Can a New York regional Off-Track Betting Corporation give its board of directors health insurance, either through the OTB itself, through the county, or by letting directors buy into NYSHIP at their own expense?

Plain-English summary

The Suffolk Regional Off-Track Betting Corporation's president and vice-president asked the AG three layered questions: can the OTB give its directors health insurance? if not, can Suffolk County? if not, can directors at least buy into the New York State Health Insurance Plan (NYSHIP) using their own money?

The AG said no to all three.

OTB-funded benefits: not authorized. OTB directors, unlike the public-authority board members in the 2007-F1 opinion, are statutorily authorized to receive compensation, but only in the precise amounts laid out in Racing, Pari-Mutuel Wagering and Breeding Law § 502(10):

• Up to $250 per regular meeting day, capped at $2,500 per year (502(10)(a)).
• Up to $100 for other approved OTB business days, capped at $1,500 per year (502(10)(b)).
• An extra $1,000 per year for the chair (502(10)(c)).
• Reimbursement of actual and necessary expenses (502(10)(d)).

The directors are explicitly compensated for up to 25 OTB days per year, no more. The board has no general authority to fix its own members' compensation (compare § 503(6), which gives the board that power over officers, agents, and employees). The AG applied expressio unius (Town of Riverhead v. State Bd. of Real Prop. Servs., 5 N.Y.3d 36 (2005)): the legislature wrote a specific compensation list, so anything not on it is off the table. And Abiele Contracting makes public-benefit corporations creatures of statute that cannot exercise undelegated powers. Health insurance is a form of compensation, so it cannot be added on top of the § 502(10) menu.

County-funded benefits: also barred. The AG reframed the question: forget who writes the check; can the directors receive additional compensation beyond what § 502(10) authorizes? No. The directors' eligibility cap on compensation runs against any source, not just OTB funds. Suffolk County cannot put a health-insurance benefit on top of the statutory ceiling.

NYSHIP buy-in at the director's own expense: also blocked. Assuming OTBs can participate in NYSHIP (per Civil Service Law § 163(2)) and assuming directors are "employees" for NYSHIP purposes (the AG made the assumption without deciding), Civil Service Law § 167(2) still gets in the way. The statute requires the employer to pay at least 50% of the premium for any non-exempt participant. The 1998 amendment exempts only unpaid elected officials and unpaid public-authority board members. OTB directors are not unpaid (they receive § 502(10) per diems). So if a director enrolled, the OTB would be statutorily required to pay 50% of the premium, which is exactly the supplemental compensation forbidden by § 502(10). The director could not opt to pay 100% out of pocket; the statute does not give either party that option.

Background context. The opinion builds on Op. Att'y Gen. No. 2007-F1, which held that public agencies whose board members serve without compensation cannot pay for their health benefits. The OTB situation is the inverse: directors are compensated, but only in the dollar-bounded way the Legislature wrote into § 502(10), and that statute's specificity is what does the work. The AG also flagged a 1978 Comptroller opinion to the contrary (Op. St. Comptr. No. 78-811) but noted that the Comptroller's office has more recently embraced the same approach the AG takes here.

Currency note

This opinion was issued in 2008. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why is the OTB different from a typical public benefit corporation?
The compensation question for most public benefit corporations is whether their board can set its own pay. The OTB's enabling statute pre-answers that question with a fixed schedule. That makes the expressio unius canon especially strong: the Legislature wrote down what directors get.

Can the OTB legally give a director a Christmas bonus, an awards-banquet payment, or other small compensation?
No, by the same logic. Section 502(10) is the universe. The chair gets $1,000 extra; everyone else is capped at $2,500 + $1,500 + expenses.

What if a director declines all per-diem fees? Does that make them "unpaid"?
The opinion does not directly address this, but the structural answer would be that the statutory entitlement to compensation, not its actual receipt, drives the analysis. A director who waives fees is still a director the Legislature classified as compensated. The Civil Service Law § 167(2) exception likely would still not apply.

Can the OTB pay for liability insurance, training, or travel?
The opinion does not reach those questions. The reimbursement clause in § 502(10)(d) covers "actual and necessary expenses incurred in the performance of [the director's] official duties," which would cover at least some of these in principle.

Does this apply to all regional OTBs in New York?
The compensation provision is in the general OTB statute, so yes, the analysis applies to other regional OTBs. NYC OTB has a separate statutory regime (see § 606(3)) and would need a separate look.

Background and statutory framework

Regional OTB corporations are public benefit corporations under Racing, Pari-Mutuel Wagering and Breeding Law § 502(1). The board is appointed by the county's governing body. The board exercises all the powers of the OTB. § 502(8). Section 502(10) sets the directors' compensation in detail; § 502(11) allows directors to hold outside employment; § 503(6) gives the board authority to set compensation for officers, agents, and employees, but conspicuously not for the directors themselves; § 516(2) requires net OTB revenue to be paid to the participating counties.

Per-diem-as-compensation. General Municipal Law § 77-c allows local governments to pay per-diem meal allowances in lieu of itemized reimbursement for officers and employees on official business. In some contexts a per diem is a reimbursement proxy. In the OTB context, where directors get both per diems and reimbursement for actual expenses, the AG treats the per diems as compensation.

NYSHIP rules. Civil Service Law § 163(2) lets the Civil Service Commission president authorize NYSHIP participation for public benefit corporation employees. Section 167(2) imposes the 50% employer contribution rule with the 1998 carve-out for unpaid elected officials and unpaid public-authority board members.

Earlier guidance. Op. Att'y Gen. No. 2007-F1 (HFA/SONYMA): unpaid board members cannot get employer-paid health benefits because their enabling acts say no compensation. Op. St. Comptr. No. 78-811: contrary view, no longer followed. Office of the State Comptroller, Buffalo Sewer Authority audit (2007): authority board members who receive fixed compensation cannot also get health benefits.

Citations

• Racing, Pari-Mutuel Wagering and Breeding Law § 502 (regional OTB structure); § 502(1) (PBC status); § 502(8) (board exercises OTB powers); § 502(10) and its subdivisions (a)-(e) (compensation schedule, including chair stipend and expense reimbursement); § 502(11) (outside employment permitted); § 503(6) (board may fix compensation of officers, agents, and employees); § 516(2) (net revenue payment to counties); § 606(3) (separate NYC OTB health benefit rule).
• General Municipal Law § 77-c (per-diem meal allowance in lieu of itemized reimbursement).
• Civil Service Law § 163(2) (NYSHIP participation authorization for PBC employees).
• Civil Service Law § 167(2) (50% employer contribution; 1998 unpaid-official exception).
• Abiele Contracting, Inc. v. New York City School Constr. Authority, 91 N.Y.2d 1, 10 (1997) (public authority has only delegated powers).
• Town of Riverhead v. State Bd. of Real Prop. Servs., 5 N.Y.3d 36, 42-43 (2005) (expressio unius canon).
• Op. Att'y Gen. No. 2007-F1 (HFA/SONYMA board health insurance).
• Op. St. Comptr. No. 78-811 (1978; contrary view, superseded).
• Office of the N.Y. State Comptroller, Buffalo Sewer Authority: Internal Controls over Health Insurance (2007).

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/I_2008-3_pw.pdf

Original opinion text

RACING PARI-MUTUEL WAGERING AND BREEDING LAW §§ 502, 502(1),
502(8), 502(10), 502(10)(a), 502(10)(b), 502(10)(c), 502(11),
503(6), 516(2), 606(3); GENERAL MUNICIPAL LAW § 77-c; CIVIL
SERVICE LAW §§ 163(2), 167(2)

The Suffolk Regional OTB Corporation may not provide health benefits to its directors. The directors may not receive health benefits from the county nor may they participate in the New York State Health Insurance Plan at their own expense.

May 22, 2008

Jeffrey A. Casale
President & CEO

Marietta M. Seaman
Vice President
Suffolk Regional Off-Track Betting Corporation
5 Davids Drive
Hauppauge, New York 11788

Informal Opinion
No. 2008-3

Dear Mr. Casale and Ms. Seaman:

You have requested an opinion regarding whether the Suffolk Regional Off-Track Betting Corporation (hereinafter "OTB") is authorized to provide health insurance benefits to its current and retired directors. You have asked several additional questions, depending on our answer to the first question. If we conclude that the OTB is authorized to provide health insurance benefits to its directors, you have asked whether they are eligible for inclusion in the New York State Health Insurance Plan (NYSHIP). If we conclude that the OTB is not authorized to provide health insurance benefits to its directors, you have asked whether the county that authorized the OTB could grant health insurance benefits to the OTB directors. If not, you have asked whether the OTB directors can participate in NYSHIP at their own expense.

Background

Your request follows upon an opinion issued by this Office, Op. Att'y Gen. No. 2007-F1, in which we concluded that public agencies whose board members were to be uncompensated for their service may not pay for health insurance benefits for their current or former board members, because the provision of health insurance benefits is a form of compensation.

Regional off-track betting corporations are established as public benefit corporations. Rac. Pari-Mut. Wag. & Breed. Law § 502(1). The Suffolk OTB is administered by a board of directors, the members of which are appointed by the governing body of Suffolk County. Id. The powers of the OTB are exercised by its board of directors. Id. § 502(8). Unlike the public agencies that were the subject of Op. Att'y Gen. No. 2007-F1, the directors of the OTB are statutorily authorized to be compensated. Their compensation is provided as follows:

a. The directors may receive a sum of two hundred fifty dollars for each day or part thereof spent in attendance at meetings held in accordance with subdivision eight of this section [relating to regularly-scheduled meetings], but not to exceed twenty-five hundred dollars during any one year.

b. The directors may receive a sum of one hundred dollars for each day or part thereof at meetings other than those defined in subdivision eight of this section or otherwise in the work of the corporation; provided that such activities are approved by the board as a whole. Such additional expenses shall not exceed fifteen hundred dollars in any calendar year.

c. The chairman of the board elected in accordance with subdivision one of this section shall receive additional compensation of one thousand dollars per year to cover those expenses and activities associated with such office.

d. In addition, the directors shall be reimbursed for their actual and necessary expenses incurred in the performance of their official duties.

e. Any expenses incurred by a director in excess of those authorized by paragraph d of this subdivision shall be the responsibility of the appointing political subdivision, payable on vouchers certified or approved by the chief fiscal officer of such political subdivision as is provided by law.

Rac. Pari-Mut. Wag. & Breed. Law § 502(10).

In some instances, a per diem sum may serve as a proxy for reimbursement of actual and necessary expenses incurred in the performance of official duties, see, e.g., General Municipal Law § 77-c (governing board of municipality may choose to pay reasonable per diem allowance for meals in lieu of actual and necessary expenses incurred for officers and employees traveling on official business), and thus might properly be viewed as reimbursement rather than compensation. Under the circumstances here, however, where the members of the board of directors are authorized to receive both a per diem sum and reimbursement for actual and necessary expenses, we believe that the per diem sum is properly considered a form of compensation. See Letter from Robert A. Feuerstein, counsel, New York State Racing and Wagering Board, to James M. McGuire, counsel to the Governor, (July 11, 2000), reprinted in Bill Jacket for ch. 462 (2000), at 6 (recommending an increase in the per diem sum paid to directors; "Their oversight responsibilities are weighty and the financial compensation is small. The proposed amendments to the compensation of directors may serve to attract a larger pool of qualified potential directors for appointment . . . ."); cf. Rac. Pari-Mut. Wag. & Breed. Law § 502(10)(c) ("The chairman of the board . . . shall receive additional compensation" of $1000 per year (emphasis added)).

The statutory scheme governing the compensation of OTB directors specifically authorizes OTB directors, other than the chairperson, to be compensated for only up to 25 days of OTB-related work per year. See Rac. Pari-Mut. Wag. & Breed. Law § 502(10)(a) and (b) (authorizing compensation of $250 per day spent attending regularly-scheduled meetings, up to $2500 per year, and $100 per day spent on other OTB-related business, up to $1500 per year).

Analysis

In response to your first question, we believe that the compensation authorized by section 502(10) is the total compensation that may be paid to OTB directors. We reach this conclusion based upon the statutory scheme governing the board of directors. First, the board of directors has no specific authority to provide health insurance benefits for or, more generally, to establish the compensation of its own members. Cf. Rac. Pari-Mut. Wag. & Breed. Law § 503(6) (authorizing the board of directors to appoint officers, agents, and employees, and fix their compensation). Nor are the directors specifically authorized to participate in an existing health insurance program. Cf. id. § 606(3) (certain officers and employees of the New York City OTB Corporation may participate in City-authorized health insurance program). As a creature of statute, the OTB, acting through the board of directors, lacks powers not granted to it by express or necessarily implicated legislative delegation. Abiele Contracting, Inc. v. New York City School Constr. Authority, 91 N.Y.2d 1, 10 (1997).

When the absence of any specific authority for the board of directors to establish compensation for its members is viewed in combination with the precise compensation parameters laid out in section 502(10), the conclusion that only the compensation prescribed by section 502 is permissible is strengthened. Under these circumstances, we believe the principle of statutory construction of expressio unius est exclusio alterius applicable: where a law expressly describes a particular act, an irrefutable inference must be drawn that what was not included was intended to be excluded. Town of Riverhead v. State Bd. of Real Prop. Servs., 5 N.Y.3d 36, 42-43 (2005), quoting Statutes § 240, 1 McKinney's Cons. Laws of N.Y. at 411-12 (1971).

Finally, we note that members of the board of directors are authorized to hold outside employment. Rac. Pari-Mut. Wag. & Breed. Law § 502(11). They are thus not prohibited from receiving compensation from other sources. Therefore, equity does not weigh against our concluding that directors are limited to receiving the compensation prescribed in section 502(10). Indeed, an argument could be made that paying for the health insurance benefits of the directors, who are specifically authorized to be compensated for only up to 25 days of OTB-related work each year, would unfairly deprive the authorizing county of some of the funds it would otherwise receive. See Rac. Pari-Mut. Wag. & Breed. Law § 516(2) (after payment of the costs of the OTB's functions, remaining net revenue is divided between the participating counties).

Having concluded that the OTB is not authorized to provide health insurance benefits to members of its board of directors, we turn to your next question. Although you have asked that we consider the question of whether health insurance benefits could be granted by Suffolk County, we choose to answer instead the dispositive question of whether the directors may receive additional compensation paid by Suffolk County.

Our answer to this question follows from our conclusion with respect to your first question. Subsection 10 of section 502, as discussed above, authorizes the members of the board of directors to "receive" compensation in designated amounts. We believe that the specificity with which the amount of the compensation that the directors may receive is provided by section 502(10) precludes their receipt of any other compensation for their work as directors, whatever the source. We are thus of the opinion that they cannot receive compensation in the form of health insurance benefits provided by the authorizing county.

Finally, with respect to the question of whether the members of the board of directors are eligible to participate in NYSHIP at their own expense, we conclude that they may not. We assume here that OTBs may elect to participate in NYSHIP. See Civil Service Law § 163(2) (the president of the Civil Service Commission may authorize inclusion in NYSHIP of the employees of public benefit corporations). We further assume, without so concluding, that the directors of the OTB would be considered "employees" for purposes of participating in NYSHIP. See id. Even making these assumptions, we believe Civil Service Law § 167(2) proves determinative of the question. This section provides that

[e]ach participating employer shall be required to pay not less than fifty percentum of the cost of premium or subscription charges for the coverage of its employees and retired employees who are enrolled in the statewide only or the statewide and comparable supplementary health insurance plans established pursuant to this article. . . . Such employer shall not be required to pay the cost of premium or subscription charges for the coverage of unpaid elected officials, or unpaid board members of a public authority, or their dependents . . . .

Id. While section 167(2) contains an exception to the general rule that an employer must pay at least 50% of the premium or subscription charges of its participating employees for the employers of unpaid elected officials or unpaid board members of a public authority, it contains no exception that would apply to OTB directors, who are statutorily authorized to receive only a specified limited amount and form of compensation. Thus, pursuant to Civil Service Law § 167(2), the OTB as employer would be required to pay at least half of the cost of the directors' participation in NYSHIP. The directors could not fully pay the costs of their participation in NYSHIP but would have to accept some additional compensation in the form of payment for those benefits by the OTB. We therefore conclude that the directors may not participate in NYSHIP at their own expense.

The Attorney General issues formal opinions only to officers and departments of state government. Thus, this is an informal opinion rendered to assist you in advising the public benefit corporation you represent.

Very truly yours,

KATHRYN SHEINGOLD
Assistant Solicitor General
In Charge of Opinions