A new federal judge and a new complaint fared better for Contra Costa County retirees fighting to save their health care benefits. U.S. District Judge Jon Tigar on Friday kept alive a breach of contract lawsuit by county retirees who challenged a county plan to cap its contributions to their health care.
The decision will likely keep the case on many local government watchlists, as municipalities and counties struggle to find legal ways to cut the cost of retiree benefits.
The Retiree Support Group of ContraCostaCounty sued in 2012 claiming the county had promised to pay 80 percent of health care benefits to retirees and their dependants for life.
But the county capped its contributions to a flat dollar amount in 2010 and retirees would have to pick up the tab for anything over that, according to the suit.
The lawsuit was thrown out in July by U.S. District Judge Jeffrey White, who said the retirees failed to show the promise amounted to a contract right. The group filed an amended complaint and by then the case had been passed on the newly appointed Judge Tigar.
On Friday, Tigar ruled that the retirees had made out enough of a case to raise a triable question of whether a contract existed. He rejected the county’s effort to dismiss the case.
The retirees argued they had given up past wage increases and other benefits in exchange for county promises to pay 80 percent of health care costs. This promise was recorded in memorandums of understanding over the years, according to the lawsuit.
Tigar pointed to a 2011 California Supreme Court decision that held a resolution or ordinance “may contain implied terms creating vested rights to retiree health benefits.”
He also noted that the 9th U.S. Circuit Court of Appeals had applied that precedent to a SonomaCounty retiree case making similar claims of vested retiree health benefit costs.
The Contra Costa retirees’ allegation, “when taken as true, are sufficient to raise a reasonable inference that the county intended to contractually bind itself to provide to the retirees lifetime health care benefits in accordance with the 80 percent promise,” Tigar wrote.
Case: Retiree Support Group of Contra Costa Co., v. Contra Costa Co., No. 12-cv-944JST