Lawsuit filed over change to Medicare Advantage Plan

Retirees Investing in Social Equity Delaware, or RiseDelaware, filed a formal complaint in the Delaware Superior Court on Sunday, alleging the involved state agencies did not adhere to certain procedures under the Delaware Administrative Procedures Act “while enforcing statutory powers.”

The lawsuit aims to halt the state’s implementation of its new Highmark Blue Cross Blue Shield Delaware’s Freedom Blue PPO Medicare Advantage Plan, which is set to take effect on Jan. 1, 2023.

Pensioners will have the chance to make changes to their coverage during Delaware Medicare Open Enrollment from Oct. 3 to Oct. 24. During the Sept. 19 State Employee Benefits Committee meeting, though, Statewide Benefits and Insurance Coverage Director Faith Rentz cautioned pensioners that the new plan will be the only state-offered health coverage after Jan. 1.

The lawsuit’s plaintiffs are listed as RiseDelaware Inc., state retiree and former Sen. Karen Peterson, as well as state retiree and former Newark Police Department Captain and Department of Justice employee Thomas Penoza.

Delaware Department of Human Resources Secretary and Co-Chair of the State Employee Benefits Committee Claire DeMatteis, Delaware Office of Budget and Management Director and Co-Chair of the State Employee Benefits Committee Cerron Cade, the Delaware Department of Human Resources, the Delaware State Employee Benefits Committee, and the Delaware Division of Statewide Benefits are listed as the defendants of the complaint.

The lawsuit states that Medicare Advantage Plans are not the same as the current Medicare Supplemental Plan offered by the state and the plan set to take effect on Jan. 1 is a “private-insurance-company-run, for-profit plan that replaces original Medicare and does not provide important medical benefits and federal protections for older people.”

Additionally, the complaint states these plans can present disruption to physician access, delay critical medical services, and could result in significant costs to health care access.

Mr. Cade could not be reached for comment. Ms. DeMatteis had no comment on the lawsuit filed by RiseDelaware.

Within the complaint, it is stated that an alternative plan that was offered provided a “different, better option” for addressing the state’s $10 billion unfunded liability for state retirees’ health care. The plan in question refers to an indexed employer subsidy funded through a Health Reimbursement Account; one of two options considered by the Retirement Benefit Study Committee aside from the new Medicare Advantage Plan.

On Aug. 31, Department of Human Resources Communications Director Karen Smith told the Delaware State News that when the two choices for the change were considered, “Pensioners who attended the public RBSC meetings were overwhelmingly opposed to an HRA option.”

RiseDelaware

Shortly after unknowing state retirees began to catch wind of the change in late August, RiseDelaware was founded by retiring Rep. John Kowalko, D-New-ark, and New Castle County 5th District Councilwoman Lisa Diller.

Ms. Diller kickstarted her efforts for Delaware retirees by consulting Marianna Pizzitola, founding member and president of the New York City Organization of Public Service Retirees. Ms. Pizzitola helped prevent a change in coverage for more than 250,000 New York City workers when a Manhattan judge struck down the city’s proposed change earlier this year.

According to Ms. Diller, the complaint seeks to stop the state from “forcing state retirees to leave original Medicare” for a “privatized, managed care Medicare Advantage Plan.” Ahead of the opening of Medicare Open Enrollment from Oct. 3 through 24, the change in coverage is set to affect more than 30,000 state pensioners.

In an emailed statement on behalf of RiseDelaware, Ms. Diller stated there were “significant problems with Medicare DisAdvantage,” and that the state’s “conduct was egregious.”

“You are supposed to make a choice by Oct. 24, whether to stay in or opt out, even though the information spewed out by the state about the new plan has been confusing, dense, misleading and contradictory. The state is not going to correct its course without this lawsuit,” Ms. Diller said.

In an interview Tuesday afternoon, Rep. Kowalko said there have been “hundreds and hundreds” of retirees throughout the state who have reached out to him concerned about the change.

Medicare Advantage contract

In his efforts, Rep. Kowalko had previously requested a copy of the contract on multiple occasions, yet he was not given a definitive answer other than it would be available once finalized.

At the Sept. 19 State Employee Benefits Committee meeting, Statewide Benefits and Insurance Coverage Director Faith Rentz said the three-year contract between the state and Highmark was being renegotiated to include prior authorization performance bonuses due to retirees’ concerns, and while the contract was not yet available at the time, it would be distributed once available.

On Sept. 9, the Senate Democratic Caucus urged Gov. John Carney to consider a delay of the Medicare Advantage Plan’s implementation, though his “cabinet and staff” relayed that a delay was not possible.

Rep. Kowalko told the Delaware State News he was concerned pensioners had less than a week to make a decision before open enrollment and pointed to the “contradiction” of the inability to delay the plan’s implementation while the contract had not yet been finalized.

“I believe their intention was to run out the clock on this, and really retirees have no recourse in this but to find a way to stop this rush to a mandate,” Rep. Kowalko said. “It elicits privatized Medicare for state of Delaware employees, but that is not the only issue here. There are issues of secrecy, a lack of transparency and also this drumbeat of false information being presented to state retirees with open enrollment dates looming.”

In the organization’s continued effort to oppose the measure, RiseDelaware is holding a rally in the plaza between the Carvel State Office Building and the Louis L. Redding City Council Building in Wilmington on Oct. 4 at noon.

Staff writer Joe Edelen can be reached at [email protected].

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