§ 207-c. Employee benefit fund; division of military and naval affairs. 1. Definitions. As used in this section, unless otherwise expressly stated:

a. "Director" shall mean the director of employee relations.

b. "Employee" shall mean any person in the service of the state of New York who is appointed to and serving in a position contained within the collective negotiating unit designated as the division of military and naval affairs unit established pursuant to article fourteen of the civil service law who is otherwise eligible for health insurance coverage pursuant to law and the rules and regulations of the department of civil service, except that it shall not mean seasonal employees whose employment is expected to last less than six months, employees in temporary positions of less than six months duration, or employees holding appointments otherwise expected to last less than six months.

2. Where and to the extent that, an agreement between the state and an employee organization entered into pursuant to article fourteen of the civil service law so provides on behalf of employees and upon audit and warrant of the comptroller, the director shall provide for the payment of moneys quarterly to such employee organization for the establishment and maintenance of an employee benefit fund established by the employee organization for the employees in the negotiating unit covered by the controlling provision of such agreement providing for such employee benefit fund, such amount to be determined consistent with the procedure established in said agreement but, on the basis of the number of employees as defined herein on the payroll during the payroll period the last day of which ends no later than twenty-one calendar days before the beginning of the quarter next following such day as determined by the comptroller. The amount, which will be determined pursuant to this section, for employees who are paid from first instance funds, or from special or administrative funds, will be paid from the appropriations as provided by law, in which case the comptroller will establish procedures to ensure repayment from first instance general state charge appropriations or from said special or administrative funds. The director may enter into an agreement with an employee organization which sets forth the specific terms and conditions for the establishment and administration of an employee benefit fund as a condition for the transmittal of moneys pursuant to this section.

3. Such employee organization shall periodically as specified by the director, supply a description of the benefits purchased or provided by the employee benefit fund, the utilization experience of the benefit fund, the amount disbursed for or the cost of such benefits and such other information as may be requested by the director.

4. The employee organization shall report to the comptroller, in the form and manner as he may direct, the amount it expended for the purchase of or providing for such benefits for any period specified by the comptroller. The comptroller is hereby authorized to audit the books of the employee organization with respect to any moneys transmitted to it pursuant to this section.

5. Neither the state nor any officer or employee of the state (including "employee" as defined herein and any other employee of the state) shall be a party to any contract or agreement entered into by any employee organization providing for benefits purchased in whole or in part with moneys transmitted to such employee organization pursuant to this section. No benefit provided pursuant to such contracts or agreements shall be payable by the state and all such benefits shall be paid by the responsible parties to such agreements or contracts pursuant to the terms and conditions of such agreements or contracts. The employee organization shall be a fiduciary with respect to an employee benefit fund established pursuant to this section.

6. Nothing herein shall be deemed to diminish, impair or reduce any benefit otherwise payable to any employee established or authorized by law, rule or regulation by reason of such employee's lack of eligibility to participate in any benefit program established by an employee organization pursuant to this section.

7. In the event it is determined that the moneys transmitted to an employee organization pursuant to this section is income for which payroll deductions are required for income tax withholdings from the salary or wages of employees pursuant to law, the comptroller shall determine the amount of such withholdings required and deduct the amount so required to be withheld from the salary or wages of the employees concerned.

8. The employee organization shall indemnify the state for any claims whatsoever paid by it arising from the establishment, administration or discontinuation of any employee benefit provided pursuant to this section, together with reasonable costs of litigation arising therefrom.

9. Insofar as the provisions of this section are inconsistent with the provisions of any other act, general or special, the provisions of this section shall be controlling.