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OTB Retirees Will Lose Health Care Unless State Steps In, Officials Say

By Della Hasselle | December 15, 2010 9:41pm | Updated on December 16, 2010 6:25am

By Della Hasselle

DNAinfo Reporter/Producer

MANHATTAN — Over 900 retired New York City employees of Off-Track Betting could lose their health insurance as early as the end of the year because of the company's closure, according to the New York Law Department.

The OTB filed a motion Wednesday to dismiss bankruptcy proceedings, which would put the company out of business completely with no further pay-offs. They expect that motion to go through.

That means the retired employees won't get their health insurance, which is paid for by the city through funds provided by the state. The state had been able to reimburse the city from OTB's profits.

"Unfortunately, what this means-- as we previously advised the State and OTB-- is that unless the state steps in, OTB retirees will lose their medical benefits at month's end," New York City's corporation counsel Michael A. Cardozo said in a statement Wednesday.

"NYCOTB is a state corporation, and we strongly urge the State to take appropriate steps to protect and fully advise the retirees."

The company has had a long history of trouble, including five incidents of bankruptcy and mismanagement before finally shutting down last week, NYC law media director Kate O'Brien said Wednesday.

In 2008, the state assumed liability for the suffering company and promised to use OTB proceeds to reimburse the city for the $500 million in health and pension benefits for former NYCOTB workers.

That plan fell through a week ago, when a new bailout plan to save the ailing organization, which was buried under $228 million in debt, was shot down by the state legislature, closing the agency's doors and shutting down any revenue.

Although the city had previously advised the state and OTB about the issue of retirees losing health care, the state has failed to take any action.

Cardozo sent a letter last week to several officials, including the governor's office and OTB's bankruptcy counsel, saying that the city had no choice but to stop funding the benefits.

"Although the decisions described in this letter are NOT ones the City takes lightly, it has no choice but to take these steps," Cardonzo wrote.

The City cannot be called upon to bail out State public benefit corporations and authorities when they are put into financial distress by actions or inactions of the State."

As of Wednesday, the state had yet to respond to the letter.

Over 1,000 staff members lost their jobs at over 54 locations when the State Senate failed to pass the rescue bill.

The measure failed 29-21, ending what had been a week-long ordeal.

"Merry Christmas everybody. And I hope you'll have a good night sleep knowing these people might not even be able to collect unemployment insurance," State Sen. George Onorato, the chairman of the State Senate Labor Committee, said after the State Senate's voted to close the company.

"We gave the Senate one last chance to come through and do the responsible thing. And they didn't," NYC OTB Chairman Larry Schwartz added.