In North Charleston and elsewhere city retirees sue over promised health insurance
North Charleston’s former fire chief and several other retired firefighters are suing the city, claiming Mayor Keith Summey and the city government broke long-standing promises about retiree health insurance.
A similar lawsuit involving retired police officers and firefighters is playing out in Columbia. Both disputes are related to a broader trend of governments and private businesses cutting back on benefits for retirees, and in some cases eliminating benefits that already-retired employees had been told to expect.
“In 2005 I retired after 35½ years, understanding that the city had my back,” said former North Charleston Fire Chief Alvar Rissanen. “Then, four years after retirement, all of a sudden — wham.”
The “wham” was learning in 2009 that North Charleston had decided to stop providing health benefits for retirees once they became eligible for Medicare. Previously, the city had agreed to pay for Medicare supplemental policies, and to allow retirees to pay for family insurance through the city’s plan, to insure spouses and dependents.
“Plaintiffs had no way of knowing that Mayor Summey and defendant city would break the promises that had been repeatedly made to them,” the lawsuit states.
For Rissanen and former Assistant Fire Chief Michael Baxley, the change means that their younger wives will lose their health insurance when Rissanen and Baxley turn 65 in several years. And for all four plaintiffs — Rissanen, Baxley, former Battalion Chief Clifford Forner and former Assistant Fire Chief Willie Hood — the change means unexpected health-care costs during retirement.
“It was a total surprise,” said Rissanen. “The city has always been my friend, I felt.”
For now, the outcome of the North Charleston dispute hangs on the case involving retirees who worked for the city of Columbia. The cases are so similar that both sides in the North Charleston suit agreed to wait and see what happens in the Columbia case, which is awaiting possible review by the South Carolina Supreme Court following a Court of Appeals ruling.
“The case has been stayed so that both sides can evaluate additional guidance the South Carolina Supreme Court is expected to provide,” said Derk Van Raalte, North Charleston’s lawyer. “The city obviously believes it did everything lawfully and looks forward to setting forth its position more fully in court.”
Nancy Bloodgood is the lawyer for the North Charleston firefighters and the Columbia employees.
“The facts are a little different, but the theory is the same,” said Bloodgood, whose office is on Daniel Island. “If employees work for a certain number of years and are promised things,” then they should be able to rely on those promises.
It’s a legal issue called “promissory estopple” that goes to the question of whether employees can rely upon on what supervisors, human resource officers or elected officials tell them.
In the Columbia case, a lower court granted summary judgment against the retirees’ claims. A three-judge Court of Appeals then agreed that the retirees could not pursue breach of contract claims based on employee handbooks and insurance benefit booklets, but the judges unanimously ruled that there’s a factual question to be resolved involving promises made by city employees.
At issue going forward is whether the now-retired Columbia employees, and those in North Charleston, reasonably relied upon explanations of their benefits given to them by the city, in meetings and in employee newsletters, and whether those explanations were authorized.
The North Charleston suit says that “Rissanen recalls hearing Mayor Summey telling the assembled firefighters, ‘you’ve got it made’; ‘We’ve got you covered’; and ‘You have a honey of a deal’ when he repeatedly explained what the city would provide its retirees.”
The South Carolina Municipal League has filed a brief supporting Columbia’s position, arguing that not only do city supervisors and human resource personnel lack authority to promise health insurance for retirees, but that the city itself lacks the authority to promise such a benefit.
The legal argument is that city councils don’t have the authority to promise benefits that would bind future city councils to having to pay for and continue those benefits.
The Columbia and North Charleston disputes arise as municipalities, like private companies, face soaring costs for health insurance, at a time when retirees are living longer.
In addition, federal accounting rules that were phased in during recent years now require municipalities to budget for the cost of promised future benefits, actually setting money aside to pay for them.
Bloodgood, representing the retirees, said she believes employers can change the rules for current employees, but changing them for people who have already retired is a different matter.
Rissanen said he and the other firefighters who worked for North Charleston for decades helped build that city, which was incorporated in 1972. The fire department predates the city’s creation.
“We stood behind the mayor and the city,” Rissanen said. “I trusted what the city told me, and trusted that the city had my back.”
Reach David Slade at 937-5552 or Twitter @DSladeNews.