Retired Sacramento County employees have no legal right to unending health care subsidies from the county, a federal judge has ruled.
The Sacramento County Retired Employees Association and six individuals sued the county in 2011 on behalf of four categories of retirees, challenging the decision to reduce or terminate subsidies that help pay for medical and dental care.
As a cost-saving measure in tough economic times, the Board of Supervisors slashed the subsidy in 2010 by $100 a month – from a maximum $244 to $144 – and then, in 2011, to a maximum of $80.64 a month.
The association, which claims a membership of about 8,000, argued that the long history of the subsidies created an implied contract guaranteeing them in perpetuity. Citing a report by a health benefit task force to the supervisors, the retirees claimed that, under the terms of various contracts between the county and its medical plans, its retirement system was required to maintain a minimum level of funding for the subsidies.
But U.S. District Judge Kimberly J. Mueller saw it differently, ruling that the association failed to back up its claims.
“Plaintiffs have not presented copies of any such contracts, or pointed to anything else in the record supporting their claim that these contracts existed, or explained how their alleged status as third-party beneficiaries of such contracts fits within” the law, the judge stated last week in a 30-page order granting summary judgment in favor of the county.
Thus, she said, the plaintiffs are unable to demonstrate that the alleged existence of “an explicit contract” is enough of an issue requiring a trial.
“Moreover,” she added, “the same report provided to the Board of Supervisors confirms this conclusion; it says that ‘provision of these health benefit subsidies has been on an annual review basis. They are not legally considered vested benefits. They may be lowered or eliminated entirely whenever the (Sacramento County Employee Retirement System) Board deems it to be prudent, appropriate and necessary, e.g., whenever excess interest earnings are inadequate or nonexistent. Annuitants are advised annually of the tentative nature of these benefits.’
“The undisputed evidence shows that, although the Board (of Supervisors) consistently ordered the subsidy to be paid over a period of time, it did so by adopting a policy, not a … contract,” Mueller declared.
“That’s the end of it, unless the plaintiffs choose to appeal,” said County Counsel John Whisenhunt in a telephone interview. He declined to comment on his view of the lawsuit’s quality.
“We just defend what comes along,” he said. “I think the results speak for themselves.”
Mark Merin, attorney for the retirees, could not be reached for comment.
Call The Bee’s Denny Walsh, (916) 321-1189.