Michigan Supreme Court sides with Macomb County in retirees’ benefit dispute

May 31-- May 31--In a class-action case involving health care benefits for 1,600 retired Macomb County workers -- roughly 400 of whom have died since they filed the lawsuit in 2010 -- the Michigan Supreme Court ruled Thursday that the union contracts for the retirees don't specifically promise "a vested right to lifetime and unalterable retirement health care benefits."

The ruling reverses a decision by the Michigan Court of Appeals, which sided with the retirees. The split decision fell strictly on party lines, as four Republican justices sided with Macomb County while two Democrats took the side of the retirees.

The case has attracted statewide attention because of its potential impact on the budgets of county and municipal governments, which are now more free to alter retiree benefit levels. Key statewide organizations that represent cities and counties submitted briefs in support of Macomb County's position.

According to Macomb County's lawyers, no matter which way the lawsuit was decided there would always be health care coverage for retired county workers. As evidence, they point to the major bond sale in 2015 that the county is using to fund its retiree benefit costs.

The ruling simply means that the county can make minor changes in that coverage without negotiating with unions, officials said. The retirees' argument is that nothing now stops the county from making major changes.

The 25-page majority opinion was signed by four Republican justices including Justice Stephen Markman, who wrote it. The ruling concludes that retiree health benefits expire at the expiration date of each union contract, freeing the county to make changes.

In a 15-page dissent, written by Chief Justice Bridget McCormack and also signed by Justice Richard Bernstein -- both Democrats -- McCormack stated that, notwithstanding the words in the county's union contracts, the retirees' view "has commonsense appeal: they thought retirement health care was a promise that they would have health care for the period of their retirement."

After Thursday's ruling was announced, Macomb County's top lawyer said the county had "no plan or intention" of reducing retiree health care coverage.

"The court's ruling simply allows the county the flexibility to go to the insurance marketplace to secure the best rates possible while delivering the same retiree health care services well into the future," Macomb County Corporation Counsel John Schapka said.

The county appealed last year's court of appeals ruling that said the retirees were entitled to the same level of benefits they'd been receiving under more than 30 union contracts they'd voted to ratify. County officials have said that, if the decision had gone against them, it could burden local governments across Michigan with huge unfunded liabilities, as they'd be forced to maintain costly benefit levels and be precluded from negotiating changes in insurance carriers.

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The current level of Macomb County retirees' health care coverage "is, honestly, really quite good," said Donna Cangemi, president of American Federation of State, County and Municipal Employees (AFSCME) Local 41, which has hundreds of members who work for Macomb County government.

"I thought the county's changes were pretty minor. But I think these people who fought this believe it was a principle they wanted to defend," Cangemi said, adding: "I was pretty skeptical that the Supreme Court would rule in their favor" because "they just don't go the way of labor anymore."

Cangemi said the retirees failed in their effort to have Justice David Viviano recuse himself because he had served for years as a Macomb County circuit judge.

During oral arguments for the case in November, Justice Bernstein queried the county's lawyer about whether, hypothetically, the county could simply cut all retiree health care benefits, should it prevail in the case.

"If this court were to hold that this (coverage) is not in fact vested, is there anything to preclude the county from taking away all health benefits, if it so chooses?"

Macomb County counsel Susan Zitterman replied: "Other than its moral commitment and the commitment it's made to the electorate -- the people that elect the county officials -- there is no contractual requirement that they vest in these retirees the benefits in this contract for the rest of their lives."

Bernstein continued: "The point being ... the county could strip all benefits if it chose to, and there would be nothing to prevent that legally. Is that correct?"

Zittterman responded, "Under the contract, I believe that to be the case. But as has happened in every contract that has been negotiated since the 1980s, the benefits will be provided.

"The county has gone to great expenses to get a bond passed to ensure it is fiscally able to do so."

Contact Bill Laitner: [email protected]

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