The Providence Retired Police and Firefighter's Association v. City of Providence, C.A. PC-11-5853

• Decision Date: 30 January 2012
• Docket Number: C.A. PC-11-5853
• Court: Rhode Island Superior Court
• Parties: THE PROVIDENCE RETIRED POLICE AND FIREFIGHTER'S ASSOCIATION v. THE CITY OF PROVIDENCE, by and through its Treasurer, JAMES J. LOMBARDI

THE PROVIDENCE RETIRED POLICE AND FIREFIGHTER'S ASSOCIATION
v.
THE CITY OF PROVIDENCE, by and through its Treasurer, JAMES J. LOMBARDI

C.A. No. PC-11-5853

Superior Court of Rhode Island

January 30, 2012

DECISION

TAFT-CARTER, J.

To address the mounting cost of non-pension post retirement employment benefits paid by municipalities to their retirees, the State of Rhode Island enacted legislation enabling municipalities to require retirees to enroll in Medicare as soon as they become eligible. Pub. L. 2011, ch. 151, art. 12, § 2 (codified as G.L. 1956 § 28-54-1 (2011)) ("§ 28-54-1"). The legislation also provides that a municipality will not be required to pay healthcare benefits to a Medicare eligible retiree despite any provision in a Collective Bargaining Agreement ("CBA") to the contrary. Id In response to the legislation, the Defendant City of Providence ("City") enacted Providence, R.I., Code of Ordinances, Ch. 2011-32, No. 422 (2011), amending Code of Ordinances, Art. VI, Ch. 17 ("the Ordinance"). The Ordinance requires Medicare eligible retired employees of the City to enroll in Medicare as a condition of receiving or continuing to receive retirement payments and health benefits.

The Plaintiff Providence Retired Police and Firefighter's Association is an association representing retirees of the Providence Police and Fire Departments ("the Police and Fire Retirees"). On October 12, 2011, the Police and Fire Retirees filed suit seeking declaratory judgment that (I) the state legislation authorizing the actions taken by the City is facially unconstitutional as it violates the Due Process and Contracts Clauses of both the United States and Rhode Island Constitutions ("Contracts Clause" inclusively);^[1] (II) the City Ordinance is also facially unconstitutional for the same reasons; (III) as applied to the Police and Fire Retirees, both the Statute and the Ordinance violate the Contracts Clauses of both Constitutions; and (IV) as applied to the Police and Fire Retirees, the City Ordinance violates the Police and Fire Retirees' rights to due process of law. The Police and Fire Retirees also seek (V) a permanent restraining order against the City enjoining it from altering the health benefits that the Police and Fire Retirees currently receive under the collective bargaining agreements that were in place at the time that the Police and Fire Retirees retired and (VI) any damages that the Police and Fire Retirees will have suffered as a result of the City's actions.

Pending a hearing on the merits of the case, the Police and Fire Retirees filed on December 2, 2011 the instant Motion for a Temporary Restraining Order and/or Preliminary Injunction seeking to enjoin the City from canceling the Police and Fire Retirees' health benefits and forcing the Police and Fire Retirees to enroll in Medicare. The Police and Fire Retirees allege that § 28-54-1 and the Ordinance violate the Contracts Clauses of the state and federal constitutions. The City objects. Jurisdiction is pursuant to Super. R. Civ. P. 65 and G.L. § 8-2-13 (1997). For the reasons stated herein, the Court grants the Police and Fire Retirees' Motion. The City is enjoined from terminating the Police and Fire Retirees' Blue Cross/Blue Shield health insurance as defined in the CBAs until final resolution of this dispute. The City is also enjoined from requiring the Police and Fire Retirees to enroll in Medicare until this matter is resolved.

I

Facts and Travel

The Police and Fire Retirees are members of the Providence Police and Fire Departments who retired before the enactment of the Ordinance. While active employees, the Police and Fire Retirees were represented by either the Fraternal Order of Police, Lodge No. 3 or by Local 799 of the International Association of Firefighters, AFL-CIO ("Unions" collectively). Under the terms of the various CBAs between the Unions and the City, each Police and Fire Retiree, as well as his or her spouse, were guaranteed lifetime health insurance under either Classic Blue Cross/Blue Shield or Healthmate Coast "to"Coast ("Blue Cross").^[2] Infra at 4–8. The CBAs would ultimately provide prescription drug coverage as well. Infra at 4–8. At a hearing on January 3, 2012, former State Auditor General Ernest Almonte indicated that he provided the City with a report of the cost of Blue Cross coverage. Despite this knowledge, the City entered into the rich CBAs. The City's intended transition to Medicare, if successful, would override these CBA provisions.

A The CBAs

The Blue Cross plans were governed by specific provisions in the Providence Police Officers' and Firefighters' respective CBAs.

1 The Police CBAs

The present dispute between the City and Police Retirees involves multiple CBAs, spanning from 1977 to 2004. Between 1977 and 1982, the Police and the City operated under four CBAs: the 1977-1979 Police CBA, the 1979-1980 Police CBA, the 1980-1981 Police CBA, and the 1981-1982 Police CBA. Under the 1977-1979 Police CBA, a Retiree's health benefits were defined as follows:

"Commencing July 1, 1977, the city agrees to assume the cost of family coverage under the Rhode Island Hospital Service Corporation (Blue Cross) in the present semi-private plan and family coverage under the Rhode Island Medical Society (Physicians Service Plan B) and Blue Shield 100, or Rhode Island Group Health Association Plan for all members retiring on or after said date

"Should any member or any member of his family be eligible for medical insurance under Blue Cross or any other plan, then the city will be obligated to furnish only excess coverage so that said member will have equivalent coverage as that offered by the city. Should a retired member subsequent to retirement lose said alternate coverage then the city will pick up the full cost of coverage under this section." Hr'g Ex. 14, CBA between the City of Providence and Providence Lodge No. 3, Fraternal Order of Police, 1977-1979, Art. XIV, § 4 (emphasis added)

This provision remained unchanged in all material respects through the 1979-1980 Police CBA, the 1980-1981 Police CBA, and the 1981-1982 Police CBA.^[3]

With the 1982-1984 Police CBA, a specific rider for prescription drug coverage was added. Following this change, the Police Retiree health benefits provision stated, in pertinent part:

"Blue Cross and Physician's Service " Retirees Commencing July 1, 1977, the City agrees to assume the cost of family coverage under the Rhode Island Hospital Service Corporation (Blue Cross) in the present semi-private plan and family coverage . . . with riders for Alcoholism, Mental Health, and Prescription Drug for all members retiring on or after said date." Hr'g Ex. 14, CBA between the City of Providence and Providence Lodge No. 3, Fraternal Order of Police, 1982-1984, Art. XIV § 2 (emphasis added)

Subsequent to this amendment, the Police Retiree's health benefits CBA provision went unchanged in all material respects for almost two decades.^[4]

The 2001-2004 Police CBA further changed prescription drug coverage. In part, this coverage amendment spoke directly to the prescription drug benefits offered Police Retirees under all Blue Cross plans available to them. This provision states:

"Section 3 " Blue Cross Prescription Drug Programs The Blue Cross Prescription Drug coverage plans/riders described in this Section 3 shall be applicable to all Blue Cross Health Care Plans described in Sections 1 [governing Blue Cross and physician's services for active police] and 2 [governing Blue Cross and physician's services for retired police] above.

A. All members of the bargaining unit hired prior to September 1, 2001 shall be covered by the following Blue Cross Prescription Drug coverage plans/riders: (i) In between July 1, 2001 and December 31, 2001, the Blue Cross Prescription Drug coverage plans/riders shall be those in effect under the prior 1999-2001 Collective Bargaining agreement;

(ii) Effective January 1, 2002, the Blue Cross Prescription Drug coverage plan/rider shall be the program that includes a $3 generic drug/$5 non-generic drug co-payment plan with an annual employee co-payment cap of $600, with all co-payments over and above $600 required to be paid by the City; and (iii) Effective January 1, 2003, the Blue Cross Prescription Drug coverage plan/rider shall be the program that includes a $5 generic drug/$10 non-generic drug co-payment plan with an annual employee co-payment of $600, with all co-payments over and above $600 required to be paid by the City.

B. All members of the bargaining unit hired on or after September 1, 2001 shall be covered by the Blue Cross Prescription Drug coverage plan/rider that includes a $5 generic drug/$10 non-generic drug co-payment plan with an annual employee co-payment cap of $600, with all co-payments over and above $600 required to be paid by the City.

C. Any member of the bargaining unit who retires shall upon retirement and thereafter receive the Blue Cross Prescription Drug coverage plan/rider in effect for said member on his/her date of retirement.- Hr'g Ex. 14, CBA between the City of Providence and Providence Lodge No. 3, Fraternal Order of Police, 2001-2004, Art. XV, § 2. (emphasis added).

Accordingly, by 2004, the Police Retirees and their spouses had been guaranteed lifetime health insurance and prescription drug coverage for over two decades.

2 The Fire CBAs

The CBAs between the City and the Providence Firefighters provided the Firefighter Retirees with a level of health benefits similar to those promised to the Police Retirees. That is, the City agreed to provide a set level of health insurance to the Firefighter Retirees for the rest of their lives. Beginning with the 1989-1990 Fire CBA, the City guaranteed the Providence Firefighters that:

"Should [retiree] or any member of his family be

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