Court Overturns Medicare B Hit On State Staff; Decides Pataki's View Of Law Is Improper; $26M Refund Due

By GINGER ADAMS OTIS

Governor Pataki's attempt to make state employees pay for premiums related to Medicare Part B was foiled by a recent Appellate Division ruling that deemed the change illegal.

DANNY DONOHUE: A big win for workers.

The Pataki administration last year implemented a new policy that forced active and retired state employees to contribute more than $26 million a year for the Part B health-care premiums - costs that previously had been paid by the state.

CSEA Wins Appeal

The Civil Service Employees' Association challenged the Pataki administration in court and lost. The union, which represents 85,000 state employees, immediately appealed the lower-court ruling, which was overturned in November by the Appellate panel.

CSEA President Daniel Donohue applauded the result.

"As we saw it, the Pataki administration was taking money that wasn't theirs to take, harming CSEA members and many others," he said in a written statement. "We are pleased the court agreed with our assessment."

Calls to Governor Pataki's press office weren't returned by the time this paper went to press, but CSEA spokesman Stephen Madarasz contended it was unlikely that the case would be taken to the Court of Appeals.

GOVERNOR PATAKI: Leaves on a losing note.

"Given the timing of things, with a new administration coming in, we are hopeful that it won't go any further," he commented.

CSEA and a number of other unions sued last January when the Pataki administration chose to reinterpret a long-standing civil service law and began charging employees and retirees directly for the Medicare Part B premiums for the first time in the 40-year history of the program.

CSEA claimed the state's action was in violation of regulations requiring employers to pay 100 percent of the cost of Medicare Part B premiums. Nothing in the law, rules or regulations allowed the state or other public employers to pass on the costs to employees or retirees, the union charged.

The State Comptroller's Office issued an opinion supporting CSEA's position. But an Albany County Supreme Court dismissed the union's case last March.

An Arbitrary Change

In reversing that ruling, the Appellate Division Justices found the Pataki administration's new interpretation "arbitrary, capricious and contrary to law."

The court ruled the new policy was inconsistent with New York's legislative history, as well as the state's "correct" 40-year interpretation of the law.

As part of the ruling, the state will have to reimburse the public employees who were forced over the past year to contribute hundreds of dollars toward Part B premiums.

Public employees have contributed approximately $26 million since last Jan. 1, Mr. Madarasz said.