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The full state Supreme Court ruled Sept. 30 that Waterbury’s retired firefighters and their widows aren’t entitled to the specific health care benefits they won while working, but that they do have a vested right to “substantially commensurate” medical coverage. The decision forces the retirees to accept a new managed care plan that, according to trial testimony from Marc S. Ryan, secretary of the state Office of Policy and Management, is saving Waterbury $2 million in its first year. The unanimous ruling is bound to have lawyers for municipalities and unions scrutinizing old bargaining agreements under a magnifying glass. Unless the contract unambiguously guarantees no future adjustments, city retirees’ medical benefits may have to shed old-fashioned features like zero co-payments and full reimbursement to the patient’s doctor of choice, and become more like the no-frills managed care plans for today’s state employees. Justice Joette Katz authored the detailed decision. It held that the 114 plaintiffs, retired firefighters and their widows, had a vested right to medical care, but no such right to precisely the same terms negotiated when they were working. The decision said the retirees failed to show the city reduced their benefits below a level “reasonably commensurate” with the negotiated coverage. There were specific difference between the retirees’ old plans and the one negotiated under the watch of Waterbury’s emergency financial planning and assistance board. In the new plan, retirees and city workers were hit with a new $5-to-$15 co-pays for each medical service. In addition, the retirees would not be able to go to an out-of-network doctor at no extra charge. The retired firefighters, represented on appeal by Francis J. Grady and Dana B. Lee of Waterbury’s Grady & Riley, sued the city in March of 2002, seeking a prejudgment remedy and an injunction to block a shift to a new managed care plan. They contended the city breached the union contract, exceeded officials’ powers and caused an unconstitutional taking. At trial, Waterbury Superior Court Judge Patty Jenkins Pittman found a technical breach of contract, and gave the firefighters a slim victory: “The court cannot conclude that the differences are trivial, even though the plaintiffs have not shown that over their life expectancy, they will suffer a specific, quantifiable loss.” The high court reversed, using a contract language analysis that doesn’t limit the case to Waterbury’s unusual financial “intensive care” situation. “I think the logic of this decision probably has significant weight in almost any municipality in Connecticut,” said Waterbury’s counsel, Brian Clemow of Hartford-based Shipman & Goodwin. Still, Clemow cautioned that “the language of collective bargaining agreements is different from municipality to municipality.” FUTURE LITIGATION? Katz began the decision by noting that Waterbury is under the fiscal supervision of a state financial oversight board, in the wake of “many years of gross financial mismanagement.” The city had made deals with unionized workers it could only pay from current tax revenues, and the city’s and state’s bond ratings were suffering as a result. Katz noted the ambiguity of the contract statement that the city “shall continue in full force and effect the [medical] benefits for each … employee who retires … after the execution of this agreement.” The court found grounds for the city’s view that the retirees’ entitlement to the plan ended with the contract period, as it did for working employees. It also acknowledged the retirees’ view that the language “shall continue” meant “shall continue through retirement.” Ultimately, the court found middle ground in reasoning from the 1996 decision of Diehl v. Twin Disc, Inc., from the U.S. 7th Circuit Court of Appeals. The 7th Circuit held that when an employer reserves a right to negotiate with several carriers, as Waterbury did, it agrees to medical coverage generally, not specifically. Under Diehl, the employer certainly “could not have been free to arrange for coverage that would eviscerate the promise of benefits.” If employees demanded continuous, unchanging benefits, that could backfire, Katz noted. The insurer might discontinue the offering or “raise the cost to the point that it no longer would be feasible” to buy, and a defense of impossibility would apply, she wrote. Eric R. Brown, of Waterbury’s Secor, Cassidy & McPartland, filed an amicus curiae brief on behalf of teachers and police unions. In an interview, Brown predicted that cities soon would be litigating the meaning of “substantially commensurate.” He noted that disputes with employees are ironed out at the bargaining table, but that unhappy retirees, without access to collective bargaining, go to court. Brown also disputed Katz’s observation about an impossibility defense. Since a city can self-insure, he said, it can always pay for the coverage terms it agreed to. The Waterbury financial planning and assistance board was represented by Linda L. Morkan, of Robinson & Cole. Clemow, for the city, argued in his brief that the retirees’ benefits eclipsed those of today’s working firefighters. He commented, “If somebody’s putting their life on the line every day, and the plan they’ve got isn’t good enough for a retiree who retired 20 years ago, and their health insurance is costing them more than they were ever paid as an annual salary, what’s wrong with this picture?”

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