Medicare Supplement Plan Properly Discontinued by City
Post 5108
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New York’s Highest Court Approves Change in Medicare Plan
The City of New York decided to discontinue its Medicare supplemental plan, Senior Care, and enroll all retirees in a custom-designed Medicare Advantage Plan (MAP) managed by Aetna Life Insurance Company. Petitioners, consisting of nine retirees and one organization, initiated legal proceedings to prevent the City from eliminating their existing health insurance plans. They argued that the City had repeatedly promised to provide and pay for a Medicare supplemental plan upon retirement, and that they relied on these promises when making financial, employment, and retirement decisions.
In the Matter of Robert Bentkowski, et al. v. City of New York, et al., 2025 NY Slip Op 03690, No. 57, New York Court of Appeals (June 18, 2025) ruled in favor of the city.
The Trial Court
The Supreme Court ruled in favor of the petitioners on their promissory estoppel cause of action and their cause of action under Administrative Code of the City of New York and the Appellate Division affirmed. The City appealed.
The primary issue before the Court of Appeals was whether petitioners were entitled to judgment on their promissory estoppel cause of action. The Court of Appeals concluded that petitioners were not entitled to judgment on this cause of action, as they failed to establish the existence of a clear and unambiguous promise of Medicare supplemental insurance coverage for life.
Promissory Estoppel:
1. The Court found that the Summary Program Descriptions (SPDs) provided by the City were descriptive and for informational purposes only and did not constitute a clear and unambiguous promise of Medicare supplemental insurance coverage for life.
2. The affidavits submitted by the petitioners, including those from Lilliam Barrios-Paoli and hundreds of retirees, were based on the SPDs and did not establish a clear and unambiguous promise.
Administrative Code § 12-126 (b) (1):
The petitioners contended that the City was required to provide and pay for a Medicare supplemental plan under Administrative Code § 12-126 (b) (1). The Court rejected this contention, stating that the requirement prohibits the City from passing any portion of the cost up to the statutory cap on to its employees and retirees, but does not require the City to fund health insurance without the benefit of federal subsidies.
Conclusion:
The Court reversed the order of the Appellate Division and remitted the matter to Supreme Court for further proceedings in accordance with its opinion.
DISCUSSION
Respondents answered, arguing, among other things, that the City’s statements in the SPDs did not constitute “a clear and unambiguous forward-looking promise sufficient to support a promissory estoppel claim.” Furthermore, respondents stated that the Aetna MAP was the product of negotiation between the City, Aetna, and the Municipal Labor Committee (MLC), which represents over 100 municipal unions in the collective bargaining process. According to respondents, the Aetna MAP would allow the City to access federal subsidies, creating $500 million in savings to be allocated to a Health Benefits Stabilization Fund to provide sufficient reserves for future health benefits.
Any inference of a lifetime promise derived from the SPDs is even less plausible in light of the prefatory language employed therein and the mayoral cover letters. Because there is no clear and unambiguous promise in the SPDs, the affidavits of Barrios-Paoli and the hundreds of retirees likewise fail to establish the existence of such a promise.
The parties stipulated to the completeness of the record. On that record, petitioners failed to introduce sufficient evidence to establish that the City’s decision to shift retirees to the Aetna MAP constitutes a diminution in retiree benefits or the City’s contributions for those benefits.
The order of the Appellate Division reversed with costs, and matter remitted to Supreme Court, New York County, for further proceedings in accordance with the opinion herein.
ZALMA OPINION
Promises to provide health insurance coverage and Medicare Supplement Coverage must be clear and unambiguously to provide such services for the life of the employee or retired employee for a court to compel the city to keep the promises. The promises of coverage were not kept because they were not made to be a “forever benefit.” Shifting benefits from one program to another did not diminish the benefits promised.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Post 5396
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Post 5421
Posted on August 11, 2026 by Barry Zalma
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Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units. After an underlying personal injury action was filed, Union Mutual determined that the property actually contained three apartment units and rescinded the policies on the ground that the defendants had made a material misrepresentation in the applications.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
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LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true facts been disclosed. To establish materiality as a matter of law, the insurer must submit documentation of its underwriting practices, such as manuals, guidelines, bulletins, or rules addressing similar risks.
DISCUSSION/ANALYSIS:
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