A ruling rendered by a state arbitrator may force Paterson to drop out of the state plan for public employees’ medical benefits — a program that Mayor Andre Sayegh has said would save the city as much as $20 million per year.
The arbitrator determined the city failed to ensure that its employees would get comparable medical coverage when Paterson scrapped its self-insurance program last year and switched to the state plan, officials said. In the ruling, the arbitrator directed Paterson to return to the state plan and to compensate employees for extra costs they incurred as a result of the switch, according to union leaders and officials.
But Sayegh said Paterson would contest the ruling. “We do not agree with the arbitrator’s decision and plan to appeal,” the mayor said.
Kyle Hughes, president of the firefighters’ union, said his group and the unions for Paterson police officers filed contract grievances over the health insurance change because they believed the city failed to provide comparable coverage when it went to the state plan.
The union president said employees had difficulty getting prescriptions under the new insurance that they were able to obtain under the old self-insurance plan. In some instances, he said, workers had to pay for medications that previously were covered.
Hughes asserted that the change should have been addressed in contract negotiations with the unions, but the city made the switch unilaterally. “We asked them to wait, but they forced it down our throats,” he said.
Paterson’s most recent set of labor contracts included provisions that said any changes in medical coverage had to provide coverage equal to or better than what was already in place.
Hughes also said the unions have questioned the administration’s projections for cost savings in the health care switch. Last year, the Sayegh administration said Paterson’s health coverage bill would exceed $65 million if the city continued using self-insurance. By moving into the state plan, the city budgeted $41 million, according to public records.
Paterson saw its employee health benefit costs skyrocket earlier this decade when the budget line item soared from $37 million in 2013 to $48 million in 2016. At one point during that period, the city had to borrow $4 million because it didn’t have enough money to pay for its employees’ medical bills under the old self-insurance program.
Officials said it is unlikely that the arbitrator’s decision on would bring about a quick change in the medical coverage. If the city appeals, officials said, the litigation likely could be lengthy. But even if the city opted not to appeal, a return to the self-insurance program would require the city to establish a whole new set of medical contracts.
Mason Maher, president of the union that represents Paterson’s ranking police officers, said his group wants the city to switch back to the self-insurance plan now, rather than going through the legal delays.