Civil Service Law Did Not Create a Contractual or Vested Right in Health Benefits—Statutory Provision Allowing the Reduction in Benefits Valid and Enforceable Retroactively

The Third Department, in a full-fledged opinion by Justice Peters, determined that a Civil Service Law statutory provision allowing reductions in the state’s contribution to retired state employees’ health benefits (Civil Service Law section 167 (8)) was valid and enforceable retroactively.  The court further determined that Civil Service Law section 167 (1)(a) did not create a contractual or vested right in health benefits which was violated by section 167 (8):

Petitioners argue that Civil Service Law § 167 is internally inconsistent to the extent that it imposes a fixed contribution rate for retiree health insurance while concomitantly authorizing modification of those statutory rates, and they urge this Court to harmonize the statute’s provisions by declaring that Civil Service Law § 167 (8) applies only prospectively. We begin our analysis with the familiar maxim that the text of a statute is the best evidence of legislative intent and, “where the statutory language is clear and unambiguous, the court should construe it so as to give effect to the plain meaning of the words used” … . It is also fundamental that a statute must be considered as a whole and its various sections construed with reference to one another and in a way that renders them internally compatible … .

Applying these principles here, we conclude that Civil Service Law § 167 (8) plainly and unambiguously permits modification of the fixed contribution rates for retiree health insurance premiums set forth in Civil Service Law § 167 (1) (a). * * * …[W]hile Civil Service Law § 167 (1) (a) provides for a fixed percentage contribution, the explicit command of the Legislature in Civil Service Law § 167 (8) makes clear that the former provision does not apply where it would otherwise conflict with Civil Service Law § 167 (8). As the plain language renders these provisions internally compatible, “there is no room for construction and [we] have no right to add to or take away from that meaning” … .

Petitioners next claim that they have a contractual and vested property right to the percentage contribution rate set forth in Civil Service Law § 167 (1) (a) * * *.  “[B]efore a law may be deemed to amount to a contract between the [s]tate and a third party, the statutory language must be examined and found to be ‘plain and susceptible of no other reasonable construction’ than that a contract was intended” … . Indeed, “certain types of legislative acts, including those fixing salaries and compensation, . . . [give rise to the presumption that the] ‘law is not intended to create private contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise'” … .

We find nothing in the language of Civil Service Law § 167 (1) (a) to constitute “clear and irresistible evidence” that the Legislature intended to “fetter[] its power in the future” with respect to retirees’ health insurance contributions … . Matter of Retired Pub Empls Assn Inc v Cuomo, 2014 NY Slip Op 07044, 3rd Dept 10-16-14