The Massachusetts Supreme Judicial Court proved once again that it is
increasingly unsympathetic to the interests of public employees with a
recent decision that lets municipalities deprive certain retirees of
basic health care coverage. In the case of Cioch v. Treasurer of
Ludlow, the SJC handed municipalities a big pair of scissors to cut
health care costs – by letting them deny coverage to retirees not
enrolled in a municipal plan at the time of retirement. While this
decision is an immediate setback for public employees, it ultimately may
be a case of “be careful what you wish for.” In the long-term, the
Cioch decision likely will increase health care costs for public
employers.
The SJC supported Ludlow’s position and ruled that municipalities may
ban post-retirement enrollment in their health insurance programs.
Ironically, while Massachusetts has earned international coverage for
its universal health care efforts, the SJC is letting municipal
employers go in the opposite direction. This decision is particularly
cruel to an unknown number of public employee retirees who politely
declined coverage from their employer throughout their career in an
effort to save money for all parties.
Massachusetts law on municipal health insurance, Chapter 32B, §§9, 16,
requires employers to provide health insurance to all employees working
at least 20 hours a week and to continue providing such coverage after
retirement. More than a decade ago, the Appeals Court and the SJC ruled
in McDonald v. Town of Sturbridge, 39 Mass. App. Ct. 479 (1995), S.C.,
423 Mass. 1018 (1996), that Chapter 32B does not forbid coverage of
retirees who were not covered while active employees. The SJC’s cryptic
one-paragraph decision in McDonald was unclear whether and to what
extent municipal employers may ban post-retirement enrollment via
regulation. The issue faced by the SJC in Cioch is to resolve the issue
left open to debate by McDonald: whether cities and towns can deny
coverage to retirees who were not enrolled in a municipal plan at
retirement. Cioch puts this query to rest by ruling that municipalities
may adopt regulations that ban post-retirement enrollment, despite the
considerable savings reaped by employers when these employees declined
coverage during their employment.
The Cioch case involved the plight of 68-year old retired teacher Joanne
Cioch.During her 22 years of employment with the Town of Ludlow, Ms.
Cioch was insured by her husband’s employer. This step resulted in
savings to Ludlow that totaled in low-6 figures over her employment.
Sometime after Ms. Cioch and her husband retired, they lost access to
health coverage by her husband’s former employer. Ms. Cioch then sought
such benefits from her Ludlow, which denied the request. With the
assistance of the Massachusetts Teachers Association, she sued.
Sandulli Grace, PC, on behalf of the Boston Police Patrolmen’s
Association, Inc., filed a “friend of the court” brief in support of the
Cioch and the MTA.
The SJC supported Ludlow’s position and ruled that municipalities may
ban post-retirement enrollment in their health insurance programs.
Ironically, while Massachusetts has earned international coverage for
its universal health care efforts, the SJC is letting municipal
employers go in the opposite direction. This decision is particularly
cruel to an unknown number of public employee retirees who politely
declined coverage from their employer throughout their career in an
effort to save money for all parties.
Cioch spares public employers of the expense of retirees not previously
enrolled in health insurance plans. But it’s a case of municipal
managers being penny-wise and pound foolish as the SJC decision likely
will result in increased health care costs for cities and towns. The
Cioch decision encourages police officers and other public employees who
currently are not covered by municipal plans to now enroll in City plans
– even if the employees have more affordable or more comprehensive
options through their spouses. Instead of saving $10-15,000 in health
care costs per employee per year for their employers, public employees
now have every incentive to enroll in costly municipal health care
plans, thereby increasing the employer’s financial burden. In other
words, the SJC’s Cioch decision arguably accelerates the health care
budgetary crisis faced by municipal employers.
In light of this decision, employees and labor unions should consider
several steps to guarantee health insurance to retirees: (1) enroll in a
municipal health care plan prior to retirement; (2) negotiate a
provision in the collective bargaining agreement that entitles active
employees to enroll in a municipal health plan anytime during retirement
(or to switch insurance plans), regardless of whether the employee
previously was enrolled in a municipal plan; (3) negotiate a provision
to require employers to individually notify employees who decline
coverage of the possibility th at they may lack access to
post-retirement enrollment; and/or (4) require the employer to notify
employees and labor organizations if it ever considers placing
restrictions or exclusions on post-retirement enrollment.
In a footnote, the SJC signaled another potential problem area for a
certain class of public employees: “deferred retirees,” also known as
employees who quit or are fired from employment prior to being eligible
for retirement benefits (or prior to employee retiring). If, under
Cioch, a municipality is permitted to restrict retiree insurance
coverage to persons on the health care rolls at the time of retirement,
these deferred retirees arguably are, by definition, ineligible for
retirement coverage even if they were enrolled in a municipal plan at
the time they left the job.
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