NEW YORK, May 26 (Reuters) - Nearly 1,000 former Off-Track
Betting employees will lose their health benefits after an
appellate court ruled Thursday that the city is not responsible
for covering the defunct gambling operation's bills.
In a two-paragraph ruling, the Appellate Division, First
Department, sided with the city, which argued it should not be
forced to pay for benefits because the bankrupt New York City
Off-Track Betting Corporation no longer contributes to those
District Council 37, the union that represents many of the
retirees, "cannot show a probability of success on the merits,"
the court wrote. The five-judge panel denied the union's
request for a preliminary injunction to stop the city from
The union had requested the injunction in December 2010.
After Judge Cynthia Kern of the Supreme Court denied that
request in January, the union appealed, and the appellate court
ordered the city to continue covering the benefits until it
ruled on the appeal.
During that time the city paid more than $1.8 million in
benefits without reimbursement, according to the city's law
department. It had originally planned to stop paying benefits
on Jan. 1 of this year.
The executive director of District Council 37, Lillian
Roberts, said the union is "disappointed" and plans to appeal
the ruling to the Court of Appeals, the state's highest court.
The state took over city OTB operations in 2008 under a
bill that required the city, among other things, to pay retiree
health-care costs as long as the agency reimbursed those
"The duty to pay for the benefits rested with OTB," said
the city's corporation counsel, Michael Cardozo. "There was no
requirement for the city to 'bail out' the state or OTB without
any assurance of repayment, especially in these dire budget
Cardozo added that the situation is "unfortunate" and
called on the state to take steps to protect OTB retirees from
losing their benefits.
A budget spokesman for Gov. Andrew Cuomo declined to
The case is Lillian Roberts et al v. David Paterson et al,
Appellate Division of the Supreme Court of New York, First
Department, No. 116602/10.
For Roberts: Ernst Rosenberger of Stroock & Stroock &
For New York City: Sharyn Rootenberg of the New York City
For New York State: Laura Johnson of the New York State
Attorney General's Office.
(Reporting by Joseph Ax)