The Minnesota Supreme Court today ruled a city can cut the health benefits of retirees when it cuts the health benefits of its current workforce.
The court upheld two lower court rulings that insisted Duluth can change its retiree health insurance benefits to match those of its current employees.The city said it saved $60 million over 30 years by cutting the retiree benefits. The retirees said the benefits should be the ones the city agreed to when they retired.
The court said a clause in the city’s contracts that requires the city to offer the same benefits to retirees as “active” employees, refers to the employees now, not the city employees at the time of retirement.
The clause requiring a retiree to select a single health insurance plan at the time of retirement does not guarantee the retiree the selected plan throughout retirement. That initial election of a health insurance plan is effective for as long as the City offers the selected plan to current City employees.
In a dissent, however, Justice Paul Anderson says the contracts were ambiguous on the question of “current” vs. “active.”
For example, if a newspaper article refers to “the current Minnesota Governor,” it is unknown which governor the article references without knowing more details, such as the publication date of the article. The same is true of the active-employees clause. Without context, “active” or “current” employees as used in the CBAs could mean “current” on a specific date in the past.
It is essential for any court deciding this case to answer the following question: what is the exact time period to which the active-employees clause refers?
The court, however, did not touch the question of whether Duluth — or any other city in Minnesota — could eliminate health insurance for all retirees by eliminating it for all current employees. It said it was not asked that question.