Andrews v. Lombardi

• Decision Date: 30 June 2020
• Docket Number: No. 2017-257-Appeal., No. 2017-260-Appeal.,KC 13-1128,No. 2017-255-Appeal., No. 2017-256-Appeal.,2017-255-Appeal.
• Citation: 233 A.3d 1027
• Parties: Manuel ANDREWS, Jr. et al. v. James LOMBARDI, in his capacity as Treasurer of the City of Providence, Rhode Island.
• Court: Rhode Island Supreme Court

233 A.3d 1027

Manuel ANDREWS, Jr. et al.

v.James LOMBARDI, in his capacity as Treasurer of the City of Providence, Rhode Island.

No. 2017-255-Appeal.

No. 2017-256-Appeal.

No. 2017-257-Appeal.

No. 2017-260-Appeal.

KC 13-1128

Supreme Court of Rhode Island.

June 30, 2020

Lauren E. Jones, Esq., Kevin F. Bowen, Esq., Thomas M. Dickinson, Esq., Thomas J. McAndrew, Esq., Robert S. Thurston, Esq., for the Plaintiffs.

William K. Wray, Jr., Kenneth B. Chiavarini, Esq., William M. Dolan, Esq., Matthew T. Jerzyk, Esq., Nicholas L. Nybo Esq., Jeffrey T. Dana, Esq., the Defendant.

Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

Chief Justice Suttell, for the Court.

In response to a "fiscal hurricane,"¹ the City of Providence (the City) took various actions to increase revenues and cut costs. One such action, enabled by a 2011 state statute, was to pass an ordinance requiring retirees from the City's police and fire departments to enroll in the federal Medicare program upon reaching the age of eligibility instead of continuing to have the City pay for their private health insurance policies for life. Many police and firefighter retirees filed suit challenging the ordinance, and most settled with the City following court-ordered mediation. The settlement agreement required the police and firefighter retirees to enroll in Medicare upon eligibility at age sixty-five, but it also required the City to pay fees associated with late enrollment to Medicare for some retirees as well as various supplemental options to Medicare, thereby bringing the overall health coverage closer to what it had been under the previous plans for the police and firefighter retirees prior to the new City ordinance. However, sixty-seven retirees opted out of the settlement (the plaintiffs) and pursued their civil claims through a bench trial. The trial justice ultimately found in favor of the City on all of the plaintiffs’ claims, and the plaintiffs appealed from the final judgment. For the reasons set forth in this opinion, we affirm in part and vacate in part the final judgment of the Superior Court.

IFacts and Procedural History

The plaintiffs² retired on various dates between November 1, 1980 and October 12, 2012, from positions with the Providence fire department or police department. The City of Providence Retirement Board approved each plaintiff's respective application for retirement in compliance with the procedures in place at the time of his or her retirement. After retirement, all plaintiffs received the health insurance coverage that was in effect when they retired, which differed among plaintiffs; that coverage was uninterrupted until May 1, 2013.³ At present, all plaintiffs under the age of sixty-five continue to receive this coverage until they reach the age of eligibility for Medicare, on their sixty-fifth birthday.

On January 11, 2011, then Providence Mayor Angel Taveras appointed a Municipal Finances Review Panel (MFRP) to review the City's budget for fiscal years ending June 30, 2011 and June 30, 2012. On February 28, 2011, the MFRP released a report which concluded that the City faced a $69.9 million structural budgetary deficit for fiscal year ending June 30, 2011. The report concluded this deficit would increase to $109.9 million for fiscal year ending June 30, 2012. With respect to the City's retiree health care plan, the MFRP concluded that, as of June 30, 2009, the City had an unfunded accrued actuarial liability of $1.497 billion.

In 2011, the General Assembly enacted G.L. 1956 § 28-54-1 (the "Medicare Enrollment Statute"), which went into effect on June 29, 2011. The statute states as follows:

"Every municipality, participating or nonparticipating in the municipal employees’ retirement system, may require its retirees, as a condition of receiving or continuing to receive retirement payments and health benefits, to enroll in Medicare as soon as he or she is eligible, notwithstanding the provisions of any other statute, ordinance, interest arbitration award, or collective bargaining agreement to the contrary. Municipalities that require said enrollment shall have the right to negotiate any Medicare supplement or gap coverage for Medicare-eligible retirees, but shall not be required to provide any other healthcare benefits to any Medicare-eligible retiree or his or her spouse who has reached sixty-five (65) years of age, notwithstanding the provisions of any other statute, ordinance, interest arbitration award, or collective bargaining agreement to the contrary. Municipality provided benefits that are provided to Medicare-eligible individuals shall be secondary to Medicare benefits. Nothing contained herein shall impair collectively bargained Medicare Supplement Insurance." Section 28-54-1.

Less than one month later, on July 19, 2011, the City Council passed Chapter 2011-32, Ordinance No. 422 (the 2011 Medicare Ordinance), amending Chapter 17, Article VI of the Providence Code of Ordinances, which went into effect the same day. The 2011 Medicare Ordinance states, in relevant part:

"Notwithstanding any other ordinance, collective bargaining agreement, or interest arbitration award:

"(1) As a condition of receiving or continuing to receive retirement payments and health benefits, all retired individuals and spouses of retired individuals shall enroll in Medicare immediately upon eligibility. Any health benefits provided by the city to Medicare-eligible individuals shall be secondary to the Medicare benefits.

"(2) With the exception of Medicare supplement or gap coverage, the city shall not provide Medicare-eligible retirees or Medicare-eligible spouses of retirees with healthcare benefits. The cost of said Medicare supplement or gap coverage shall be paid by the city and/or retiree as otherwise provided by ordinance or contract.

"(3) Nothing contained in this section shall be construed to confer healthcare benefits on a retiree or retiree's spouse which are not otherwise provided by ordinance or contract."

Following the enactment of the 2011 Medicare Ordinance, the City notified those who would be affected, including plaintiffs, that on May 1, 2013, the City would terminate City-paid health care coverage for those who were Medicare-eligible. For those who were not yet Medicare-eligible, the City would continue with the health care plans that were in place until such time that each individual became Medicare-eligible.

The Providence Retired Police and Firefighter's Association (the Retiree Association) and several individual police and firefighter retirees challenged the constitutionality of the 2011 Medicare Ordinance in a lawsuit filed on October 12, 2011 (the 2011 lawsuit). On January 30, 2012, the trial justice granted the police and firefighter retirees’ motion for a temporary restraining order, thereby enjoining the City from both terminating the police and firefighter retirees’ health benefits and forcing these retirees to enroll in Medicare. On May 14, 2012, the trial justice ordered the parties into mediation, which resulted in a tentative settlement agreement. On May 22, 2012, the City executed memoranda of understanding with the Retiree Association; Local 799, International Association of Firefighters (the Fire Union); and Providence Lodge No. 3, Fraternal Order of Police (the Police Union), which provided police and firefighter retirees with health care benefits greater than what had been provided in the 2011 Medicare Ordinance.

The settlement agreement, like the 2011 Medicare Ordinance, required the police and firefighter retirees who opted into the settlement to enroll in Medicare upon attaining eligibility. However, the settlement agreement also stated that the City would pay for certain costs associated with Medicare coverage, including penalties incurred from late enrollment in various Medicare supplemental programs such as Parts B and D. The Retiree Association, the Police Union, and the Fire Union voted in favor of these settlement terms, and all members of the Retiree Association were given the opportunity to opt out. On April 12, 2013, after a fairness hearing, the trial justice determined that the proposed settlement was fair and reasonable, and she issued a final consent judgment reflecting the terms of the settlement (the 2013 Final and Consent Judgment).

In October 2013, individuals who opted out of the proposed settlement filed a complaint in the present case against the City challenging the constitutionality of the 2011 Medicare Ordinance and the Medicare Enrollment Statute.⁴ The plaintiffs sought a declaratory judgment that: (1) the City breached its contractual obligations to each plaintiff by "unilateral[ly] terminat[ing] * * * the Health Care Benefits when Retirees reach[ed] the age of Medicare eligibility"; (2) the Medicare Enrollment Statute is both unconstitutional on its face and as applied because it violates the Contract Clause, Due Process Clause, and Takings Clause of the United States and Rhode Island Constitutions; (3) the 2011 Medicare Ordinance is both unconstitutional on its face and as applied because it violates the Contract Clause, Due Process Clause, and Takings Clause of the United States and Rhode Island Constitutions; and (4) plaintiffs are entitled to relief under a promissory estoppel theory. The plaintiffs also requested a permanent injunction directing the City's treasurer to provide the health care benefits that had allegedly been wrongfully withheld and prohibiting the City from terminating or suspending the health care benefits to which plaintiffs were allegedly entitled.

The City filed a motion for partial summary judgment on December 23, 2015, seeking summary judgment on plaintiffs’ claims (1) that the Medicare Enrollment Statute and the 2011 Medicare Ordinance were facially unconstitutional because they violated the Contracts Clause, Takings Clause, and the Due Process Clause, (2) that the Medicare Enrollment Statute and the 2011 Medicare Ordinance were...