Livermore, California – December 12, 2019 – After ten years of hard fought litigation and two victories at the California Court of Appeal, University of California retirees who worked at the Lawrence Livermore National Laboratory (LLNL) have reached an $84.5 million settlement with The Regents of the University of California over the termination of their University-sponsored health care benefits.
In October 2007, the U.S. Department of Energy awarded the contract to manage the Lawrence Livermore National Laboratory (LLNL) to a private sector LLC, Lawrence Livermore National Security (LLNS). The Regents then terminated University-sponsored retiree health care benefits for all retirees who had worked at LLNL. This triggered the lawsuit.
The lawsuit was filed on August 11, 2010. According to the suit, the new benefits provided by LLNS cost more, covered less, and were less secure than UC benefits. The lawsuit was dismissed and plaintiffs appealed. In 2012, the Court of Appeal ruled in their favor. The case then proceeded as a class action. There are approximately 9,080 retirees, spouses and dependents in the class. The average age of the class is 78. Approximately 2,000 class members have passed away since October 2007.
“The main thing we wanted was reinstatement of UC medical benefits, but we had to make a decision based on the choices we had,” said Wendell Moen, an 80-year-old plaintiff who worked as a mechanical engineer and group leader and retired from the Livermore Lab in 2000 after 37 years. “The choice was to take a good settlement now that provides benefits very close to what we would get under UC, or to continue the lawsuit for several years in hopes of getting a little more. In the end, this was not a hard decision.”
The settlement restores the security for retiree health care benefits by requiring The Regents to restore University-sponsored benefits if LLNS terminates the benefits it is providing or materially alters those benefits.
The Regents will also pay $80 million to provide an increased stipend going forward as well as past damages. The Regents will also pay $4 million for benefits counselors and contribute $500,000 toward the cost of administering the settlement.
One-fourth of the settlement ($20 million) will be used to compensate class members who suffered financial losses. Three-quarters of the settlement ($60 million) will be used to establish a trust to pay for enhanced benefits for class members over the next 20 years. (A more detailed summary of settlement terms is provided as an appendix to this release.)
“We would have preferred for UC benefits to be restored, but this would have required winning at trial and then winning on appeal, which would have taken several more years,” said Alan Hindmarsh, who is 77 and retired in 2002 after working 34 years as a mathematician at the Lab. “The settlement is a reasonable compromise, especially with 25 class members dying every month.”
“I am very pleased that after ten long years of struggle UC has worked with us to craft this settlement and in doing so has recognized the tremendous contribution that the UC retirees from the Livermore Lab made – not only to the University, but to ensuring the security of the United States during the darkest years of the Cold War,” said 77-year-old plaintiff Jay Davis, a former associate director at the Lab who retired in 2002. “We were proud to be UC employees for 50 years and we’re proud to be part of the University now. We would have preferred to receive our medical benefits through UC, but the settlement takes us most of the way to what UC promised us.”
“I’m no different than the vast majority of UC employees and retirees – the promise of affordable lifetime medical benefits was a big part of my decision to stay at the University my entire career,” said 73-year-old Donna Ventura, another plaintiff, who worked in human resources and health services at the Lab for 32 years. “In spite of the fact that this process has taken ten years, I’m pleased that we have finally come to a solution that will benefit the retirees and their families for years to come.”
The plaintiffs have filed a motion asking the Alameda Superior Court for preliminary approval of the settlement. A hearing is scheduled for December 20, 2019. If the court gives preliminary approval, notice will be sent to all members of the class, who will have a chance to express their views of the settlement at a hearing that will be scheduled by the court. The court will then be asked to give final approval to the settlement.
The class is represented by Andrew Thomas Sinclair of Sinclair Law Office in Oakland; Dov Grunschlag of Carter Carter Fries & Grunschlag in San Francisco; and Kathleen Fisher, Maya Maravilla and Alex Freeman of Calvo Fisher & Jacob in San Francisco.
The case is Moen, et al., v. Regents of University of California, et al., Case No. RG10530492, Superior Court, County of Alameda, California.
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The University of California Livermore Retirees Group (“UCLRG”) is a grass-roots organization formed to restore UC medical benefits to more than 5,000 retirees from Lawrence Livermore National Laboratory who were unfairly and illegally removed from the UC health plan in 2008. This advocacy group has hundreds of members nationwide, many of whom have contributed to the Legal Defense Fund which is bringing the current legal action. For more information visit their website at llnlretiree.com.
SETTLEMENT BACKGROUND INFORMATION
Moen v. Regents
There are approximately 9,080 retirees, spouses and dependents in the class. The average age of the class is 78. Approximately 2,000 class members have passed away since October 2007. Most of the class (95%) is eligible for Medicare and is covered through Via Benefits and Kaiser Senior Advantage. Class members who are not eligible for Medicare are covered through (non-Medicare) Kaiser and Anthem Blue Cross.
Backstop / Reinstatement Provision
Plaintiffs and the Class will stay in the LLNS Health and Safety Benefit Plan for Retirees and continue to receive benefits from LLNS. The settlement provides an enhanced “Supplemental Payment” to bring benefits into line with those offered by UC.
The value of the settlement depends on LLNS maintaining the benefits it provides. Security going forward is provided by the “backstop/reinstatement” provision which requires The Regents to reinstate UC-sponsored benefits if LLNS terminates or materially changes the benefits it provides.
$84.5 Million Settlement
The Regents will pay $80 million to compensate class members for past damages and enhanced health care coverage going forward.
One-fourth (25%) of the $80 million will be used for past damages; three-quarters (75%) will be used to enhance health care benefits over the next 20 years.
The Regents will also pay $4 million for benefits counselors and $500,000 towards the cost of administration.
Past Damages – Initial $1,000 Payment
All members of the class will receive a payment of $1,000 as soon as the settlement is approved by the court. This payment will go to all members of the class (including heirs of deceased class members), so will cost approximately $9 million.
Past Damages – Above $1,000
Certain Class Members suffered losses over $1,000 and will be compensated for a portion of their loss (expected to total approximately $11 million).
Enhanced Benefits for 20 Years
Approximately $60 million of the settlement will be used to establish a trust that will provide additional funds for the next 20 years. These funds will lower the cost of coverage for Class Members going forward.
Benefits Counselors & Administrative Costs
The Regents will also pay $4 million for benefits counselors who will assist class members in choosing the most appropriate health care coverage and resolving disputes with health care providers. The Regents will contribute $500,000 toward the costs of administering the settlement.
Via Benefits is a “portal” that provides access to hundreds of health care and prescription plans. LLNS provides a stipend of $2,450 per year which class members use to select the coverage they want. Under the settlement, class members will continue to receive the LLNS stipend ($2,450 per year or $204.17 per month) plus a supplemental payment going forward ($550 per year or $45.83 per month). So, class members will have a total of $204.17 + $45.83 = $250.00 ($3,000/year) with which to purchase coverage through Via Benefits.
Kaiser Senior Advantage
For Class Members in Kaiser Senior Advantage, LLNS provides $2,450 per year or $204.17 per month. The settlement will provide an additional $558 per year, or $46.50 per month, for those in Kaiser Senior Advantage.
Non-Medicare Class Members
Class members who are not eligible for Medicare and receive coverage through Kaiser or one of the three Anthem Blue Cross plans will receive a supplemental payment depending upon the plan selected. These class members will see an initial reduction in their monthly health care cost between 50% and 72%.