Public Sector Unions Sue City Hall Over Health Savings Impasse
Facing Adams administration demands to pay back up to $4 billion after a failed Medicare Advantage switch for retirees, the Municipal Labor Committee is seeking to fend off arbitration.
New York’s major municipal employee unions sued the city government Monday, exploding into the open a long-simmering conflict between them and the administration of Mayor Eric Adams over which side is responsible for billions of dollars in pledged health care savings that have failed to materialize.
The Municipal Labor Committee filed the case in Manhattan State Supreme Court, demanding that the court stop the city from pursuing arbitration that seeks to force the unions to fulfill a commitment in their contracts to achieve $600 million in annual health care savings.
The court clash stems from the collapse of a longstanding joint effort to force civil service retirees to switch to cheaper Medicare Advantage coverage to help achieve those savings. The move set off a firestorm of opposition among retirees, and the plan was rejected by a state Supreme Court judge in a decision upheld repeatedly. An Adams administration appeal will be heard by the state’s highest court later this year.
The MLC, a consortium of the city’s 102 public sector unions, claims the city is unfairly blaming them for the Medicare Advantage flop and putting them on the hook for making up the money as the crucial employee health reserve it was meant to fund ran dry.
“No arbitrator can order blood from a stone,” the unions’ complaint argues. “The City’s recent unsuccessful legal defense in court of the parties’ agreed-upon Medicare Advantage program unexpectedly deprived the parties of an important planned source of revenue.”
It is the latest chapter in the health care savings saga that began more than a decade ago under former Mayor Bill de Blasio, who along with United Federation of Teachers president Michael Mulgrew sought to secure billions of dollars in cumulative health care savings to help pay for long-sought raises for city workers, to be paid into a special health care fund.
As retiree furor got louder, Mulgrew dropped his support last year for the Medicare Advantage switch to achieve the promised savings. Records the unions filed in court show that as the Medicare switch flopped and the health care fund dwindled, communications between the labor consortium and Mayor’s Office of Labor Relations Director Renee Campion became increasingly acrimonious.
In a letter to the unions last July, Campion alerted MLC Chair Harry Nespoli that the fund was running dry and requested a meeting to address the brewing crisis. “The Stabilization Fund owes the City more than $4 billion for expenses the City pays upfront and for which the Fund is supposed to reimburse the City or pay the City directly,” she asserted.
“In no way is the city owed $4 billion,” Nespoli responded. “Nor, for that matter, can the MLC be faulted for the impasse with Medicare Advantage. We supported the plan and certainly are not responsible for the litigation strategy undertaken by the City and criticized by the court that has blocked it.”
Campion hit back days later, writing on Aug. 8: “I would remind you MLC counsel has been kept apprised at all times of the City’s litigation strategy and reviewed all the City’s filings in this litigation.”
The new filings show that on Jan. 10, Campion wrote to arbitrator Martin F. Scheinman, asking for his intervention and declaring the Municipal Labor Committee “unwilling to implement new healthcare benefit modifications needed to achieve required savings.” Calling the unions’ inaction a “contractual violation,” she said the city seeks monetary damages and/or a binding order to the unions to achieve the savings targets.
The MLC argues in its just-filed case that arbitration would be in violation of members’ collective bargaining agreements.
Nespoli and a spokesperson for the committee did not respond to phone calls from THE CITY seeking comment.
A spokesperson for the city’s Law Department, which is defending the suit, said in a statement: “The City has filed for arbitration under the 2014 and 2018 health savings agreements. We believe the matter is properly before the arbitrator and the MLC’s effort to stay the arbitration is without merit.”
The Adams administration had moved to switch all retirees by September 2023, and renewed the agreement with the support of the MLC, which voted to approve the deal in March of that year.
But the plan was struck down that August by Manhattan Supreme Court Justice Lyle Frank, who sided with city retirees who’d sued to stop the switch, finding merit to their argument that it violated longstanding guarantees by the city that every active and retired city worker is entitled to city-funded health care through a combination of Medicare and other supplemental insurance.
The city is considering several ways to cut costs on employee health care to help fill the gap, including charging $1,500 annually to employees who choose insurance plans other than the city’s basic and limited offerings, and by increasing copays for a variety of treatments including emergency room visits, New York Focus reported.
Multiple candidates for mayor have said they will drop the push for Medicare Advantage if elected – with Andrew Cuomo most recently joining Brad Lander, Scott Stringer, Jessica Ramos and Jim Walden in making that pledge.
by Claudia Irizarry Aponte
April 29, 2025, 6:05 p.m.
Original Article can be found here
