Local 589 International Ass'n of Fire Fighters v. City of Newburgh

OPINION OF THE COURT Lazer, J. At issue is the validity of a collective bargaining provision which under certain circumstances confers upon a private physician selected by mutual agreement of the parties the power to decide whether a fire fighter sustained a job-related illness or injury for purposes of establishing eligibility for benefits pursuant to General Municipal Law § 207-a. We conclude that the provision is a valid one. Local 589, International Association of Fire Fighters, AFL-CIO, commenced this proceeding to confirm a compulsory arbitration award imposing a contract between Local 589 and the City of Newburgh after an impasse had been reached in the collective bargaining process. The city cross-moved to vacate the arbitration award on a variety of grounds, only one of which is raised on this appeal from the ensuing judgment confirming the award. Contending that Special Term erred in confirming the portion of the award that amended article — 398 — XXIV of the collective bargaining agreement, the city argues that the provisions of the award establishing a procedure for determining section 207-a benefits are contrary to public policy and thus that portion of the award must be vacated. General Municipal Law § 207-a requires a municipality with a population of under 1,000,000 to provide fire fighters who are disabled in the line of duty with greater benefits than those awarded fire fighters who are otherwise disabled. Since the statute is remedial in nature and is intended to provide a benefit to fire fighters, it is to be construed liberally in their favor (see, Matter of Mashnouk v Miles, 55 NY2d 80, 88; Pease v Colucci, 59 AD2d 233, 235). Unlike the provisions conferring somewhat similar benefits on fire fighters employed by the City of New York (see, Administrative Code of City of New York § B19-7.84), section 207-a establishes no procedural framework for determining whether a fire fighter has suffered a job-related illness or injury, instead allowing each municipality to formulate its own procedure consistent with the demands of due process (see, Legg v Fitzmaurice, 112 Misc 2d 283). Presumably, this was intended to permit each municipality to devise a methodology consistent with local needs. The previous collective bargaining agreement between the City of Newburgh and Local 589 established a medical review board to determine whether a fire fighter had sustained a job-related injury or illness. Article XXIV of that agreement provided as follows: "There shall be a Medical Review Board to determine whether an individual member of the unit has an illness or injury which is job related under 207-a of the General Municipal Law. Such Board shall be comprised of a physician selected by the unit member, a physician selected by the City and in the event that these physicians cannot agree, then a physician shall be selected by the mutual agreement of the individual’s physician and the City’s physician to make a determination. "The recommendation of the physician selected by the mutual agreement of the individual’s physician and the City’s physician shall be advisory to the hearing officer named by the City in determining benefits under Section 207a [sic] of the General Municipal Law. Subject only to review in an Article 78 proceeding.” The arbitrators included this provision in the new contract — 399 — they imposed, but with an important modification which is the subject of the instant dispute. The second paragraph of the article was amended to read: "The determination of the physician selected by the mutual agreement of the individuals [sic] physician on [sic] the city’s physician shall be final subject to an appeal in an Article 78 proceeding by either party.” Although the wording of the provision leaves much to be desired, all parties agree that the effect of this modification is to grant determinative power to the agreed-upon physician. They disagree as to the validity of the provision. In determining the validity question, it is irrelevant that the contract was imposed by compulsory arbitration and was not reached through successful collective bargaining. It is well settled that a court may set aside a binding compulsory arbitration award of this nature only if the award is found to be arbitrary and capricious (see, Caso v Coffey, 41 NY2d 153, 158; Mount St. Mary’s Hosp. v Catherwood, 26 NY2d 493, 508-510). In deciding whether an award has a rational basis or is arbitrary and capricious, various factors will come into play, depending on the nature of both the challenged provision of the award and the challenge itself. For example, when the challenge is made to the amount of a wage increase on the basis of the employer’s fiscal condition, the strength of the evidence proffered to the arbitral panel is clearly relevant (see, Caso v Coffey, supra, at p 158). On the other hand, when, as here, a contractual provision in such an award is attacked as being contrary to public policy, it can be deemed arbitrary and capricious only if the same provision would be deemed violative of public policy had it been freely entered into by the employer. Any other approach would limit the efficacy of this means of resolving public labor disputes. So viewed, the question before us is whether a municipality may delegate to a physician selected by the parties to their agreement the power to determine whether a fire fighter suffers from a job-related illness or injury. At the outset, we conclude that delegating the determination whether a fire fighter has sustained a job-related injury or illness to a private physician when the physicians selected by the city and Local 589 are unable to agree is analogous to submitting such a dispute to an arbitrator, and the validity of such a delegation is to be tested by the same principles as are applied to determine whether a public entity may delegate a part of its decision-making power to an arbitrator. The general rule, of course, is that a public employer may agree to — 400 — arbitrate disputes with its employees (see, Syracuse Teachers Assn. v Board of Educ., 35 NY2d 743, 744; Board of Educ. v Associated Teachers, 30 NY2d 122). Nonetheless, there exist "a small number of areas, interlaced with strong governmental or societal interests” (Binghamton Civ. Serv. Forum v City of Binghamton, 44 NY2d 23, 29, citing Matter of Susquehanna Val. Cent. School Dist. [Susquehanna Val. Teachers' Assn.], 37 NY2d 614, 616-617) which are so basic to the proper functioning of the public employer that it may not delegate the power to make decisions falling within those areas. Thus, if the delegation of the decision-making power in this case does implicate a strong public policy, "as evidenced by statutory and decisional law” (Binghamton Civ. Serv. Forum v City of Binghamton, supra, at p 29), it must be set aside (see, e.g., Matter of Candor Cent. School Dist. [Candor Teachers Assn.], 42 NY2d 266). This public policy exception to arbitrability has been applied sparingly in recent years as arbitration has achieved increasing recognition as a viable means of settling disputes. Thus, the Court of Appeals, in rejecting a challenge to an arbitration award which limited the powers of a school district in making teacher assignments, unequivocally declared that: "Incantations of 'public policy’ may not be advanced to overturn every arbitration award that impairs the flexibility of management of a school district. Every collective bargaining agreement involves some relinquishment of educational control by a school district. Only when the award contravenes a strong public policy, almost invariably involving an important constitutional or statutory duty or responsibility, may it be set aside” (Matter of Port Jefferson Sta. Teachers Assn. v Brookhaven-Comsewogue Union Free School Dist., 45 NY2d 898, 899). In a similar vein, the Court of Appeals has upheld the delegation by a public employer to an arbitrator of the power to impose sanctions on errant public servants, even when the misconduct rises to the level of receiving bribes to violate the public trust, and the sanction imposed is relatively minor (Binghamton Civ. Serv. Forum v City of Binghamton, supra). When such significant aspects of a public body’s authority can be delegated to an arbitrator, it follows that the power to decide whether a particular fire fighter has sustained a job-related injury or illness can similarly be submitted to an unbiased third-party physician, at least in the absence of a clear and convincing indication of a contrary legislative intent. — 401 — In determining whether there is contrary legislative intent, we have considered the fact that certain other statutes conferring similar benefits on public employees specifically provide that the determination of whether an injury is job related is to be made by a specific official or body. Nevertheless, an examination of the relevant provisions reveals no comprehensive scheme for making such determinations. Rather, in each case the Legislature has taken a separate approach, varying with the public entity involved. Thus, in those cases in which the State Retirement System is the source of the benefits, the statutes specifically delegate that power to the Comptroller (see, e.g., Retirement and Social Security Law §§ 363, 363-c). When the benefits are to be paid to police or fire fighters employed by the City of New York from their respective pension funds, the New York City Council chose to utilize a more formal, bifurcated procedure, whereby the determination whether an employee was disabled is to be made by a medical review board, whereas the determination whether the injury was job related is to be made by a board of trustees in which the power is equally divided between city representatives and employee representatives (Administrative Code §§ B18-43.0, B19-7.84; Matter of Canfora v Board of Trustees, 60 NY2d 347; Matter of City of New York v Schoeck, 294 NY 559, 567-568). Finally, with respect to benefits to be paid by the many other municipalities, the Legislature has chosen not to provide any particular mechanism for determining eligibility, instead allowing each public entity to fashion its own methodology (see, General Municipal Law §§ 207-a, 207-c). While the decision is necessarily to be made by the employer or its agents in the absence of any other provisions (see, King v City of Newburgh, 84 AD2d 388, 393), this in no way indicates a legislative intent to preclude delegation. Indeed, two contrary lessons are to be drawn from the statutes. First, in enacting each provision, the Legislature established whatever procedure it thought most suitable under the circumstances and, more importantly, when the Legislature wished to provide a specific procedure, it was quite capable of doing so. Hence, we find no basis in the statutes for any public policy against delegation. Moreover, the mere fact that the power has initially been assigned to the municipality by the Legislature is certainly not determinative, for if that were so, all delegation would be improper. We see no merit in the argument that the delegation is — 402 — illegal because it permits persons who are not public officials to decide matters involving the expenditure of public funds. The delegation to a third party of decisions requiring the payment of public moneys is not per se violative of public policy, for that is exactly what happens whenever a wage settlement is imposed upon a public employer through the compulsory interest arbitration process (see, e.g., Caso v Coffey, 41 NY2d 153, supra). In the instant case, moreover, the Legislature, in enacting General Municipal Law § 207-a and its predecessors, has already made the fundamental, discretionary decision that a fire fighter who suffers a job-related injury or illness is entitled to the benefits provided by that statute, and that public funds must be expended to provide those benefits. Thus, a fire fighter in that situation must be awarded such benefits as a matter of right and regardless of the effect on the municipal budget. The only determination to be made is the essentially factual decision whether a particular fire fighter does in fact have a job-related injury or illness. While this may at times pose a complex question, it does not implicate any fundamental policy concerns. Therefore, we find no justification for concluding that this decision may not be delegated to an impartial physician while decisions concerning such important matters as appropriate sanctions for malfeasance by public employees (Binghamton Civ. Serv. Forum v City of Binghamton, 44 NY2d 23, supra), teacher assignments (Matter of Port Jefferson Sta. Teachers Assn. v Brookhaven-Comsewogue Union Free School Dist., 45 NY2d 898, supra), and staff size (Matter of Susquehanna Val. Cent. School Dist. [Susquehanna Val. Teachers' Assn.], 37 NY2d 614, supra) may be delegated to an arbitrator. The determination whether a fire fighter has suffered a job-related illness or injury simply does not implicate the type of basic policy decisions at issue in those cases in which public policy has been held to bar delegation. This can be seen by consideration of the teacher tenure area, which provides what is perhaps the clearest example of an improper delegation of power. The Court of Appeals has held that the duty of a school board to determine whether a probationary teacher is to be granted tenure may not be delegated to a third party (Matter of Cohoes City School Dist. v Cohoes Teachers Assn., 40 NY2d 774). Unlike the determination at issue here, the duty to make tenure determinations is specifically imposed by statute upon a board of education and, more importantly, the decision is so discretionary in nature that a board need give — 403 — no reason for a denial of tenure unless it has been established that the denial was apparently for an illegal reason (Education Law §§ 2509, 2573, 3012; James v Board of Educ., 37 NY2d 891). It is because the exercise of the power to grant or deny tenure involves a consideration of numerous discretionary factors relating to such matters as the ability of the teacher and the educational policies and needs of the district that this decision must ultimately rest with the school board. Any other rule would impair the board’s fundamental obligation to maintain an adequate educational system (Matter of Cohoes City School Dist. v Cohoes Teachers Assn., supra, at pp 777-778). For similar reasons it has been held that a school board may not give up its power to inspect teacher personnel files, a function deemed essential to the tenure determination (see, Board of Educ. v Areman, 41 NY2d 527, 531-533). It is only when the proposed delegation involves such fundamental policy concerns, however, that it will be barred on public policy grounds (see generally, Matter of Port Washington Union Free School Dist. v Port Washington Teachers Assn., 45 NY2d 411). Thus, a school district is free to supplement the tenure decision with preliminary procedural safeguards and to establish grievance procedures for tenured teachers (see, Matter of Cohoes City School Dist. v Cohoes Teachers Assn., supra; Matter of Candor Cent. School Dist. [Candor Teachers Assn.], 42 NY2d 266, supra; Board of Educ. v Associated Teachers, 30 NY2d 122, supra). Similarly, a school district may limit its power to assign teachers (Matter of Port Jefferson Sta. Teachers Assn. v Brookhaven-Comsewogue Union Free School Dist., 45 NY2d 898, supra) and to determine questions of staff size (Matter of Susquehanna Val. Cent. School Dist. [Susquehanna Val. Teachers' Assn.], 37 NY2d 614, supra), although these determinations clearly involve educational policy to some extent. In short, in the absence of a specific legislative proscription, it is only when a fundamental policy decision is at issue that public policy precludes delegation. Simply put, the determination whether a fire fighter has suffered a job-related injury or illness implicates no such fundamental and discretionary policy decision. If he or she has sustained such an injury or illness, benefits must be provided, regardless of the effect on the public entity’s budget and without any review of relevant governmental policies. Thus, there exists no overriding reason why this factual decision cannot be left to an unbiased third-party physician without running afoul of any strong public policy. — 404 — Accordingly, there should be an affirmance of the judgment insofar as appealed from.