to or inconsistent with its terms.” Id. PERB found that “it is undisputed that leave time, taken with or without pay is a mandatory subject for negotiation… and as such may not be altered or abolished by the employer without negotiating…” Nevertheless, in Waverly the District was held within its rights to abolish the practice of providing leaves of absence without pay, but with benefits, based upon the ‘supersession’ clause. Id. 27 PERB held in Waverly that, based upon the existence of contractual provisions in the CBA which addressed leaves of absence, in combination with the supersession clause, the Union therein had “contractually waived and agreed to end the prior practice.” Id. In the present case, the combined effect of the ‘complete agreement’ clause and the ‘supersession’ clause is to eliminate any obligation that may have been alleged to exist on the part of the District to continue any practice which is not memorialized within the Agreement. While health insurance benefits, including health insurance for retirees, are provided for in detail in the CBA, the provision of Medicare part B benefits is not called for by the Contract. Thus, PERB should have found that the District is under no obligation to continue the provision of said benefits. Since the CBA provides for health benefits and even provides for retiree health benefits, the ‘supersession’ clause alone would operate to negate any right to Medicare part B benefits. The clause requires that the terms of the contract supersede any practice of the District which is “contrary to or inconsistent with its terms.” (R. 131) Since the Contract contains specific terms regarding health insurance coverage, but does not provide for the provision of Medicare part B benefits, any provision of said benefits would necessarily be contrary to or inconsistent with its terms. Therefore, by the terms of the current Agreement, the 28 District has no further obligation to continue the provision of Medicare part B reimbursement. Assuming arguendo, if PERB concluded that the provision of Medicare Part B benefits was not “contrary to or inconsistent” with the terms of the Agreement, the ‘complete agreement’ clause contained in Section 3.6 of the Agreement certainly obviates any possible requirement of the District to negotiate. This clause provides that the Agreement is the full agreement of the parties regardless of “whether or not any item contained in [the] agreement was known or should have been known, or was or was not discussed by the parties at the moment they entered into this agreement.” (R. 100) As noted above, the Agreement does reference retiree health benefits; however nothing in the Agreement refers to or requires the continued provision of Medicare part B benefits. As the Agreement contains a complete agreement clause and the benefits sought after in the present Improper Practice charge are not provided for in the Agreement, nor are they mentioned in any way, there is no obligation whatsoever on the part of the District to continue to provide these benefits. The Union could have chosen to reference this ongoing litigation in an attempt to preserve any right to Medicare part B reimbursement in the Agreement. However, this was not done. Thus, the continued provision of Medicare part B benefits has been effectively bargained away. It is also noteworthy that this 29 Agreement was entered into after Arbitrator Rinaldo rendered his decision of November 6, 2004. Therefore, it is clear that parties have effectively negotiated away any obligation that the District may arguably have had to continue to provide Medicare part B reimbursement and the Union’s Improper Practice charge must be dismissed. To the extent that PERB’s Decision of April 22, 2010, finds that the District’s arguments in this regard are barred by the principal of res judicata, it is the District’s position that the PERB’s prior Decisions were interlocutory and not a final determination on the merits as those decisions continued the matter for further proceedings. (R. 15-24; 139-144) The District therefore respectfully requests that this Court find that PERB’s Decision was based upon and error of law, and or was arbitrary and capricious, as the parties have effectively negotiated away any right that the Union may have had to demand negotiation of the Medicare part B reimbursement issue. POINT V DISTRICT’S CONTINUED PROVISION OF MEDICARE PART B BENEFITS WOULD CONSTITUTE AN IMPERMISSABLE GIFT OF PUBLIC FUNDS AND PERB’S DETERMINATION WAS BASED UPON AN ERROR OF LAW The District’s continued provision of Medicare part B benefits, absent legislative approval, would constitute an impermissible gift of public funds in 30 violation of the New York State Constitution. Pursuant to Article VIII, § 1 of the New York State Constitution, absent a statute permitting payment, or a written contract authorizing payment, the reimbursement of Medicare part B benefits is prohibited because it would be considered a gift of public funds. As the District is not under any current contractual obligation requiring Medicare part B reimbursement, there is no legislative approval, and the District is constitutionally prohibited from continuing its provision. Article VIII, §1, of the NYS Constitution, provides in relevant part “No… school district shall give or loan any money or property to or in aid of any individual or private corporation or Union, or private undertaking…” The Appellate Division, Second Department, observed in Pirro v. Bowen, “the Constitution requires that there be a legal obligation on the part of the State or municipality before public funds can be paid to individuals.” 76 A.D.2d 392 (2 nd Dep’t. 1980), appeal denied 52 N.Y.2d 702 (1980). The Third Department in Karp v. North County Community College, 258 A.D.2d 775 (3 rd Dep’t. 1999) addressed the issue of payments to a former employee for unused vacation or sick time and held that “[p]ayments made to a former employee without such authority are deemed public gifts, prohibited by NY Constitution, Article VIII, § 1.” Id. In addition to the Constitutional prohibition on the unauthorized expenditure of public funds, there are two additional New York State statues that address the issue of payments made by public corporations. Pursuant to General Municipal 31 Law §92-a, municipal corporations are authorized to provide medical, surgical and hospital insurance plans for their officers and employees and retired officers and employees. However, General Municipal Law §92-a does not exist in a vacuum and must operate in conjunction with Civil Service Law §204-a (1) which states that any written agreement between a public employer and an employee organization shall contain the following: “[i]t is agreed by and between that parties that any provision of this agreement requiring legislative action to permit its implementation by amendment of law or by providing the additional funds therefore, shall not become effective until the appropriate legislative body has given approval.” Thus a Board resolution must give approval of the Medicare part B reimbursement payments. No such legislative approval for provision of Medicare part B payments was rendered in this case. There is, therefore, no continuing contractual obligation to provide this benefit. Therefore any holding which required the District to continue the provision of said benefits would necessarily amount to a violation of State Constitutional provisions. Thus it was error for PERB to find that the District could legally continue to provide Medicare part B reimbursement and the Decision of May 7, 2009, should be rescinded in its entirety. To the extent that PERB’s Decision of April 22, 2010, finds that the District’s arguments in this regard are barred by the principal of res judicata, it is the District’s position that the prior PERB Board Decisions were interlocutory and 32 not a final determination on the merits as those Decisions continued the matter for further proceedings. (R. 15-24; 139-144) Thus the District respectfully request that this Court find that PERB’s decision was based upon an error of law. POINT VI PERB’s DECISION IS NOT BASED UPON SUBSTANTIAL EVIDENCE PERB’s resolution of factual questions must be supported by substantial evidence. In the present case PERB made a factual determination finding that the Union members had actual or constructive knowledge of the Medicare part B reimbursement as of the District issuance of the June 12, 2003 memorandum. (R. 15- 24) The Union failed to produce, a single piece of documentary evidence establishing such knowledge on the part of any of its members. The parties agreed that there was no evidence that any Union member had ever actually received the benefit while an active union member, as it had only been provided to retirees. (R. 136 ) Thus, PERB’s factual determination was based solely upon conflicted and incredible testimony of numerous Union members and retirees. It is the District’s position that PERB’s reliance on this testimony fails to rise to the level of substantial evidence. This Court, in 300 Gramatan Avenue Associates v. State Division of Human Rights, 45 N.Y.2d 176, 181; 379 N.E.2d 1183 (1978), defined substantial evidence, noting that, while it is, “More than seeming or imaginary, it is less than a preponderance of the evidence, overwhelming evidence or evidence beyond 33 a reasonable doubt.” Id. at 180-181. The Court further defined substantial evidence as “such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact.” Id. at 180; See also, FMC Corp. v. Unmack, 92 N.Y.2d 179, 188 (1998) ; People of the State of New York v. Smith, 66 N.Y.2d 130, 139 (1985) ; Berenhause v. Ward, 70 N.Y.2d 436, 443 (1987) . The primary issue before PERB in this matter was whether or not the Union had knowledge of the District’s provision of Medicare part B reimbursement at the time of the June 12, 2003, memo. By virtue of the PERB Board Decision of July 25, 2007, the Union had to demonstrate that its members had actual or constructive knowledge of Medicare part B reimbursement while they were still active Union members, in order to establish that the District’s provision of said reimbursement was a binding past practice. (R. 147-158) In fact in order to establish that the June 12, 2003, notification constituted an Improper Practice, the Union had to demonstrate that its members had such knowledge on or before June 12, 2003. The Record before PERB contains no proof that any active Union member has ever received Medicare part B reimbursement. Said reimbursement had only been provided to retirees who were former Union members. In order to demonstrate such knowledge the Union necessarily must have demonstrated actual or constructive knowledge of it members of the reimbursement as of June 13, 2003. While the Union produced witnesses who 34 alleged that they had such knowledge, even the ALJ acknowledged the weakness and inconsistency of the testimony of the Union’s witnesses. (R. 300-315) For the reasons set forth below it is respectfully submitted that the Union witnesses’ testimony is insufficient to demonstrate actual knowledge on the part of the Union as of June 12, 2003. It is not disputed that the District had provided yearly reimbursement of Medicare part B premiums paid by retirees. However, there is no evidence that any active Union member ever received said benefits during their active Union membership. The parties stipulated to this fact. (R. 136) Time after time Union witnesses testified that, prior to June 2003, they had never received any written documentation from the Union regarding Medicare part B reimbursement. (R. 181; 190; 215; 219; 225; 232; 251; 255). The Union failed to produce a single piece of documentary evidence that its members had actual knowledge of Medicare part B reimbursement while they were in active employment. Despite its witnesses’ allegations that the issue had been discussed at Executive Council meetings, the Union failed to produce written evidence of any kind with regard to its alleged knowledge or awareness of the benefit. Moreover, Union witnesses, who had been involved in collective negotiations, admitted that there had never been any demand to negotiate regarding the provision of Medicare part B reimbursement. (R. 180; 190-191; 219; 232) 35 None the less, the Union maintains that its members were aware of the District’s provision of reimbursement prior to June 2003, and thus had a reasonable expectation to continued “receipt” of same. At the hearing held on January 30, 2008, the Union paraded fourteen witnesses before the Board. None of these witnesses were able to produce any documentary proof that they had knowledge of receipt of the benefit as of June 2003. The witnesses presented by the Union alleged knowledge based strictly upon hearsay statements. While the rules of evidence before the Board are relaxed, the self serving hearsay statements of the Union’s witnesses are so unreliable that they cannot be used to demonstrate actual or constructive knowledge of receipt of the benefits. Further weighing against the probative value of the hearsay statements, the Union failed to produce the alleged orators of the hearsay statements. There was no showing that the individuals who are alleged to have given knowledge to the Union members prior to June 2003 were unavailable (with one unfortunate exception, Muriel Rossi who was deceased). Under these circumstances the allegations of the Union members must be held to the highest level of scrutiny, if they are to be considered at all. It is thus respectfully submitted that it was legal error for the ALJ to credit the testimony of the Union’s witnesses. 36 Many of the Unions’ witnesses’ testimony was either totally irrelevant or provided no support whatsoever for the proposition that the Union or its members had knowledge of the benefits as of June 13, 2003. For example, Mary Condon alleged that she had knowledge based upon conversations with other teachers. (R. 223) However, Ms. Condon could not say when she had gained this knowledge. (R. 227) Likewise, Shirley Girton testified that her knowledge was based upon conversations with retirees. (R. 243) However, Ms. Girton admitted that she could say whether these conversations occurred prior to or after June 2003. (R. 246) As a result this testimony is not probative on the issue before the Board. R. David Andrus testified that he was Superintendent of Schools for the District from 1991-1993. (R. 258) Mr. Andrus testified that he was never a member of the Union. (R. 263) As such his testimony is also not probative on the issues presently before the Board. Mr. Andrus alleged that he took an early retirement and drafted a separation agreement which included reference to benefits to be provided to him by the District during his retirement. (R. 260) The agreement placed into the record before PERB by the Union does not specifically mention Medicare part B reimbursement, thus its relevance to the issue before the Board is unclear. Moreover, nothing in Mr. Andrus testimony could possibly be construed to impute knowledge, either actual or constructive, of Medicare part B reimbursement to the Union or any of its members. As a result Mr. Andrus’ testimony is utterly irrelevant to the issue before the Board. 37 Jeannine Andrus testified that her knowledge was based upon a conversation with a financial advisor. (R. 214) She admitted that she never learned of the benefit from any Union member. (R. 215) One must wonder how she could have missed all of the conversations regarding this benefit that the other witnesses testified to? Most importantly her testimony cannot be said to establish the required knowledge and awareness of Medicare part B reimbursement as of June 12, 2003. John Connors testified that his knowledge was based upon conversations with Tony Balada. (R. 218) There was no showing that Mr. Balada was unavailable, but Mr. Balada was not produced, so the District was unable to adequately ascertain the accuracy of Mr. Connor’s assertion. However, a close review of Mr. Connors testimony reveals that the discussions that he allegedly had with Mr. Balada were never specific with regard to Medicare part B reimbursement. (R. 220) Under this circumstance, Mr. Connor’s testimony cannot be said to impute knowledge or a reasonable expectation to the Union or its members. Mary Madigan testified that her knowledge was based upon a conversation with Miriam Schaller that occurred in the late 1970’s or early 1980’s. (R. 196) Ms. Madigan testified that at the time Ms. Schaller was employed and was getting the benefit. (R. 196) Again Ms. Schaller was not produced so the validity of Ms. 38 Madigan’s assertions was not subject to full cross examination. However, Ms. Schaller retired as of July 1, 1979. (R. 290) According to the District’s records Ms. Schaller did not become Medicare part B eligible until 1998. (R. 288) Obviously Ms. Madigan’s memory of conversations that occurred nearly thirty years ago is seriously in question. Ms. Madigan also testified that she had knowledge based upon conversations with Ms. Bryant, however, Ms. Madigan could not recall when these conversations occurred. (R. 195) Once again Ms. Madigan’s testimony cannot form the basis of a finding that the Union or its members had knowledge of the benefit. Patricia Swartout alleged that her knowledge of the benefit was based upon a conversation with fellow teacher Bobby Furth. (R. 250) This conversation allegedly occurred before Ms. Furth retired. (R. 250) However she admitted that, “at the time I didn’t pay that much attention to it”. (R. 250) Her testimony demonstrates that Medicare part B was not specifically discussed, as Ms. Furth allegedly only told her that she would be getting a “special benefit”. (R. 250) Thus regardless of when the conversation took place, Ms. Swartout’s testimony never established knowledge of Medicare part B reimbursement. Moreover, Ms. Furth, the alleged source of Ms. Swartout’s information regarding a “special benefits”, did not become Medicare part B eligible until 1999, years after she retired. (R. 289) Ms. Furth was not produced for cross examination and there was no showing that she was unavailable. Given this context, it is respectfully submitted that Ms. 39 Swartout’s testimony lacks sufficient reliability to form the basis of a finding that the Union or its members had a “reasonable expectation” to receipt of the benefit as of June 12, 2003. Betty Cheeseman testified that her knowledge was based upon a single conversation with Muriel Rossi that allegedly occurred in the late 1990’s. (R. 254- 255) A reasonable expectation to continued receipt of a retirement benefit cannot be founded upon a single off handed conversation. Moreover the conversation was not specific about Medicare part B reimbursement. As such this testimony, even if true, does not establish a reasonable expectation to continued receipt of Medicare part B reimbursement. The testimony of John Ferranti is demonstrative of the fact that, when pressed, the Union witnesses had to admit that they really did not have specific knowledge of Medicare part B reimbursement. Mr. Ferranti testified that he based his knowledge on conversations which occurred around the “copier”. (R. 234) However, an examination of Mr. Farranti’s testimony reveals that none of these conversations were truly specific with regard to Medicare part B reimbursement. Mr. Ferranti testified that he heard older teachers say, “your pay isn’t everything, you have other things coming.” (R. 234) He also testified that he had knowledge of benefits from conversations with Tom and Jean Boyuka. (R. 239) However, again this conversation was not specific to District reimbursement of Medicare part B and was not something that Mr. Ferranti paid particular attention to. (R. 241) 40 Mr. Ferranti stated that, “it’s one of those things that, you know, being probably in my late 40’s, I didn’t spend a lot of time paying attention to it.” (R. 241). Mr. Ferranti’s testimony reveals a truth applicable to the Union as a whole. The Union members, even if they were vaguely aware of the provision of some type of benefit, were not specifically aware of the District’s provision of Medicare part B reimbursement. Certainly it cannot be said that Mr. Ferranti was relying on the provision of this benefit as a term and condition of employment. A vague awareness of the possible existence of a “special benefit” is not the foundation upon which a reasonable expectation to continued receipt of Medicare part B reimbursement can be established. A prime example of the suspect nature of the Union witnesses’ allegations is the testimony of Barbra Slocum, the second of the Union’s witnesses to testify in this matter. Ms. Slocum testified that her knowledge of the benefit came from conversations with Teddy Bryant. (R. 187) Ms. Slocum alleged that these conversations occurred in the late 1990’s. (R. 190) Ms. Slocum stated that Bryant, “noted that she had received the reimbursement check and also said how helpful that was to her in meeting her medical costs.” (R. 190) Ms. Slocum was very clear that this conversation occurred AFTER Ms. Bryant was retired and had begun to receive reimbursement checks. 41 The fact is that Ms. Slocum’s memory failed her. The conversation which she testified to could not possibly have occurred in the 1990’s and her testimony as a whole cannot be considered accurate. Ms. Bryant did not turn 65 years of age until May of 2002. (R. 182) Ms. Bryant did not actually begin receiving the Medicare part B reimbursement until 2002. (R. 182) The benefits that she received in 2002 represented a partial benefit, only one or two months worth of Medicare part B premiums, hardly enough to be considered helpful in meeting medical expenses. (R. 182-183) The fact is, Ms. Bryant did not begin receiving the full value of Medicare part B reimbursement until 2003, after the District’s announcement that it would discontinue the provision of same. It is clear that Ms. Slocum’s testimony can be discounted in its entirety. She testified that her knowledge of the benefit came from conversations with Ms. Bryant. She stated that these conversations occurred in the 1990’s, but not until after Ms. Bryant began receiving the benefits. As Ms. Bryant did not even begin receiving the benefits until 2002, and then only a partial benefit, Ms. Slocum’s testimony is clearly inaccurate. Like Ms. Slocum, Janice Fiore testified that her knowledge of the benefit came in part form conversations with Ms. Bryant. (R. 209) Ms. Fiore also stated that this conversation occurred before June 2003, but after Ms. Bryant retired. (R. 209) As noted above Ms. Bryant herself did not begin actually getting the full value of the benefit until after the District’s announcement in June of 2003. 42 Ms. Bryant’s knowledge of the benefit in 2002 simply does not establish Union knowledge as Ms. Bryant was no longer a unit member at that time as she had retired. Her knowledge prior to 2002 is highly suspect. Ms. Bryant testified that her knowledge was based upon conversations with a retiree named Bernard Benson who had retired at age 55 in the 1980’s. (R. 181) Obviously Mr. Benson himself would not have been eligible to receive the benefit until at least 1995, long after he would have left the active membership of the Union. There is no proof in this record that Ms. Bryant had knowledge of the benefits while she was a Union member. Nor is there, proof in the record that any Union member had actual knowledge of the benefits as of June 2003. As many of the Union’s witnesses testified that their knowledge was based upon information from Ms. Bryant, all of the witnesses self-serving testimony is rendered highly suspect. Perhaps most indicative of the lack of awareness on the part of the Union and its membership regarding the benefit was Ms. Bryant’s testimony about the questions which she regularly receives from former Union members when they receive the benefit checks. Specifically Ms. Bryant testified that she has received “roughly a hundred” calls from former Union members regarding the checks. (R. 175) She admitted that former members called her to ask what the check was. (R. 183) This demonstrates that many retirees, former Union members, did not know 43 what the check was when they received it. Clearly they did not have an awareness of the benefits while they were active Union members, as they did not even know what the money was for when they received it as retirees. This actually proves that the Union members did NOT have knowledge or a reasonable expectation to continued receipt of the benefits. Bryant’s assertion that prior to June 2003 she received phone calls from former members asking if the reimbursement check was coming is absurd and further detracts from Ms. Bryant’s testimony. If the Union or its members were getting such regular questions regarding this issue one would have to think that that at some potion they would have issued some form a written directive or informational letter on the topic. The Union failed to produce any such writing and, as such, the statements of the witnesses amount to nothing more than self- serving hearsay. Moreover the knowledge of “former members” does not establish knowledge by the Union or its current members, and thus, even if true, does not establish a reasonable expectation to continued receipt. At the hearing held on January 30, 2008, the District presented witnesses Janice Darling and Kathy Blackman. The District witnesses testified that they regularly conduct informal ‘pre-retirement’ exit interviews with prospective Union retirees. These sessions cover issues such as the retiree’s participation in the District’s Health insurance plan etc… (R. 269; 282) During these interviews no Union member has ever given any indication to the District staff that they had any 44 awareness of Medicare part B premium reimbursement. (R. 271; 282-283) Ms. Darling testified that no Union member had ever even asked about Medicare part B reimbursement. (R. 271) The PERB’s Decision of April 22, 2010, glosses over the testimony of the District’s witnesses that no Union member had ever asked them about Medicare part B reimbursement. PERB’s determination fails to explain its apparent reliance on the contradictory, unsupported and incredible testimony of the union witnesses. Conversely, both Ms. Darling and Ms. Blackman had fielded many questions from retirees, former Union members, who had received the reimbursement checks. These questions included, “What is this check for?”, “Can I cash it?” (R. 272; 283) These questions corroborate Ms. Bryant’s testimony with regard to receipt of questions about the benefits. However, the testimony of the District witnesses has the ring of truth with regard to the subject matter of the questions. The District witnesses’ testimony clearly demonstrates that even the retirees who receive the benefit checks (former Union members) frequently do not know what the checks are for. Under these circumstances it is clear that the Union and its members did not have an awareness of the benefits, much less a real expectation to its continued provision. Certainly none of the Union members relied upon receipt of Medicare part B reimbursement in continuing their employment with the District. As a result PERB’s finding of both knowledge and a 45 reasonable expectation to continued receipt and thus a “term and condition of employment”, is not based upon substantial evidence and should be reversed. To hold that the ‘evidence’ produced by the Union in this case establishes, by substantial evidence, actual or constructive knowledge of the benefit would be repugnant to the purposes of the Act. If the Union is allowed to prevail on the basis of unreliable hearsay statements, then Employers can be bound to any ‘practice’, even if they are not fully aware of it. In order for a ‘benefit’ to be binding the Union must at least prove that they knew of it and therefore reasonably expected that practice to continue. In this case the evidence simply does not establish that the Union or its members had sufficient awareness of this benefit to conclude that they had a “reasonable expectation” to its continued provision. The evidence in this case establishes that, at best, the Union and its membership had a vague awareness of the provision of some type of retiree health benefit. It has already been readily established that there was no contractual provision in place which called for the provision of the benefit. The Union was apparently incapable of producing any documentary evidence that it had knowledge of the benefit. The Union witnesses admitted that they had never made any attempt to negotiate a written formalization of the provision of the benefit. One would think that if the Union was as aware of the benefit as it contended before PERB, it would have been formally discussed at the negotiating table, or at least at the Union’s Executive Council, such that it would have appeared in Executive Council minutes. Clearly the Union members did not have knowledge, actual or constructive, of this benefit prior the development of the current dispute in June 2003. Under these circumstances it cannot be said that the Union had a reasonable expectation to the continued provision of the benefit. As such the District respectfully submits that the PERB Decision of April 22, 2010 is not supported by substantial evidence. CONCLUSION The District hereby respectfully requests for the foregoing reasons that this Court find that PERB' s determination of April 22, 2010, is based upon and error or law, is arbitrary and capricious and/or an abuse of discretion, and not based upon substantial evidence, and grant the Petition, and for such other relief as justice may reqUIre. Dated: November 9,2012 46 Lars P. Mead, Esq. COUGHLIN & GERHART, LLP 1701 North Street Endicott, New York 13760 (607) 723-9511 47 TO: David P. Quinn, Esq. Attorney for Respondent New York State Public Employment Relations Board 80 Wolf Road Albany, New York 12205-2604 518-457-2678 Richard E. Casagrande, Esq. New York State United Teachers 305 Vestal Parkway West Vestal, New York 13850 (607) 786-5742