MILLINOCKET, Maine — The state Supreme Court has upheld a Town Council vote in 2009 to cut lifelong life and group hospitalization insurance coverage to 29 retired and present town workers.
The Maine Supreme Judicial Court affirmed the town’s civil-court opposition to a class-action lawsuit filed by the plaintiffs in a decision released Thursday. Only Justice Joseph M. Jabar dissented.
Town Council Chairman John Davis, who was not on the council in 2009, called the verdict “bittersweet.”
“I am glad we won it but it is bittersweet in a way because the retirees have lost something,” Davis said Thursday. “These guys are all on fixed incomes and they don’t need another expense, but difficult times call for difficult measures.”
“The good thing about this award is that it gives the town the flexibility to change with the times,” he added. “It was important for us to win, but I am not going to be dancing in the street over it.”
Citing rising costs, the council voted 7-0 on May 14, 2009, to eventually end the free health care benefits paid to the retirees. Since 1999, the town’s portion of retiree health benefits had increased from 89 percent to 112 percent, or from as little as $282.40 a month in 1999 to $599.44 a month in 2009, under a typical plan, then-Town Manager Eugene Conlogue said at the time.
A projection done in 1999 predicted the cost of retiree health benefits rising from $399,000 that year to $837,000 annually by 2009 — an almost dead-on prediction, he said. Under the town’s plan, the retirees pay a portion of their health benefits depending on the plan and number of people covered. The town pays the rest, but looks to phase out paying retiree health benefits, Conlogue has said.
In their Supreme Court appeal, the plaintiffs argued that the council vote was a breach of contract and that the state Superior Court erred in granting judgment to the town.
“Many of the employees allege that the town manager promised them this benefit when they were hired. At least one employee alleges that members of the Town Council acknowledged this benefit as well,” the Supreme Court decision reads. “They also allege that it was common knowledge that the town paid lower wages than the local mill, but compensated for the wage difference by offering a better benefits package, which included group hospitalization insurance for life.”
However, the court ruled that “the employees have not produced any evidence that the alleged promises were made by official action of the Town Council, as opposed to statements of council members or the town manager.”
The Supreme Court rejected the argument the plaintiffs made that the town perpetuated a contract by continuing to pay benefits to them despite several changes in contract and pension language.
“On the facts of this case, however, the statements and continued payments are insufficient, as a matter of law, to constitute a promise [of perpetual payments] by the town,” the ruling states.
The court agreed with town arguments that the pension change was a typical decision made by officials responding well within their rights to changes in conditions.