State Employees' Ass'n of N.H. v. State

• Decision Date: 14 April 2011
• Docket Number: No. 2010–271.,2010–271.
• Citation: 20 A.3d 961,51 Employee Benefits Cas. 1395,161 N.H. 730
• Parties: STATE EMPLOYEES' ASSOCIATION OF NEW HAMPSHIRE and anotherv.The STATE of New Hampshire and another.
• Court: New Hampshire Supreme Court

161 N.H. 730

20 A.3d 961

161 Lab.Cas. P 61,133

51 Employee Benefits Cas. 1395

STATE EMPLOYEES' ASSOCIATION OF NEW HAMPSHIRE and another

v.The STATE of New Hampshire and another.

No. 2010–271.

Supreme Court of New Hampshire.

Argued: Feb. 16, 2011.Opinion Issued: April 14, 2011.

Molan Milner and Krupski, PLLC, of Concord (Glenn R. Milner on the brief), and Stember Feinstein Doyle Payne & Cordes, LLC, of Pittsburgh, Pennsylvania (William T. Payne and another on the brief, and Stephen M. Pincus orally), for the plaintiffs.Michael A. Delaney, attorney general (Danielle L. Pacik, assistant attorney general, on the brief and orally), for defendant State of New Hampshire.Getman, Stacey, Schulthess & Steere, P.A., of Bedford (Andrew R. Schulman on the brief and orally), for defendants New Hampshire Retirement System and Dr. Lisa Shapiro.David R. Connell, of Concord, on the brief, for the New Hampshire Local Government Center, as amicus curiae.DUGGAN, J.

The plaintiffs, the State Employees' Association of New Hampshire (SEA), SEIU, Local 1984 and four individual retired state employees, appeal an order of the Superior Court ( McNamara, J.), denying their request to declare RSA 100–A:54, III (Supp.2010) unconstitutional and granting summary judgment for the defendants, the State, the New Hampshire Retirement System (NHRS) and Dr. Lisa Shapiro, individually and in her capacity as chair of the NHRS Board of Trustees. We affirm.

The record supports the following facts. The State provides pensions to eligible retired state employees through the NHRS. Active state employees contribute to the NHRS through wage deductions. RSA 100–A:16, I(a) (Supp.2010). Upon retirement, retirees receive a member annuity based upon their contributions and a state annuity determined in part by the member's “average final compensation.” RSA 100–A:5, I(b) (2001). The funds held by the NHRS are to be used solely to pay the retirement allowances of NHRS members. See N.H. CONST. pt. I, art. 36–a.

The State also provides medical and surgical benefits to state employees and their spouses and dependents, and eligible retirees and their spouses through a separate program and statutory scheme. See RSA 21–I:30, I–II (Supp.2009) (amended 2010); see also State Employees Assoc. of N.H. v. N.H. Div. of Personnel, 158 N.H. 338, 340, 965 A.2d 1116 (2009). Eligible retirees include retired state law enforcement personnel (Group II), other retired state employees who meet certain eligibility criteria (Group I) and certain vested deferred retirees. RSA 21–I:30, II, III (Supp.2009) (amended 2010). The NHRS does not hold the funds used to pay for these benefits. Instead, the Employee and Retiree Benefit Risk Management Fund holds these funds, and they are administered by the department of administrative services (DAS). RSA 21–I:30–e (Supp.2010).

Prior to 1992, the State paid the full health care premium for eligible retired state employees, subject to funding by the legislature. RSA 21–I:30 (Supp.1990). In 1991, the legislature amended the statute to provide that “[t]he state shall pay a premium.” RSA 21–I:30, I (Supp.1991). Nonetheless, following this amendment, the State continued to pay the entire cost of the retirees' health care premium. However, in July 2009, the legislature enacted RSA 100–A:54, III, which provides in pertinent part:

The retirement system shall deduct from the monthly retirement allowance of retired state employees under the age of 65 years receiving medical and surgical benefits provided pursuant to RSA 21–I:30, the premium contribution amounts of $65 per month for each such retiree and $65 per month for each applicable spouse; provided that the charge to each household shall not exceed $130 per month. Deducted amounts ... shall be deposited in the employee and retiree benefit risk management fund. In the event the retiree's monthly allowance is insufficient to cover the certified contribution amount, the retirement system shall so notify the department of administrative services, which shall invoice and collect from the retiree the remaining contribution amount.

Shortly after the statute's enactment, the State distributed a notice to all retired state employees who received benefits pursuant to RSA 21–I:30, which stated:

Effective July 1, 2009 legislation was enacted that requires State of New Hampshire retirees and their spouses ... to make a monthly contribution toward the cost of their health care coverage.

The law directs the New Hampshire Retirement System to deduct $65 per person each month from the retiree's pension account for each covered retiree and covered spouse.

The New Hampshire Retirement System will begin taking premium contributions from pension benefits beginning July 31, 2009.

As of April 2009, an estimated 3,258 retired state employees and spouses under the age of sixty-five received health coverage. Of these retirees, only eight had a monthly allowance insufficient to cover the premium contribution.

In response to this statute's enactment, the plaintiffs brought a declaratory judgment action in superior court on behalf of themselves and those similarly situated against the State, the NHRS, and Shapiro. They sought a declaration that RSA 100–A:54, III is unconstitutional under the Contract Clauses of the New Hampshire and United States Constitutions and Part I, Article 36–a of the New Hampshire Constitution, and to permanently enjoin the NHRS from deducting the health care premiums from their pension benefits. The plaintiffs also filed a motion for class certification, upon which the trial court never ruled.

The parties subsequently filed cross-motions for summary judgment. The trial court granted the defendants' motions and denied the plaintiffs' motion. The court ruled that the plaintiffs have a vested contractual right to receive their full pensions and that RSA 100–A:54, III impairs that right. However, the court determined that the impairment is not substantial, and, accordingly, the impairment does not violate the Federal or State Contract Clauses. The court further found that RSA 100–A:54, III does not violate RSA 100–A:26–a (2001) or Part I, Article 36–a. This appeal followed.

On appeal, the plaintiffs assert that RSA 100–A:54, III violates both Part I, Article 23 and Part I, Article 36–a of the New Hampshire Constitution. They contend that it violates Part I, Article 23 because it impairs: (1) their vested right to receive the full amount of their pension benefits; and (2) their vested contractual rights conferred by RSA 100–A:26–a. They contend that it violates Part I, Article 36–a because it requires the NHRS to deduct funds that it was obligated to send to retirees and instead send them directly to the State to reduce the State's cost of providing medical insurance.

In reviewing the trial court's rulings on cross-motions for summary judgment, “we consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law.” N.H. Assoc. of Counties v. State of N.H., 158 N.H. 284, 287–88, 965 A.2d 1012 (2009) (quotation omitted). The sole issue on appeal is the constitutionality of RSA 100–A:54, III. We review the constitutionality of a statute de novo. Id. at 288, 965 A.2d 1012. “The party challenging a statute's constitutionality bears the burden of proof.” Tuttle v. N.H. Med. Malpractice Joint Underwriting Assoc., 159 N.H. 627, 640, 992 A.2d 624 (2010) (quotation omitted).

“In reviewing a legislative act, we presume it to be constitutional and will not declare it invalid except upon inescapable grounds.” Baines v. N.H. Senate President, 152 N.H. 124, 133, 876 A.2d 768 (2005) (quotation omitted). “In other words, we will not hold a statute to be unconstitutional unless a clear and substantial conflict exists between it and the constitution.” Id. (quotation omitted). As such, a statute will not be construed to be unconstitutional when it is susceptible to a construction rendering it constitutional. White v. Lee, 124 N.H. 69, 77–78, 470 A.2d 849 (1983). “When doubts exist as to the constitutionality of a statute, those doubts must be resolved in favor of its constitutionality.” Bd. of Trustees, N.H. Judicial Ret. Plan v. Sec'y of State, 161 N.H. 49, 53 (2010).

I

The plaintiffs first contend that RSA 100–A:54, III violates Part I, Article 23 of the New Hampshire Constitution, which provides: “Retrospective laws are highly injurious, oppressive, and unjust. No such laws, therefore, should be made ... for the decision of civil causes....” We have previously defined “retrospective law” as “every statute, which takes away or impairs vested rights, acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past.” Opinion of the Justices (Furlough), 135 N.H. 625, 630, 609 A.2d 1204 (1992) (quotations omitted).

“Part I, Article 23 does not expressly reference existing contracts. However, we have held that its proscription duplicates the protections found in the contract clause of the United States Constitution.” Tuttle, 159 N.H. at 640, 992 A.2d 624 (quotation omitted). Although our retrospective law provision provides greater protection than its federal counterpart, we have relied upon federal Contract Clause cases to resolve issues raised under Part I, Article 23 when contract impairment, and not simply retroactive application of a law, was alleged. Id. at 640–41, 992 A.2d 624. Accordingly, we understand Section 10 of the Federal Constitution and Part I, Article 23 of the State Constitution to afford equivalent protections where a law impairs a contract, or where a law abrogates an earlier statute that is itself a contract. Id. at 641, 992 A.2d 624. We will refer to their equivalent protections as the Federal and State Contract...