Unions sue after health care premiums OK’d (OS's union)

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Unions sue after premiums OK’d

Lawyers differ on whether council’s 6-0 vote breaks a promise


B Y MAGGIE O’BRIEN

WORLD-HERALD STAFF WRITER

City unions wasted no time filing a lawsuit after the Omaha City Council voted Tuesday to require retired workers to pay more for health insurance.

The lawsuit, filed in U.S. District Court, came just hours after the council voted 6-0 to approve Mayor Jim Suttle’s plan to charge premiums for retired police, fire and civilian employees.

Mike Dowd, an attorney for the unions, said the ordinance violates labor contracts that require the city to provide health insur­ance for retired employees. He said that in­cludes charging the city for the cost of that coverage.

“I am very sensitive to the legal obliga­tions the city has,” Dowd said.

Another union attorney, John Corrigan, said the police, fire and civilian contracts all address health care and who is required to pay for it.

A section of the police contract, for in­stance, states that the city “agrees to pro­vide, at the city’s cost, health care coverage” for retired employees and their dependents. The fire and civilian contracts say that the city must provide coverage similar to that given to current employees.

In the fire contract, there also is language concerning active employees’ health cover­ age. It says “the premium for such coverage (single or family coverage) shall be paid by the city.”

Most civilian employees have been paying modest premiums since 2006. Corrigan said a small number of retired police officers also pay a health care premium.

He said all that retirees want is what was promised to them when they retired. “These premiums were set when those people left,” Corrigan said.

The city’s Law Department interprets the contract language differently from the union attor­neys and says the city can legal­ly enforce the higher premiums as long as they don’t take away health care benefits.

City Attorney Paul Kratz de­clined to comment on the lawsuit, which names Suttle and all seven council members as defendants.

“We’ll just defend any lawsuit in court,” Kratz said.

The lawsuit seeks a tempo­rary injunction to prohibit the ordinance from taking effect in July, as planned. It also asks for a permanent injunction to stop the plan from ever being enacted, Corrigan said.

The city now provides health benefits to nearly 1,100 former employees from the time they retire until they reach age 65 and qualify for Medicare.

In most cases, the city covers 100 percent of the premiums, al­though some retirees pay modest premiums.

Suttle proposed raising pre­miums as a way to save money for the financially strapped city. Under his original plan, a civilian retiree with a family plan would pay $702 a month, or $8,424 a year.

Under his revised plan, re­tirees would pay at most $487 a month, or $5,844 per year. Pre­miums would be based on the amount of the retiree’s pension — the higher the monthly pen­sion check, the higher the pre­mium. And instead of different rates for police, fire and civilian retirees, the city is now propos­ing the same premiums for all.

The revised proposal would save the city about $4.1 million annually.

City officials said the council’s vote is a first step in addressing health care costs for active em­ployees as well. Richard O’Gara, the city’s hu­man resources director, told council members that taxpayers could be paying as much as $100 million in health care for active and retired city workers in five years. In a decade, he said, that number could reach $200 mil­lion.

“This is a ship headed for the rocks,” Councilman Chris Jer­ram said. “It’s on a collision course, and it will happen if we don’t do something.”

Several retirees told council members that the higher premi­ums would make it difficult for them to get by.

“None of us really wants to do this,” said Councilman Ben Gray. “At the end of the day, we’ve got to do something to get these costs under control.”

Council President Garry Ger­nandt, a retired police officer, abstained from voting to avoid a potential conflict of interest.

'cause there will not be a breath of it in the media after tomorrow.