State High Court Ruling Supports Retiree Rights to Health Benefits
The California Supreme Court has unanimously decided that a city or county cannot pare back health benefits for retired workers if it previously set coverage at a certain level and implied that the level would be maintained, the San Francisco Chronicle reports (Egelko, San Francisco Chronicle, 11/22).
Many local governments across California have been following the lawsuit as retirement-related benefits increasingly become a financial concern.
The ruling stems from a case from Orange County.
In 2007, the Retired Employees Association of Orange County sued the county after the county eliminated aÂ county retiree health care subsidyÂ (Reuters, 11/21).Â According to Ernest Galvan, an attorney for the county retirees, the adjustment led to a premium increase of $3,000 annually for retirees or their family.
The county maintained that it could retroactively reduce retiree health benefits because county supervisors had not explicitly guaranteed that the benefits would remain at a certain level (San Francisco Chronicle, 11/22).
A federal trial court ruled in favor of the county. A federal appeals court then took up the case and asked the California Supreme Court to clarify the related state law (Dolan, Los Angeles Times, 11/21).
Details of the Decision
According to the state high court, retired workers in Orange County could be able to show that there was an implied contract that would prevent the county from altering benefits in a way that hiked costs for retirees (Los Angeles Times, 11/21). According to the ruling, labor negotiations, board of supervisors actions and the rules of retirement plans can constitute a binding pledge that health benefits will remain stable (San Francisco Chronicle, 11/22).
The court did not rule on whether Orange County retirees have such rights, Reuters reports (Reuters, 11/21).
The case will return to the U.S. 9th Circuit Court of Appeals (Los Angeles Times, 11/21).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.