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A California appeals court said this week that the University of California owes retirees who worked at the Lawrence Livermore National Laboratory the university-sponsored group health insurance they were promised during their employment, reversing an earlier court decision saying otherwise.
Several Livermore retirees sued the California system in 2010, saying that it effectively disowned them in terms of retiree health care when a private partnership started running the federal defense lab, in 2007. The retirees argued that their new plan, administered by the private partnership, had “significant disadvantages and no comparable new advantages when compared with the university-provided retiree medical benefit plan,” such as higher premium and higher monthly out-of-pocket costs. Thousands of people were affected by the change.
The appeals court opinion says that the earlier ruling in favor of the university relied on “erroneous legal standards,” including that health care was too individualized a topic to prove that an entire class of workers was disadvantaged by the coverage shift, or was even aware of the retiree benefits initially offered. Numerous other cases involving public employment compensation terms “indicate an implied contract is formed through the employer’s offer of the term, the employer’s intent to be contractually bound by the offer, and the employee’s performance of services. They contain no suggestion that each employee must prove personal knowledge.” Moreover, the opinion says, the fact that retirees now know their health care coverage could be canceled at any time is a significant non-economic impairment.
A spokesperson for the California system said it was “disappointed” in the decision and “considering our options as we review the court’s reasoning.”
