Former state workers are fighting back against health plan changes

A group of Delaware retirees, including a former state senator, has filed a lawsuit seeking to block changes to state retirees' health care plan.

The switch to Medicare Advantage has sparked an outcry from many state retirees, who feel Delaware has misled them and is now forcing them to accept health insurance that could deny or delay care.

It has led the retirees to fight back: The filing of the lawsuit this week in Delaware Superior Court argues the state failed to follow administrative procedures when implementing this change, particularly regarding transparency and allowing retirees to offer input.

This lawsuit comes as retirees are faced with an approaching deadline at the end of October to opt out of the Medicare Advantage plan. If they do, they would lose their state-funded health care. State officials are strongly urging retirees against this.

Human Resources Secretary Claire DeMatteis and Office of Management and Budget Director Cerron Cade have been named defendants in the lawsuit. The Carney administration, through a spokesperson, declined to comment.

Massive confusion and anger

Retirees in the lawsuit likened the state's actions to a "jet plane racing down the runway with its wings yet to be attached."

"This has created massive confusion and anger," the lawsuit states. "Retirees are wholly unable to make an informed decision about whether to enroll in the new Medicare Advantage plan – about which they have received confusing, contradictory and often erroneous information – or stay with traditional Medicare and give up their state subsidized benefits."

Medicare Advantage consists of Medicare plans offered by private companies, in this case Highmark Blue Cross Blue Shield Delaware. A Highmark spokesperson also declined to comment.

Many states and cities have transitioned to Medicare Advantage as a way to control ballooning health care and pension costs. The state warns that Delaware's $10 billion of unfunded liability for retiree health care is expected to grow to $33 billion in 2050 if the state does nothing to curb costs.

Medicare Advantage plans have received intense scrutiny, most recently at a June congressional hearing. The U.S. Department of Health and Human Services Office of the Inspector General published a report this spring that found that there have been "widespread and persistent problems related to inappropriate denials of services and payment."

The state's plan to move to Medicare Advantage has made some retirees feel a deep sense of betrayal by the state. Many worked for the state, some for decades, in order to one day enjoy an illustrious retirement package. Now they fear that could be all for nothing.

'Counting on this'

"I can't tell you – I was with the Department of Labor for 27 years – how many times people say, 'Well, the pay stinks. But the benefits are really good,'" said Karen Peterson, a former state senator and a plaintiff in the lawsuit.

"Everybody that I hear from was counting on this," retiree Mary Graham said.

Graham and Peterson are among hundreds of retirees who have, in just a few weeks, flooded town hall meetings and lawmakers' inboxes, upset and unsatisfied with the state's decision.

The nonprofit group RISEDelaware, which stands for Retirees Investing in Social Equity Delaware, was formed as a result of these frustrations. Rep. John Kowalko, an outgoing lawmaker who has been among the loudest critics of this change, is one of the co-founders.

A major turning point came when lawmakers held a town hall at Goldey-Beacom College in mid-September. Hundreds of retirees attended, to where there was standing room only. A line of people waiting to speak was out the door, Peterson recalled.

Demanding answers

Seniors came armed with questions – and were angry. Feeling that many of their questions remained unanswered, Peterson and Graham were among the residents who decided to get more involved.

"I was feeling really down," Peterson said. "I was feeling really helpless, like the people in the room at Goldey-Beacom that night. And I thought, well, I want to fight back."

A group of retirees, on numerous conference calls and email chains, explored the options and decided to move forward with a lawsuit. New York retirees filed a lawsuit to fight a similar change to a Medicare Advantage plan. In March a judge ruled that the city must allow retirees to opt out of the Medicare Advantage plan and maintain their current health care plan.

RISEDelaware and Thomas Penoza, a former police captain, are also named as plaintiffs. Graham, a retired lawyer, described her role as a liaison between the attorneys litigating the case and the retirees.

"My motto is: It's better to be pissed off than pissed on," Peterson said about joining the lawsuit.

The lawsuit alleges that the State Employee Benefits Committee, which made the recommendation that was then voted on by the General Assembly and signed into the state's budget, did not follow open government procedures.

The committee, according to the lawsuit, also ignored the recommendations of a different committee that was tasked with looking at ways to reduce the state's unfunded liability issues.

This group, the Retirement Benefits Study Committee, "proposed a different, better option for addressing the issue" and recommended that no change occur until January 2024, according to the lawsuit.

The SEBC committee, retirees said in the lawsuit, "clandestinely ignored this well-reasoned proposal."

Delaware officials have maintained that the state's plan is different from other Medicare Advantage plans and that seniors will be able to receive the same type of coverage.

Retirees, in the lawsuit, describe this statement to be "fiction." They point to the presence of prior authorization being a key feature of Medicare Advantage plans.

"In short, the private insurance company becomes the final arbiter of what the patient needs – not the doctor," the retirees stated in the lawsuit. "And significantly, prior authorization is not part of traditional Medicare – except for the sole exception of durable medical equipment such as motorized wheelchairs."

Amid the criticism, state officials and Highmark made the concession to have a four-month delay of preauthorization requirements. Yet this hasn't satisfied concerns.

This month, at an SEBC public meeting, retirees voiced their dismay over Medicare Advantage. Several seniors who lived at Cokesbury Village, a long-term care facility, expressed concern at the meeting that their medical services might be denied.

One woman said she receives an infusion every eight weeks and was worried Medicare Advantage wouldn't cover it. Another feared the facility where she lives might not accept this type of insurance, which could require her to look for care elsewhere – despite paying thousands of dollars to live there.

"The fact that we have no choice makes us feel railroaded," one retiree said during the meeting.

Graham and Peterson have spent hours reading the Medicare Advantage plan, diligently marking up the explanation of benefits to see if the care they have typically received will be covered.

Both have question marks scribbled in the margins throughout the 38-page document. There are likely many older seniors, Graham and Peterson said, who do not have the time or the ability to do this.

"We think about those people a lot," Graham said. "And each of us may be in that situation at some point. And even now, it's pretty incomprehensible to us as reasonably smart people."

Contact Meredith Newman at [email protected].