The question in this case was whether courts should infer that health-insurance benefits in collective bargaining agreements vest, such that they extend beyond when the agreements expire. In unanimous decision, the Court (Singas, J.) held that courts should not infer that health-insurance benefits vest, but should instead interpret collective bargaining agreements using the standard tools of contract interpretation.
The case arises from a long-running litigation between the collective negotiating representative of the largest bargaining unit of New York State workers (CSEA) and the State. In their collective bargaining agreement for 2007–2011, the State and CSEA agreed to contribute a certain amount to cover insurance costs for state employees and retirees, and their dependents. The agreement didn’t specify how long the State would contribute at those rates.
The question at the heart of this case, which came to the Court on a certified question from the Second Circuit, was whether right to have the State contribute to insurance coverage at a certain rate vested.
In answering that question, the Court of Appeals started by rejecting the inference that health-insurance rights vest. The Court had left that question open in Kolbe v. Tibbets, a 2013 case recognizing that some federal courts, including the Sixth Circuit in International Union v. Yard-Man, Inc., had held, based on policy considerations, that courts should infer that contractual health-insurance rights vest.
Two years after Kolbe, the U.S. Supreme Court rejected Yard-Man as a matter of federal law, clarifying that courts should apply ordinary contract-interpretation principles when analyzing collective bargaining agreements. And ordinary contract-interpretation principles call for interpreting contracts based on what they say, rather than based on unwritten, policy-based inferences.
The Court of Appeals here adopted the same approach under state law. Applying that approach, the Court concluded that the 2007–2011 agreement did not expressly provide for vesting, since it nowhere stated that the State would continue to contribute at a certain rate after the agreement expired. The Court declined to say whether the 2007–2011 agreement was ambiguous, instead leaving that question for the Second Circuit to decide.