River City Fraternal Order of Police Lodge 614, Inc. v. Ky. Ret. Sys.
| Decision Date | 21 March 2019 |
| Docket Number | CIVIL ACTION NO. 3:17-cv-102 (WOB) |
| Citation | 375 F.Supp.3d 748 |
| Parties | RIVER CITY FRATERNAL ORDER OF POLICE LODGE 614, INC., et al., Plaintiffs v. KENTUCKY RETIREMENT SYSTEMS, Defendant |
| Court | U.S. District Court — Eastern District of Kentucky |
Alison M. Messex, David Leightty, Priddy, Cutler, Naake & Meade, PLLC, Louisville, KY, for Plaintiffs.
Peter Matthew Cummins, Samuel W. Wardle, Frost Brown Todd LLC, Louisville, KY, for Defendant.
This case presents a purported conflict between state and federal law. Plaintiffs are a group of retired county police officers who brought this lawsuit challenging Defendant Kentucky Retirement Systems' decision to terminate retirees' state-funded health insurance coverage upon their becoming eligible for Medicare. That health insurance, Plaintiffs claim, is one of the retirement benefits guaranteed by the "inviolable contract" Kentucky formed with Plaintiffs pursuant to KRS § 78.852. When Kentucky Retirement Systems informed Plaintiffs that their health insurance coverage was being terminated due to the mandates of the Medicare Secondary Payer statute, 42 U.S.C. § 1395y, Plaintiffs contend Defendant thereby breached the "inviolable contract." Plaintiffs allege five counts:
Plaintiffs seek relief in the form of (i) a declaratory judgment; (ii) an injunction prohibiting the above described practice and requiring Retirement Systems to retroactively reinstate Plaintiffs' health insurance coverage; (iii) damages for expenses incurred as a result of any prior termination of health insurance coverage; and (iv) double damages pursuant to the Medicare Secondary Payer statute. (Doc. 6 at 8, 9–10).
This matter is now before the Court on Defendant's motion for summary judgment (Doc. 12), and Plaintiffs' cross-motion for partial summary judgment (Doc. 21).1 The Court previously heard oral argument on the parties' motions and took the matter under submission. (Doc. 29).
In the interest of addressing all the issues, the opinion that follows is somewhat lengthy and involves the analysis of several complex medical insurance statutes and regulations.
Neither party disputes the material facts pertaining to the issues before the Court. Plaintiffs are members of the River City Fraternal Order of Police Lodge 614, Inc., ("FOP 614"), and former Jefferson County and Louisville Metropolitan police officers who have retired under the County Employees Retirement System ("CERS").
(Doc. 6, ¶ 2). The CERS is administered by the nominal Defendant in this case, the Board of Trustees for Kentucky Retirement Systems (the "Board"). Id.2 After retiring, the named Plaintiffs re-entered employment with another employer that offers a group health insurance plan. Id. at ¶ 3; see (Doc. 21-3, Hr'g Tr. at 58–66, 81–86).
In consideration for the contributions made by Plaintiffs during their employment, and by virtue of the "inviolable contract" established between Plaintiffs and the Commonwealth of Kentucky under KRS § 78.852, Plaintiffs received "hospital and medical insurance" coverage at no cost as one of their retirement benefits. According to Plaintiffs, their health insurance coverage could not be altered or impaired. (Doc. 6, ¶¶ 10–11).
Sometime in March 2017, however, Kentucky Retirement Systems ("Retirement Systems") mailed a health insurance Termination Letter to approximately 130 individuals, like Plaintiff John Arnold, who: (a) had retired under the CERS; (b) subsequently had taken employment with an employer that offers group health insurance; and (c) were eligible, or about to become eligible, for Medicare as a result of turning 65 years of age. Id. at ¶¶ 12–13; (Doc. 21-3, Hr'g Tr. at 129–31).
The triggering event that prompted Retirement Systems to send the Termination Letters was that Plaintiffs were "Medicare eligible." See (Doc. 21-4, Termination Letter; Doc. 21-3, Hr'g Tr. at 129–31).3
The letters informed the retirees that the federal Medicare Secondary Payer statute "mandates" that Retirement Systems "cannot offer coverage secondary to Medicare." (Doc. 21-4; Doc. 6, ¶ 12). As such, the letter concludes by declaring that "your health insurance coverage through [Retirement Systems] will be terminated effective June 30, 2017" and "the dependents on your policy will no longer be eligible to participate in [Retirement Systems'] group health insurance." (Doc. 21-4).4
Believing that the Medicare Secondary Payer Statute does not "mandate" such a result, (Doc. 6, ¶¶ 14, 16–17), on June 16, 2017, Plaintiffs filed suit against Retirement Systems in state court, along with a motion for a restraining order. (Doc. 1-8 at 5–30). Once the issues were fully briefed, the court held a hearing on June 20, 2017. Id. at 174–177.
At the hearing, Retirement Systems' Division Director for Retiree Healthcare confirmed under oath that the Termination Letters were only sent to those retirees who: (i) had retired under Retirement Systems; (ii) re-entered the workforce with an employer that offered a health plan; and (iii) were about to become Medicare eligible by virtue of turning 65 years of age. (Doc. 21-3 at 129–31).
As the Division Director further testified, an individual's re-employment status alone does not trigger a termination notice, (Doc. 21-3 at 129–30); nor is any distinction made between individuals who are re-employed with a Retirement Systems participating employer and those who are not. Id. at 131–32. In fact, a retiree in Plaintiffs' position may be re-employed for years before they receive a Termination Letter. Id. at 130. It is only once an individual has turned or is about to turn age 65 (making the individual Medicare eligible) that Retirement Systems sends its Termination Letter. Id. Specifically, the Termination Letter is sent "six weeks before they age into 65" or otherwise become eligible for Medicare. Id.
Indeed, Plaintiff Arnold testified that after retiring he was employed with the Jefferson County Coroner's Office for over 15 years before he received notice that his health insurance coverage was being terminated. Id. at 82. In short, Plaintiffs' younger, Medicare-ineligible (and otherwise similarly situated) co-workers are permitted to continue to enjoy the benefits of health care coverage at no cost.
After the hearing, on June 26, 2017, the state court issued a restraining order enjoining Retirement Systems from terminating the health insurance for affected retirees. (Doc. 1-8 at 175). The Board then filed a motion to dissolve the restraining order, id. at 188, and Plaintiffs filed a motion for a temporary injunction. (Doc. 1-9 at 6). A hearing was held on July 20, 2017. (Doc. 21-3). On September 25, 2017, the court issued its order, denying Plaintiffs' motion and stating that the restraining order would be dissolved on November 1, 2017. (Doc. 1-3 at 6). When Plaintiffs' health insurance was terminated, Plaintiffs allegedly incurred medical expenses that otherwise would have been covered under Retirement Systems' health insurance plan. (Doc. 6, ¶¶ 16–17).
Subsequently, the state court permitted Plaintiffs to amend their complaint to add a claim under the Medicare Secondary Payer statute. (Docs. 1-4, 1-5). On December 13, 2017, the Board timely removed the case to federal court. (Doc. 1). After a number of the motions now pending were filed by the parties, the assigned judge recused, and the case was reassigned to the undersigned. (Doc. 17).
Summary judgment under Rule 56 is appropriate only when the Court, viewing the record as a whole and in the light most favorable to the nonmoving party, determines that there exists no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a)–(c) ; Celotex Corp. v. Catrett , 477 U.S. 317, 322–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248–50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "A genuine issue of material fact exists when, ‘there is sufficient evidence ... for a jury to return a verdict for that party.’ " White v. Wyndham Vacation Ownership, Inc. , 617 F.3d 472, 475–76 (6th Cir. 2010) (emphasis added) (quoting Anderson , 477 U.S. at 249, 106 S.Ct. 2505 ). Where the issue is a "pure question of law," extraneous facts that do not bear on that question are "immaterial." See, e.g. , Chappell v. City of Cleveland , 585 F.3d 901, 909–914 (6th Cir. 2009) (citing Scott v. Harris , 550 U.S. 372, 381 n.8, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) ).
"The summary judgment standard does not change simply because the parties presented cross-motions."
Profit Pet v. Arthur Dogswell, LLC , 603 F.3d 308, 311 (6th Cir. 2010). The "court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Id. (citations and internal quotation marks omitted).
Plaintiffs allege they were guaranteed health care coverage at no cost by virtue of the "inviolable contract" created by KRS § 78.852. It is undisputed that Retirement Systems terminated Plaintiffs' health care coverage. (Doc. 23-1 at 1). The Board contends, however, that continuing Plaintiffs' coverage would violate the Medicare Secondary Payer statute, 42 U.S.C. § 1395y. (Doc. 12-1 at 20–22).
In opposition, Plaintiffs argue that not only does the Medicare Secondary Payer statute not require Retirement Systems to terminate Plaintiffs'...
To continue reading
Request your trial
-
DaVita Inc. v. Va. Mason Mem'l Hosp., CASE NO. 2:19-cv-302-BJR
...when the primary insurer' was 'responsible' for paying the benefits at issue." River City Fraternal Order of Police Lodge 614, Inc. v. Kentucky Retirement Systems, 375 F. Supp. 3d 748, 765 (E.D. Ken. 2019) (emphasis in original); see also, Humana Medical Plan, Inc. v. Western Heritage Insur......