North Carolina retiree health insurance case not resolved by superior court | National Associated Press

RALEIGH, NC (AP) — A decade-long legal fight over whether retired government workers were harmed when North Carolina stopped offering them a more generous level of premium-free health insurance remained unresolved after Friday’s ruling from the state Supreme Court.

Most of the justices agreed that former state employees and teachers had a “constitutionally protected vested right” to remain in a government insurance plan in which retirees paid 20% of their coinsurance without paying any premium, or an equivalent plan. That no-premium “80/20” option was no longer offered in September 2011, as state legislators and plan leaders sought to close the spending shortfall.

“These retirees reasonably relied on the promise of this benefit when choosing to accept employment with the state. They are entitled to the benefit of their treatment,” Associate Justice Anita Earls wrote in the majority opinion.

But Earls said it’s unclear whether that right has been affected to the point that former workers need monetary damages. And that could be offset if any harm served a “legitimate public purpose,” such as the legislature or the State Health Plan seeking to rein in rising health care costs paid for with taxpayer dollars, he wrote.

The case will now be returned to a trial judge who had initially sided with a legal retiree class of 220,000 former state employees and teachers, but that judges said went too far.

Earls acknowledged that legal parties may now have to present complicated and competing health care and money calculations to the judge, who will gather the facts to decide whether retirees were truly harmed and should receive compensation. That could include assessing whether the options provided to retirees after 2011 were substantially more or less valuable than what retirees could get when they qualified for health benefits, and if so, by how much. The State Health Plan could win the case by showing that the plans offered now are more valuable.

Although today’s retirees must pay relatively small monthly premiums for individual coverage under the “80/20” plan, premium-free benefits remain under the 30% coinsurance and Medicare Advantage plans. State Treasurer Dale Folwell, whose office oversees the state Health Plan, said in 2017 that premium refunds of more than $100 million were possible if the courts sided with retirees.

The dispute “raises issues of profound importance to the hundreds of thousands of dedicated public employees who have dedicated their lives to serving their fellow North Carolinians, often for less immediate compensation than they would have had in the private sector,” he wrote. Earl’s.

Three other judges sided with Earls in overturning parts of a 2019 ruling by a panel of the state Court of Appeals which found that there was no contractual obligation to offer that level of benefits without premiums. Judges had contrasted them with public pension benefits, which courts have ruled to be contractual. While participation in the pension system is mandatory, the health insurance program is voluntary.

But rulings in other cases show that treating an employee benefit as a contractual right doesn’t depend on how much it resembles a pension, Earls wrote. The General Assembly first authorized premium-free benefits in 1981. Evidence from retirees, including plan booklets for workers, led them to believe they could rely on retirement health insurance coverage for life, according to the opinion of the majority.

Associate Justice Tamara Barringer, writing a separate opinion also agreed to by Associate Justice Phil Berger Jr., said a trial judge should also have been ordered to decide whether there is any contractual obligation to retirees.

“There is still work to be done in trial court to conclude the case, but this is a major victory for the constitutional and contractual rights of state retirees,” Michael Carpenter and Sam McGee, attorneys for the plaintiffs, said in a statement. Attorney General Josh Stein’s office, whose attorneys are representing the state and state agencies in the case, did not respond Friday about the ruling, a spokesman said.

Retired employees led by retired Chief Justice Beverly Lake Jr. sued the State Health Plan and retirement plans in 2012. Lake died about six months after the Court of Appeals ruling.

Chief Justice Paul Newby was not involved in either Friday’s ruling or oral arguments in October. No reason was given for why he was recused. But he was one of five judges listed in a January 2021 order with living or deceased family members who were once state workers or teachers, raising questions about conflicts of interest that were resolved months later.

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