High Court Rules City and State Have No Obligation to
Pay NYC OTB Health Insurance Benefits

The New York State Court of Appeals unanimously affirmed an order of the Appellate Division, which held that the City and State of New York are precluded by NY Constitution, article X, § 5, and Racing, Pari-Mutuel Wagering and Breeding Law § 614 from assuming a legal obligation to pay the health insurance benefits of retirees of the former New York City Off-Track Betting Corporation (“NYC OTB”). By decision dated June 28, 2012, the Court cited the “bedrock principle that a public benefit corporation, such as NYC OTB, ‘enjoy(s) an existence separate and apart from the State, its agencies and political subdivisions.” As a public benefit corporation created by the State, NYC OTB was never a “department or agency” of the City and its retirees were not “City retirees” under the City Administrative Code, as they were never employed by the City.

The case arose from the the December 7, 2010 shut down of NYC OTB , following which the City’s Corporation Counsel informed  NYC OTB that its retirees would lose coverage under the City’s health insurance and welfare benefit plans because NYC OTB was no longer able to reimburse the City as required by Racing, Pari-Mutuel Wagering and Breeding Law § 606 (4) and section 30 of Chapter 115 of the Laws of 2008. The case was filed by, among others, District Council 37, AFSCME, AFL-CIO and its local 2021, representing 1,027 NYC OTB employees and more than 600 retirees.

A copy of the Court's decision may be found here.

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