Rose v. Cnty. of San Benito

Decision Date19 April 2022
Docket NumberH048681
Parties Normandy ROSE et al., Plaintiffs and Respondents, v. COUNTY OF SAN BENITO, Defendant and Appellant.
CourtCalifornia Court of Appeals Court of Appeals

Colantuono, Highsmith & Whatley, PC, Michael Colantuono, Pasadena, John L. Jones II, Renne Public Law Group, Arthur A. Hartinger, Steve J. Cikes, for Defendant/Appellant.

Burke, Williams & Sorenson, LLP, Daphne M. Anneet, Los Angeles, for Amicus Curiae.

Wylie, McBride, Platten & Renner, Christopher E. Platten, San Jose, Kevin S. Landis, for Plaintiffs/Respondents.

Danner, J.

For more than two decades, defendant San Benito County (county or San Benito) provided health insurance benefits for its employees under the Public Employees' Medical Hospital Care Act (PEMHCA or the Act), which requires a participating county to pay retiree health insurance benefits at the same contribution rate it pays to active employees. Starting in January 2017, the county ceased providing benefits under PEMHCA and at the same time reduced the health insurance benefit contribution for Medicare-eligible retirees. Plaintiffs, who are retired county employees, filed this action asserting that the county's actions violated an implied promise made by the county that, upon their retirement, plaintiffs would receive "fully paid" lifetime retiree health insurance benefits, with premium contributions equal to those paid for active employees.

The trial court found after a bench trial that the county's adoption and continued renewal of healthcare benefits under PEMHCA's equal contribution framework evinced a legislative intent to confer a vested right to lifetime, nonmodifiable, retiree health insurance premiums equal to those paid to active employees. The court at the same time rejected plaintiffs' claim of an implied vested right to "fully paid" lifetime health insurance premiums. In making its decision, the trial court admitted and considered evidence beyond the legislative record. The evidence the trial court relied on included testimony of former members of the county's board of supervisors and other former county employees regarding their knowledge and understanding of the county's provision of retiree health insurance benefits.

On appeal, the county contends that the finding of an implied vested right in lifetime retiree health insurance benefits at an equal contribution rate as that of active employees is unsupported by the legislative and factual record and contrary to California Supreme Court and other case authority. The county argues that plaintiffs failed to overcome the presumption articulated in Retired Employees Assn. of Orange County, Inc. v. County of Orange (2011) 52 Cal.4th 1171, 134 Cal.Rptr.3d 779, 266 P.3d 287 (Retired Employees ) against inferring a private contractual or vested right to public employee benefits, absent a clear basis in the contract or convincing extrinsic evidence. The county also challenges the court's consideration of evidence outside the legislative record as reversible error.

For the reasons explained below, we conclude that the trial court erred in relying upon inadmissible evidence to ascertain legislative intent and in failing to apply the presumption against finding an implied vested right in the absence of a clear manifestation of legislative intent to contractually bind the county. Moreover, we decide that plaintiffs' admissible evidence does not support a finding of an implied vested right. Accordingly, we reverse the judgment.

A. Factual Overview
1. County Funding of Health Insurance Benefits Under PEMHCA

As the elected governing body of the county, its board of supervisors (board) is vested with plenary authority to provide for the compensation of county employees. ( Cal. Const. art. XI, § 1 (b).) In 1993, the board enacted a resolution to provide health insurance benefits to county employees and retirees by contracting with the California Public Employees' Retirement System (CalPERS). The resolution, titled Resolution No. 93-96,1 invoked PEMHCA ( Government Code § 22750 et seq. )2 to enable the county to contract with CalPERS.

PEMHCA governs the CalPERS health benefit system. ( Vallejo Police Officers Assn. v. City of Vallejo (2017) 15 Cal.App.5th 601, 606, 223 Cal.Rptr.3d 280 ( Vallejo Police ).) It authorizes state agencies and local governments to contract with CalPERS to provide health care benefits for eligible public employees and annuitants (i.e., retirees). ( §§ 20022, 22768, 22850, subd. (f)(2), & 22922 ; see Legis. Counsel's Dig., Sen. Bill No. 626 (2003–2004 Reg. Sess.) Stats. 2004, ch. 69.) As set forth in Resolution 93-96, the Act "provides the benefits of [PEMHCA] to employees of local agencies contracting with [CalPERS] on proper application by a local agency." (Citing § 22850.)

PEMHCA also establishes a minimum level of employer contribution toward health insurance premiums and generally requires the employer to contribute the same amount to employees and retirees. ( Vallejo Police, supra , 15 Cal.App.5th at p. 606, 223 Cal.Rptr.3d 280 ; see § 22892, subds. (b), (c).) As expressed in Resolution 93-96, the Act allows the contracting agency to "fix the amount of the employer's contribution for employees and ... annuitants at different amounts provided that the monthly contribution for annuitants shall be annually increased by an amount not less than 5 percent of the monthly contribution for employees, until such time as the amounts are equal." (Citing former § 22857, repealed by Stats. 2004, ch. 69 (S.B. 626), § 22, eff. June 24, 2004; see § 22892, discussed post. ) Noting the board's desire for county employees and retirees to obtain "the benefit of the Act and to accept the liabilities and obligations of an employer under the Act," the board resolved in Resolution 93-96 for San Benito to become subject to the provisions of PEMHCA and committed to contributing a specified amount toward the cost of enrolling employees, including family members, in a health benefits plan. That year, by way of example, Resolution 93-96 fixed the county's contribution for unrepresented employees on an individual plan at $137.81 per month; for retirees, the board fixed the county's contribution at "up to a maximum of $1.00 per month" and further provided that its "contribution for each annuitant shall be increased annually by 5.0 percent of the monthly contribution for employees, until such time as the contributions are equal." (Underlining omitted.)

The provision for the county to annually increase the health benefit contribution for retirees until it equalized the contribution made to employees and retirees reflected what is commonly referred to as PEMHCA's "equal contribution" requirement. (See § 22892, subd. (b)(1).) That section required (and still requires) the employer to pay retiree health insurance benefits at the same contribution rate as active employees, though the employer may elect to gradually reach parity under what is often known as PEMHCA's "catchup" provision. (See id. , subd. (c).)3 Thus, in 1993 the county contributed one dollar per month to retirees' medical health benefits. That amount increased annually on a graduated basis, ultimately achieving "catchup" in 2012, when the county's health benefit contribution for retirees equaled that of active employees.

Consistent with the terms of PEMHCA and the county's personnel rules,4 the county annually adopted resolutions fixing the contribution amounts for health insurance available to employees and retirees. The county effectuated this for employees represented by a union or other collective bargaining unit by reaching an agreement, memorialized as a memorandum of understanding (MOU), which it then presented to the board through the agenda process as a resolution to be adopted in open session by majority vote.

Each year, the county's human resources division prepared a rate sheet reflecting the contributions agreed on in the MOU and any changes in the CalPERS premiums, to show the county's and employee's respective contributions under various plans. Annual "open enrollment" periods allowed employees and retirees the option of selecting or changing their elected health insurance plan. Unrepresented employees typically received the same contribution toward their health insurance premiums as did employees in the "general bargaining" collective bargaining unit. The MOUs were of fixed duration and subject to renegotiation as of the expiration date.

In November 2012, the board adopted Resolution No. 2012-67, which recognized that parity or "catchup" under section 22892, subdivision (c) had occurred and set equal contributions for employees and retirees beginning in 2013. Prior to 2013, the county's health insurance contributions for active employees, as agreed upon and set forth in the collectively bargained MOUs, covered the full premium cost of certain CalPERS' plans for "employee only" (individual) coverage. For example, from 1999 through 2014, county contributions equaled the full premium for employee only coverage under a plan called "PERS Choice."

Starting in 2013, county contributions thus paid the full premium for retirees who selected the "PERS Choice" plan and "employee only" coverage. Those employees and retirees who selected that plan consequently paid nothing for health insurance that year.

2. Modifications to the County's Premium Contributions and Exit From PEMHCA

Starting in 2007, the board faced challenges brought about by the economic recession, increasing healthcare costs, and the need to address the county's unfunded liabilities. The board implemented changes to address these concerns, including by contributing to a retirement benefit trust starting in 2008 and adopting a "vesting" schedule in 2009 for employees hired on or after January 1, 2010.5

Furthermore, beginning in 2013, the county negotiated MOUs with the various labor units and ultimately established a flat dollar...

To continue reading

Request your trial
3 cases
  • Broome v. Regents of the Univ. of Cal.
    • United States
    • California Court of Appeals Court of Appeals
    • June 27, 2022
    ...evidence the concurrence requirement was in every instance simply a meaningless formality.10 (See Rose v. County of San Benito (2022) 77 Cal.App.5th 688, 717, 292 Cal.Rptr.3d 678, petn. for review pending, petn. filed May 20, 2022 ["the relevance of extrinsic evidence to prove legislative i......
  • Reyes v. State
    • United States
    • California Court of Appeals Court of Appeals
    • August 29, 2023
    ...that presumption"' on the party asserting the creation of an implied contractual right." (Rose v. County of San Benito (2022) 77 Cal.App.5th 688, 723, quoting Retired Employees, at p. 1186.) "[L]egislation in California may be said to create contractual rights when the statutory language or......
  • Broome v. The Regents of Univ. of Cal.
    • United States
    • California Court of Appeals Court of Appeals
    • June 27, 2022
    ... ... simply a meaningless formality ... [ 10 ] (See Rose v. County of San ... Benito (2022) 77 Cal.App.5th 688, 717, petn. for review ... ...

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT