By Jimmy Vielkind, Times Union, Albany, N.Y.
May 30--ALBANY -- Some 600 retirees who counted on the now-defunct New York City OTB to assume their health insurance cost had their last day in court Tuesday, hoping for a ruling from the Court of Appeals to force the state to pay millions to cover their premiums.
Judges from the state's top court were pointed in asking attorneys for District Council 37, a union that had represented the OTB employees, about several provisions in the law that insulated the state from the liabilities of affiliate public benefit corporations.
OTB parlors in the five boroughs closed in December 2010, a year after filing for bankruptcy. The operation had been under state supervision. Retirees relied on their former employer for health insurance under a labor agreement drafted for city employees, but OTB always reimbursed New York City for its costs.
City Hall said it would stop paying when OTB shut down. Initially a judge forced the city to keep covering the $1.8 million cost, but an appeals court ruled in May 2011 that the city had the right to stop payments.
"Those provisions, by their terms and read in context, only limit the city and state's liability for borrowing -- bonds and notes," argued Curtis Mechling, an attorney for DC37.
Mechling said there was a promise made by Gov. David Paterson to assume all of the OTB's "assets and liabilities" as the state attempted to steer it through the crisis. The shutdown came after a bailout bill died in the Legislature. In September 2011, Gov. Andrew Cuomo vetoed a bill that would have dedicated $4.6 million to finance the benefits.
DC37 argued Paterson's statements and the takeover means the state, not the OTB, held the liability "by virtue of the state's injection, and dismantling, of the OTB."
There was "no ambiguity" in the plain language of the law, assuming the transfer was "deeply inconsistent with the purpose and structure of a public benefit corporation," said Laura Johnson, a lawyer representing the state.
She said the state and other governments set up operations like OTB to perform functions at arm's length.
"The many theories of liability the plaintiffs have proffered here are basically a Pandora's box," Johnson said.
The judges appeared skeptical about the force of the state's takeover, which Mechling supported by offering a quote from Paterson.
"Does the government have the ability, by a public pronouncement, to put the state on the hook for millions of dollars?" Associate Judge Robert Smith asked.
As Chief Judge Jonathan Lippman put it: "Don't government and political people say a lot of things that could be regarded as posturing?"
mailto:firstname.lastname@example.org --518-454-5081 --@JimmyVielkind
(c)2012 Times Union (Albany, N.Y.)
Visit Times Union (Albany, N.Y.) at www.timesunion.com
Distributed by MCT Information Services
McClatchy-Tribune Information Services