Doctors Council v. New York City Employees' Retirement System

• Citation: 127 A.D.2d 380,514 N.Y.S.2d 922
• Parties: DOCTORS COUNCIL, Barry Liebowitz, as President of Doctors Council, Steven Seligman, Melvin Wiederlight, Warren Tannenbaum, David Kligman, Carolyn Prensky, Alje Vennema and Meenaksmi Bhuvaneswar, Plaintiffs-Appellants-Respondents, v. NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM, Philip R. Michael, as Chairman of the Board of Trustees of the New York City Employees' Retirement System, and Harold D. Herkommer, as Executive Director of the New York City Employees' Retirement System, Defendants-Respondents-Appellants.
• Decision Date: 05 May 1987
• Court: New York Supreme Court Appellate Division

Page 922

514 N.Y.S.2d 922

127 A.D.2d 380

DOCTORS COUNCIL, Barry Liebowitz, as President of Doctors Council, Steven Seligman, Melvin Wiederlight, Warren Tannenbaum, David Kligman, Carolyn Prensky, Alje Vennema and Meenaksmi Bhuvaneswar, Plaintiffs-Appellants-Respondents, v. NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM, Philip R Michael, as Chairman of the Board of Trustees of the New York City Employees' Retirement System, and Harold D Herkommer, as Executive Director of the New York City Employees' Retirement System, Defendants-Respondents-Appellants.

Supreme Court, Appellate Division,

First Department.

May 5, 1987.

Richard M. Betheil, of counsel (Ronald H. Shechtman, with him on brief; Pryor, Cashman, Sherman & Flynn, New York City, attorneys), for plaintiffs-appellants-respondents.

Carolyn A. Reed, of counsel (Fay Leoussis, with her, on brief; Frederick A.O. Schwarz, Jr., New York City, attorney), for defendants-respondents-appellants.

Joel Giller, of counsel (Beverly Gross, New York City, attorney) for Victor Gotbaum, as Executive Director of District Council 37, Americ Federation of State, County and Mun. Employees, as amicus curiae.

Before MURPHY, P.J., and SULLIVAN, ASCH and WALLACH, JJ.

SULLIVAN, Justice.

Plaintiffs, seven part-time doctors employed by the City of New York or the New York City Health and Hospitals Corporation (HHC), joined by their collective bargaining representative, Doctors Council, have brought this action seeking, inter alia, a declaration that they are entitled to membership in the New York City Employees' Retirement System (NYCERS). Defendants, NYCERS and the Chairman of its Board of Trustees and its Executive Director seek a declaration also that membership is limited to employees in full-time City service. Both sides moved for summary judgment on the issue.

Doctors employed by either the City or HHC fall into two basic categories for payroll purposes--per annum doctors, who are paid according to an annual salary rate; and sessional doctors, paid at an hourly rate. Both are permanent City or HHC employees with regularly scheduled hours of work. Although the common understanding is different, a doctor whose compensation is fixed at a per annum basis is not necessarily a full-time employee, that is, one who, according to NYCERS, works at least 35 hours per week. Both sessional and per annum doctors may be employed either full-time or part-time. Of the 1900 doctors employed by the City and HHC and represented by Doctors Council, approximately 1300 are employed for less than 35 hours per week.

All per annum and most sessional doctors have full tenure protection under section 75 of the Civil Service Law or the Doctors Council collective bargaining agreement with the City of New York and HHC. Both part-time per annum and sessional doctors enjoy full collective bargaining rights. They are subject to the same discipline and the same accountability as to hours and performance, including sign-in procedures, as are doctors employed in full-time per annum positions.

In January of 1981, the Executive Director of NYCERS, one of the largest retirement systems in the country, with approximately 184,000 active members and 94,000 retirees as of June 30, 1984, and an annual pension payroll of approximately $619,000,000, notified its Board of Trustees that some part-time employees, primarily doctors and dentists, had been accepted as members. After reviewing the recommendations of a subcommitt which had been established to study the issue, the Board subsequently passed a resolution, dated November 6, 1981, stating that it "does not have the power ... to direct that part-time employees shall be eligible for NYCERS membership." The Board resolved, however, that, since some part-time employees had erroneously been accepted into membership all those who had been accepted prior to November 6, 1981, the date of the resolution, would be continued as members. The November 6, 1981 resolution also instructed the Executive Director to implement administrative procedures to prevent any such recurrence.

As of November 8, 1981, all of the plaintiff physicians held positions requiring less than 35 hours of work per week. Three of them, Bhuvaneswar, Vennema and Tannenbaum, although employed in various positions before that date, had not filed applications for membership. In December 1981, these three plaintiffs filed requests under Chapter 1044 of the Laws of 1981 for retroactive membership. Similarly, in December of 1981, the other four plaintiff physicians, Kligman, Prensky, Seligman and Wiederlight, although members of NYCERS prior to November 6, 1981, requested a transfer of benefits status to Tier I from Tier II or Tier III. NYCERS refused to process these applications on the ground that part-time employees are not eligible for membership.

Plaintiffs thereafter commenced this action, seeking declaratory and injunctive relief and asserting four causes of action: that the plaintiff physicians are entitled to NYCERS membership under the relevant statutory provisions; that defendants are estopped from denying the right of the four plaintiffs who are currently NYCERS members to transfer to Tier I retirement status; that they are also estopped from denying the applications for retroactive membership of the three plaintiffs who were not members before November 6, 1981; and, that the denial of the plaintiff physicians' applications is prohibited by the equal protection and due process clauses of the New York and the United States Constitutions. The parties have stipulated that any final judgment in this action will apply to all other doctors and dentists represented by Doctors Council who have been refused membership or transfers of status because of their part-time employment.

According to its present Executive Director, who has been with the retirement system in various capacities since 1958, NYCERS has had a "continuing" and "longstanding" policy of excluding part-time employees from membership. NYCERS acknowledged that some part-time employees had been accepted as members, but insisted that such instances were the result of error, usually caused by the absence of complete and accurate information as to the nature of the applicant's job or a lack of awareness by staff members that the applicant's job title represented a part-time position. According to NYCERS, its policy, upon discovery of such mistakes, has been to terminate the part-time employee's membership and refund all of his or her contributions.

To support their position, defendants submitted two internal memoranda, one dated November 26, 1970 and the other, October 12, 1971, from Arthur Van Houten, the then secretary of NYCERS, in which he informed the staff that, under NYCERS' rules and regulations, part-time employees were excluded from membership. Defendants submitted a third memorandum, also signed by Van Houten and dated August 16, 1971, denying NYCERS membership to a transcribing typist in the Department of Social Services because she was a part-time employee. According to Van Houten, these 1970-1971 memoranda "reflect the legal advice which I received at that time from the Corporation Counsel to the effect that, pursuant to the applicable law and regulations governing the operations of NYCERS, part-time employees were not eligible for membership." That advice, based on a review of the pertinent statutes, NYCERS' rules and an earlier 1936 opinion of the corporation Counsel, was ultimately set forth in a letter from the Corporation Counsel to Van Houten, dated November 24, 1974, stating, "[I]t has been the consistent practice of the Retirement System for at least 36 years, and apparently from the inception of the System, to follow the foregoing interpretation, as set forth in the [1936] opinion of the Corporation Counsel, that part-time employees are ineligible for membership."

In an affidavit in support of plaintiffs, however, Van Houten maintained that the Corporation Counsel's 1974 opinion was a "new position", and that NYCERS' policy, to the contrary, had been to accept part-time employees as members. Van Houten cited the minutes of meetings of the Board of Estimate, which, until 1969, had acted as NYCERS' Board of Trustees, claiming that "a review of the first volume of those minutes for the years 1930, 1940, 1950, 1960, and 1965 indicates that per diem, per session, hourly and part-time employees were both members of NYCERS and received retirement benefits from the system in significant numbers in each of those years." Van Houten further pointed out that "NYCERS members in those payroll categories included not only doctors, but also non-per annum employees in [a variety of titles, including laborer, cleaner, dock-builder, senior stationary engineer]."

In reply, defendants presented an analysis of the Board of Estimate minutes upon which Van Houten relied to demonstrate that of the approximately 131 employees mentioned in the Board minutes only two ever sought retirement credit on the basis of less than full-time employment. One of these part-time employees was apparently a doctor, paid on a per session basis. Most of the employees mentioned in the Board minutes were classified as "per diem" or "hourly", terms, which, according to defendants, only describe the method by which an employee's pay is computed and do not, contrary to Van Houten's conclusion, indicate part-time employment status. In fact, a review of the still-existing NYCERS files of the per diem and hourly employees mentioned in the Board minutes disclosed that they all had been full-time employees. ¹

Plaintiffs also submitted the affidavits of Donald C. Meyer, the Executive Director of Doctors Council, and Robert Pick, a former City negotiator. Dr. Meyer stated that he had been employed by the City as a sessional dentist since 1957 and had been a NYCERS member since 1958, and that such membership was required as a condition of his employment. Pick, as...