By Ed Jacques, LEJ Editor
Over the last few years, one of the most frequent topics surrounding incoming calls to the POAM office involve retiree health care. Typically the comments are, “nobody informed me of a change,” or “this isn’t the same prescription rider I had three years ago when I retired.” The initial response is usually typical with any POAM business agent. “What does the contract say?”
But let’s backtrack a little bit. Twenty-five years ago many effective union negotiators were bargaining for contract language that called for retired employees to receive the same health care as active members because those benefits were improving with every new contract. Health care costs were manageable and predictable for the employer.
As we all know, those costs are now out of control and the benefits levels negotiated in many recent contracts reflect that. Most health care packages are different than what they were just a few years ago due to premium sharing or higher deductibles and/or co-pays. It has caused some employees to miscalculate the cost of their retirement.
In 1998, then Oak Park PSOA President Kevin Loftis was convinced that the reversal of fortune on retiree health care needed to be addressed in the contract. His bargaining committee negotiated new language in the collective bargaining agreement (CBA) that retirees receive the exact same health care benefits as they got at their time of separation. As the City of Oak Park reached contract settlements with other employees in 2004 and 2005, it became obvious that the new public safety contract in 2006 would have to include a change to retiree health care benefits including a $15/$30 copay initiated on prescriptions and language that reverted back to the old policy of future retirees receiving the same benefit levels as current employees. The $10 fixed co-pay would go the way of VHS players.
Coincidentally, six of the union’s most vocal members were within spitting distance of retirement. The Oak Park Public Safety Officers Association had been extremely active in local politics and the current administration was afraid of another battle in the upcoming election year. Officials offered the members incentives for an early buyout on their retirement with the reminder that the window of opportunity to lock in health care benefits throughout retirement would soon be closing. The six members accepted the City’s retirement offer.
In July of 2006, the City of Oak Park raised every single retiree’s co-pay on prescriptions to $15/$30, the same as all current employees. No retiree ever agreed to change their co-pay, and some of them were retired long enough to still have a $2 co-pay.
Hundreds of retired employees were affected but only the “Oak Park Six” had the courage to fight the City. The City threatened to petition the court to force Oak Park’s attorney fees on the filing party if they prevailed on the issue. The lawyers would eventually cost $100,000!
POAM Assistant General Counsel Douglas Gutscher represented the plaintiffs in their case before the Honorable Rae Lee Chabot in Oakland County Circuit Court. Gutscher argued that the terms of the contract regarding the level of coverage was clear and unambiguous. He garnered testimony from Kevin Loftis that the City encouraged him to retire and “without a doubt” he would not have if the City had not gone on record that his prescription coverage would remain the same upon retirement. Gutscher also emphasized that if the contract does not permit such a change, and indeed requires the City to provide the retirees the same coverage as they had upon their retirement date, then the contract was breached.
Judge Chabot reiterated that the Court is without authority to modify unambiguous contracts. In Judge Chabot’s Opinion and Order she stated that Loftis’ testimony was credible and persuasive and influenced the court in its finding that the contractual language prohibited the modification to the prescription coverage. Loftis and the other five plaintiffs were awarded declaratory relief, and awarded the requested damages of their out-of-pocket expenses.
Gutscher has some solid advice for POAM locals addressing this issue in their future CBA negotiations. “We had very strong language in this case and yet the employer was still able to convince the court that there was a material issue of fact and that the language was open to interpretation.” Gutscher also wants to emphasize that negotiated contract language be clear and concise and that more verbage is not necessarily better. “Do not assume that there is a mutual understanding, because in the court’s eyes, intent is irrelevant; the language always rules the day. Equivalent coverage is not the same as exact coverage, so spell out any specific details that are important.”
For more information on this case,contact Kevin Loftis or Ed Jacques atthe POAM office.