Meyers Nave Secures Important Post-Retirement Medical Benefits Ruling for Orange County

July 14, 2009

Orange County, CA – Meyers Nave law firm announced recently that partner Art Hartinger, chair of the firm’s Labor and Employment Group, successfully defended Orange County (the “County”) against a federal lawsuit brought by the Retired Employees Association of Orange County (“REAOC”) stemming from changes to how rates are set for retiree health care benefits.

The County’s actuary earlier estimated the unfunded liabilities relating to the County’s retiree medical program at approximately $1.4 billion.

REAOC brought seven claims against the County after the Board of Supervisors approved a 2006 resolution to separate active and retired employees for the purpose of setting health insurance benefits and rates (so-called “splitting the pool”), which resulted in higher premiums for the retiree pool. REAOC contended that the County had promised to subsidize retiree medical rates by maintaining a pooling arrangement throughout the retirees’ lifetimes, and that the County unlawfully breached its legal obligations by splitting the insurance pool.

The U.S. District Court ruled in favor of the County on summary judgment dismissing all of REAOC’s claims stating that the County Board of Supervisors never granted a lifetime benefit to retirees and it was improper to imply such a benefit in this instance. The County began providing retiree health benefits in 1966 and began pooling active and retiree employers in 1985. The 2006 resolution at issue became effective on January 1, 2008.

“The Court’s ruling confirms a key principle applicable to public agencies – that a public agency commits itself to an economic benefit only by formal action of the governing board, and that an unwritten promise or ‘implication’ has no binding effect,” said Art Hartinger. “We believe that the Court correctly applied this principle in the developing area of law regarding health plans, and whether they create vested rights.”

The case, Retired Employees Association of Orange County v. County of Orange, Case No. SACV 07-1301 AG (MLGx), was brought in the United States District Court for the Central District of California, Judge Andrew J. Guilford presiding. REAOC is appealing the judgment to the United States Court of Appeals for the Ninth Circuit.

About Meyers Nave

Founded in 1986, Meyers Nave is a law firm recognized for its work with all types of public entities in California and provides the full scope of legal services to cities, counties, redevelopment agencies and special districts statewide. Meyers Nave's areas of practice include civil rights, labor/employment; torts; redevelopment; city attorney/general counsel representations; eminent domain; litigation; writs and appeals; public contracts and land use; and environmental law.

Contact:

Art Hartinger
Meyers Nave
(510) 808-2000
ahartinger@meyersnave.com