Thursday,
January 31, 2013
Page 1
C.A.
Allows Livermore Retirees to Sue for Health Benefits
By JACKIE FUCHS, Staff Writer
Four retirees
may proceed with their suit against the University of California for
termination of their university sponsored health insurance benefits, the First
District Court of Appeal has held. A three-judge panel said that Alameda
Superior Court Judge Frank Roesch erred when he
sustained the UCÕs demurrer without leave to amend, saying that the plaintiffs
had alleged sufficient facts, which if true, would support claims for breach of
an implied contract, declaratory relief, and promissory and equitable estoppel.
Plaintiffs Joe
Requa, Wendell G. Moen, Jay Davis, and Donna Ventura each worked for decades at
the Lawrence Livermore National Laboratory. During their employment there,
Livermore was operated by the UC. By virtue of their employment at Livermore,
the retirees became members of the University of California Retirement System,
which later became known as the University of California Retirement Plan.
In 1961, the
regents adopted a resolution authorizing medical benefits for university
employees and retirees. The authorization did not include any provision
permitting the regents to terminate or eliminate these benefits, or to modify
vested retirement benefits or transfer the responsibility for providing a
vested benefit to another entity.
Benefits
Authorized
After
authorizing medical benefits, the university began telling employees they would
receive health coverage both while they were working and during retirement so
long as they met eligibility requirements. In the late 1990s, however, the
regents began inserting language into benefits books and publications stating
that retiree medical benefits were not vested and could be modified or
eliminated at any time.
After retiring
from Livermore, the plaintiffs all continued to receive university-sponsored
group health insurance benefits in the same manner as other university retirees
until Jan. 1, 2008, when the management and operation of Livermore was
transferred from the university to a private consortium. The plaintiffsÕ
university-sponsored group health insurance was terminated and the consortium
assumed responsibility for providing the plaintiffsÕ health insurance benefits.
The plaintiffs brought an action for mandamus against the UC, claiming that the
elimination of their university-sponsored group health insurance benefits
constituted an unconstitutional impairment of either an express or implied
contract the regents had formed with plaintiffs, and that under the doctrines
of promissory and equitable estoppel the termination of their
university-sponsored group health insurance benefits was prohibited.
Demurrers
Sustained
Roesch sustained the demurrers, saying there
could be no implied contract for retiree medical benefits. RoeschÕs
decision was made, however, before the California Supreme Court decided Retired
Employees Assn. of Orange County, Inc. v. County of Orange (2011) 52
Cal.4th 1171. In that case the high court held that a county may
be bound by the terms of an implied contract to provide retiree benefits so
long as there is no legislative prohibition against such arrangements. Although
the intent to make a contract must be clear, it need not be express, but can be
implied from legislation in appropriate circumstances.
On appeal from
an order sustaining a demurrer, the panel noted that it was required to assume
the truth of all of the allegations of the writ. To prevail, the plaintiffs
were not required to show they already possess the evidence that will prove
their case, but only that the allegations of the writ were sufficient to state
a cause of action under some legal theory. In support of their claim for breach
of implied contract, the plaintiffs offered a 1971 benefits booklet which said
that the complete provisions of the retirement systems were set forth in the
Standing Order of the regents, an order which had not been located as of the
date of the panelÕs decision. Presiding Justice Barbara Jones said that the possible
existence of an order that might define the regentsÕ authority with respect to
retiree health demonstrates the issue cannot properly be resolved on demurrer,
because the benefits booklets contained language that could be read, as the
plaintiffs claimed, as implying a commitment to provide these benefits
throughout retirement, rather than for an unspecified shorter period. Although
the plaintiffsÕ interpretation may ultimately prove invalid, Jones said, it was
improper for the trial court to resolve the issue against them at the pleading
stage. The plaintiffsÕ allegations that they relied on the promise of health
insurance during retirement by remaining in employment at Livermore for their
entire careers, rather than seeking employment in the private sector—where
retiree medical benefits are not always available—were sufficient to
state a claim for promissory estoppel, Jones concluded.
And as the
existence of equitable estoppel is generally a question of fact, findings on
such a cause of action are generally inappropriate at the demurrer stage, Jones
said, especially where, as here, the regents were relying on language first
inserted in benefits booklets long after each of the plaintiffs had begun
employment at Livermore. Requa, for example, had been a Livermore employee for
33 years before the university began to claim that retiree health benefits were
not vested rights. The panel also rejected the universityÕs claims that the
plaintiffsÕ suit was not timely filed, saying that even if the justices were to
assume, contrary to plaintiffsÕ allegations, that the statements in the 1988
and 1998 booklets were sufficient to advise plaintiffs that health benefits
were not vested benefit entitlements, the regents Òdid not breach this promise
merely by announcing [they] would no longer honor it.Ó While such a repudiation might constitute an anticipatory breach,
giving the retirees the option of suing immediately, it did not accelerate the
accrual of a cause of action for limitations purposes; the plaintiffs could
still wait to file their suit until the regents had failed to render the
allegedly promised performance. Accepting as true the allegations of the
petition, the panel said that the plaintiffsÕ action was thus filed within the
three-year period of the statute of limitations.
Save for the
plaintiffsÕ claim for impairment of express contract, the demurrer was
overruled.
Justices Mark
Simons and Terence Bruiniers concurred in the
opinion.
The case is Requa v, Regents of University of California; 13 S.O.S. 457.