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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.
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