Born v. City of Slidell

• Decision Date: 14 October 2015
• Docket Number: No. 2015–C–0136.,2015–C–0136.
• Citation: Born v. City of Slidell, 180 So.3d 1227 (La. 2015)
• Parties: Dean BORN v. CITY OF SLIDELL.
• Court: Louisiana Supreme Court

180 So.3d 1227

Dean BORN

v.CITY OF SLIDELL.

No. 2015–C–0136.

Supreme Court of Louisiana.

Oct. 14, 2015.

CRICHTON, J.

We granted certiorari in this matter to determine whether a retiree of the City of Slidell, plaintiff Mr. Dean Born, may continue participating in the City of Slidell's health insurance plan following the City's adoption of Ordinance No. 3493, which requires each city retiree to apply for Medicare coverage upon reaching the age of sixty-five. For the reasons that follow, we affirm the Court of Appeal's finding that the City cannot terminate plaintiff's desired plan coverage and require him to accept Medicare coverage, where plaintiff retired before the effective date of the Ordinance.

FACTS AND PROCEDURAL HISTORY

Plaintiff was employed by the City of Slidell from April 30, 1984, until his retirement on August 1, 2008, at the age of sixty (60). Upon his retirement, plaintiff began drawing retirement benefits from the City of Slidell's Municipal Employee's Retirement System. Also at the time of plaintiff's retirement, § 21–21(a) and (b)(1) of the Code of Ordinances of the City of Slidell provided, in pertinent part:

(a) The city shall contribute to a program of health insurance for all full-time city employees, all elected officials and all city retirees.

(b) Retired city employees and retired elected city officials shall participate in the city's health insurance program under the following conditions:

1) A city employee or city elected official who:

a. Separates from city service after a minimum of ten years of service;

b. Within 18 months after such separation receives retirement benefits under any retirement plan authorized by the city;

c. Participated in the city's health insurance plan for a minimum of 12 months immediately prior to such separation; and

d. Participates in the city's health insurance plan from the time of separation to the time retirement benefits are received;

may elect to continue to participate in the city's health insurance plan. The city shall pay 100 percent of the cost of the individual or family coverage elected by the former employee or elected official beginning at the time retirement benefits are received.

This provision shall not apply to a city employee who voluntarily separates from city service in order to avoid disciplinary action.

Effective August 26, 2008, through Ordinance No. 3493, the City of Slidell amended § 21–21 to require city retirees, upon reaching the age of sixty-five, to apply for Medicare Coverage, with the City to pay Medicare Advantage at no cost to the retiree.¹ The additional section states as follows:

(3) Each City retiree shall, upon reaching the age of sixty-five, apply for Medicare coverage Parts A and B. The City shall provide Medicare Advantage coverage at no cost to the retiree. Those retirees who are ineligible for Medicare shall be allowed to continue participation in the City's health insurance program to the same extent as prior to reaching age sixty five.

Plaintiff received a letter from the City of Slidell on May 1, 2013, informing him that because of his impending sixty-fifth birthday on July 1, 2013, he would no longer be eligible for the City of Slidell's medical service, as "[a]ll retirees and spouses 65 and older with Medicare Parts A and B must enroll in Humana Group Medicare." The letter also stated that if plaintiff was not eligible for Medicare, he must present the City with adequate documentation to that effect. Plaintiff objected to the City's course of action and exchanged several letters with the City communicating his desire to remain on the City's retirement health plan ("the plan"). When the City reiterated to Mr. Born its intention to remove him from the plan and require him to elect Medicare coverage, on July 25, 2013, he filed a "Petition for Declaratory Judgment, Temporary Restraining Order, Preliminary Injunction and Permanent Injunction" in the 22nd Judicial District Court.

In his Petition, plaintiff asserted he met the requirements listed under § 21–21(b)(1) of the Code of Ordinances of the City of Slidell, which were in effect at the time of his retirement on August 1, 2008, and consequently, he was entitled to elect to continue to participate in the City's health insurance plan with the City paying 100% of the cost for plaintiff's family coverage under the plan. Plaintiff argued he had a vested right to the benefit promised by the City of Slidell in § 21–21, and the City was intending to breach its contract with plaintiff, thereby depriving him of his vested right to the promised benefit. As a result, plaintiff requested a declaration of his right to continue participating in the plan and an injunction prohibiting the City from removing plaintiff from his desired health insurance plan with the City of Slidell.

In response, the City filed a peremptory exception of prescription, arguing that plaintiff's suit, one for compensation for services rendered and filed five (5) years after the passage of Ordinance No. 3493, was subject to a liberative prescriptive period of three (3) years and was therefore prescribed. Following a joint stipulation of facts submitted on October 18, 2013, and a hearing on the matter on October 23, 2013, the trial court took the matter under advisement.

On November 4, 2013, the trial court issued written reasons for judgment, denying the City's Exception of Prescription, and granting plaintiff's request for a declaratory judgment that Mr. Born and his family are entitled to continue to participate in the City's plan, with the City paying 100% of the premium associated with the coverage afforded to plaintiff and his family under the plan. Specifically, regarding the City's prescription argument, the trial court found that by removing plaintiff from the City's health insurance plan, the City would be breaching its agreement with plaintiff for continued participation in the plan, thereby depriving him of his vested right to benefits. As a result, the trial court found prescription in this matter would begin to run at the time the City removed plaintiff from the City's health insurance plan. The court concluded the plaintiff's suit was timely filed, which was just after plaintiff's sixty-fifth birthday.

The trial court also found dispositive the case of Singletary v. Slidell, 2011–CA–1538 (La.App. 1 Cir. 6/8/12), 97 So.3d 1087, writ not considered, 12–2068 (La.11/16/12), 102 So.3d 28, wherein the First Circuit Court of Appeal found the same Slidell City retirement plan to be a contract between the City and the plaintiff, and that the City could not apply Ordinance 3493 retroactively to require plaintiff in that matter (who had retired prior to the time the Ordinance became effective), to accept coverage under the Humana Medicare Advantage plan rather than the City's health insurance plan. The Singletary court stated that should the City force the plaintiff to accept the Medicare plan, it would be in contravention to the federally recognized right of beneficiaries to freely decide the type of Medicare coverage decided by them. Applying Singletary in this instance, the trial court found Ordinance No. 3493 may not be applied retroactively to retirees who have met the conditions of § 21–21, as it impermissibly divests plaintiff of his vested rights.After the trial court's judgment was issued, the City of Slidell timely appealed this judgment to the Court of Appeal, First Circuit.

In a unanimous opinion, the court of appeal affirmed the trial court's ruling, agreeing with the trial court's finding that plaintiff's claim is not prescribed, as well as its finding that plaintiff met the requisite conditions set forth in § 21–21 at the time of his retirement, and as a result, the City could not apply Ordinance 3493 retroactively to remove plaintiff from the plan. In so ruling, the appellate court agreed with the trial court that the prescriptive period for plaintiff's claim did not begin to run until he was removed from the City plan, concluding that contributions to retirement plans, including health benefits, are a form of deferred compensation, and such contributions are subject to the three-year prescriptive period found in La. C.C. art. 3494.² This prescription begins to run from the day payment is exigible. La. C.C. art. 3495. As a result, plaintiff's claim for post-age sixty-five coverage under the City plan became exigible when plaintiff reached the age of sixty-five, and the City failed to provide the promised benefit. Plaintiff's claim, the court of appeal concluded, was therefore not prescribed.

Concerning the City's ability to remove plaintiff from its plan upon his sixty-fifth birthday, the court of appeal also referred to its previously discussed decision in Singletary, supra, wherein it considered this exact amended ordinance to find that its application to retirees before its enactment impermissibly divested the retired councilman of his vested right to benefits. Here, the appellate court specifically pointed to its finding in Singletary that when an employer promises a benefit to employees, and employees accept that offer, or benefit, by their actions in meeting the conditions, the result is not a mere gratuity or illusory promise but a vested right in the employee to the promised benefit. Singletary, supra, at 1089–90, citing Knecht v. Board of Trustees for State Colleges and Universities and Northwestern State University, 591 So.2d 690, 695 (La.1991).³ Consequently, the court of appeal found the plan document to be a contract between the City and plaintiff, which, although reserving a right to the City to "terminate, suspend, discontinue or amend the Plan," the court concluded was not being terminated, suspended, or discontinued by the City.⁴ Rather, the court found, the City is attempting to remove plaintiff from the City plan that covers its employees and requiring him to enroll in a wholly different plan. The appellate court concluded the plaintiff, having met all necessary conditions at...