Court of Appeals: Sorry, Judges. The State’s Contribution to Your Health Insurance is Not Part of Your Compensation

New York employees have pretty great health insurance options. Having left the State’s employ and its health insurance to move to the private sector and non-collectively bargained health insurance, believe me, I know. Premiums are low. Coverage is high. And the State covers a substantial part of the cost. So too for New York’s judges. They are state employees with access to New York’s health insurance plans, and the State too pays a significant portion of their health insurance premiums.

But in 2011, when the State was faced with a budget crisis, it negotiated with the State-employee unions to, among other things, reduce the percentage of health insurance premiums for which it was responsible. The deal avoided layoffs, so the unions agreed, and the Legislature thereafter adopted Civil Service Law § 167(8) to effectuate the reductions for nearly all State employees and retirees, including the State’s 1,200 judges. As a result of the amendment, the State’s percentage of the judges’ health insurance premium contribution was reduced from 90% to 84%.

Here’s the rub. To ensure that the State’s judges are protected from political influence by manipulation of their pay, Article VI, § 25 of the New York Constitution protects the judges’ compensation from diminishment. In particular, the Judges’ Compensation Clause provides that “the compensation of State sitting and retired judges: ‘shall be established by law and shall not be diminished during the term of office for which [a judge] was elected or appointed'” (Opn, at 5, quoting NY Const, art VI, § 25[a]). The term “compensation” isn’t defined in the Compensation Clause, however.

Seizing on the ambiguity, 13 sitting and retired judges and a few associations of judges challenged the reduction of the State’s health insurance premium contributions, arguing that it violated the Compensation Clause by reducing the judges’ total compensations, which they read broadly to include all salary and benefits paid by the State.

Supreme Court, New York County agreed, and declared Civil Service Law § 167(8) and its implementing regulations unconstitutional as applied to the State’s judges. Particularly, the Court held, the First Department had previously taken a broad view of the term “compensation” to include both wages and benefits. The Court also found persuasive a case from the New Jersey Supreme Court, where that court held that a similar diminution in the compensation of New Jersey judges violated the New Jersey Constitution.

Because the only question involved in the case was the constitutionality of Civil Service Law § 167(8) under the Compensation Clause, the State used a rarely invoked provision of the Court of Appeals’ jurisdiction to appeal directly from the Supreme Court judgment to the Court of Appeals. CPLR 5601(b)(2) provides that “[a]n appeal may be taken to the court of appeals as of right . . . from a judgment of a court of record of original instance which finally determines an action where the only question involved on the appeal is the validity of a statutory provision of the state . . . under the constitution of the state.” This is a very limited right to appeal, but the majority felt that it fit in this case.

On appeal in Bransten v State of New York (No. 67), the Court of Appeals held that under the Compensation Clause, protected judicial “compensation” includes only “a judge’s salary and any additional monies that serve as a permanent remuneration for costs necessarily incurred in fulfillment of a judge’s judicial obligations” (Opn, at 7). From the Court’s prior case law on the topic, the Court gleaned two essential features of protected compensation: “the remunerative purpose and the permanence of the legislative allotment” (Opn, at 8). The health insurance premiums, the majority held, fit under neither of these criteria.

Indeed, if the health insurance premiums were included as compensation, all benefits, even the most trivial like parking privileges, could be viewed as protected. Those benefits are not what the Constitution intended to protect when it sought to free the judiciary from political meddling. Therefore, the majority held,

While the reduction in the State’s contributions to the costs of health insurance premiums would increase a participating judge’s share of the cost associated with the chosen health care plan, such an increase is not the equivalent of a direct reduction in judicial compensation. It is a cost that is voluntarily assumed by the participating judges, and affects salary only indirectly as the judge must make up the difference.

Justice Dillon, sitting by designation from the Second Department, concurred in the reversal of the Supreme Court judgment, but for a starkly different reason. He reasoned that the term “compensation” should be read broadly to include the health insurance premiums, but would have held that the plaintiffs failed their burden to establish entitlement to judgment as a matter of law regardless. As Justice Dillon explained, given the presumption of constitutionality to which state statutes are entitled, the Plaintiffs failed to submit any evidence that the State would actually be paying less money overall to judges. A violation of the Compensation Clause, he reasoned, requires a showing that total compensation will be diminished, not just that the percentage that the State pays for health insurance premiums will be reduced. In fact, Justice Dillon noted,

If, for instance, the State’s contributions toward health care insurance premiums increase in a relevant year by a dollar amount that exceeds the value of the State’s 6% reduction in contributions for jurists or the 2% reduction for retirees, the judiciary, rather than suffering a diminution of overall compensation, may arguably come out “ahead” in the equation. In other words, the 6% or 2% contribution reductions toward premiums, as authorized by Civil Service Law § 167(8), do not necessarily and mathematically reduce the value of the insurance payments provided by the State, like a see-saw, without additional evidence that insurance payments by the State have not independently risen by 6% or 2% or more, if at all.

Judge Wilson, continuing his trend as the judge most focused on the intricate matters of the Court’s jurisdiction, objected to the Court’s taking the case on direct appeal from Supreme Court. As Judge Wilson saw it, the potential diminution in the judges’ compensation came not from Civil Service Law § 167(8), but from its implementing regulations. Section 167(8) was just a grant of authority to adopt regulations, which did not itself cause any diminution in judicial compensation. Because the plaintiffs never challenged the implementing regulations, and CPLR 5601(b)(2) only authorizes a direct appeal for constitutional questions of “the validity of a statutory provision of the state,” not for challenges to regulations, Judge Wilson would have declined to take the case.

In the end, the Court of Appeals has now limited the scope of the Judicial Compensation Clause and provided a specific definition of what constitutes protected judicial “compensation” under the New York Constitution. Although it’s an interesting issue, it certainly doesn’t seem like one that will come up much more in the future, save for maybe the jurisdictional point.  For as Judge Wilson put it, “our decision today creates an amorphous jurisdictional portal, which may open for others in the future” (Wilson, J., concurring, at 2-3). We shall see.

The Court of Appeals’ opinion can be found here.

 

 

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