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Harper Woods Retirees Ass'n v. City of Harper Woods

Court of Appeals of Michigan

October 1, 2015

HARPER WOODS RETIREES ASSOCIATION, JUDITH DEKEYSER, DONALD KUCZBORSKI, JAMES MANOR, and JEFFREY MANOR, and Others Similarly Situated, Plaintiffs-Appellants,
v.
CITY OF HARPER WOODS, Defendant-Appellee

         Editorial Note:

         This opinion is subject to revision before final publication in the Michigan Court of Appeals reports.

          Wayne Circuit Court. LC No. 12-013098-CK.

         For HARPER WOODS RETIREES ASSOCIATION, Plaintiff-Appellant: MARK A PROTER, MADISON HEIGHTS, MI.

         For WOODS CITY OF HARPER, Defendant-Appellee: SHARON A DEWAELE, HARPER WOODS, MI.

         Before: FORT HOOD, P.J., and JANSEN and GADOLA, JJ.

          OPINION

          [312 Mich.App. 502] Michael F. Gadola,  J.

         Plaintiffs appeal as of right from the trial court's order granting defendant's motion for summary disposition under MCR 2.116(C)(8) (failure to state a claim) and (C)(10) (no genuine issue of material fact). We reverse and remand for further proceedings consistent with this opinion.

         I. FACTS

         The Harper Woods Retirees Association (HWRA) is a nonprofit corporation composed of individuals who were once employed by defendant, and who retired between the 1980s and early 2000s. The individually named plaintiffs are retirees who hold the following positions within the HWRA: Jeffrey Manor, president; James Manor, treasurer; Judith DeKeyser, secretary; and Donald Kuczborski, trustee. According to plaintiffs' complaint, members of the HWRA obtained vested healthcare benefits through multiple collective bargaining agreements (CBAs) and personal contracts with defendant. These agreements identified specific health insurance plans, riders, and prescription [312 Mich.App. 503] drug co-pays available to retirees.[1] Plaintiffs alleged that retirees previously received Blue Cross - Blue Shield of Michigan (BCBS-M) " Traditional," " Master Medical," or " Community Blue-1" insurance plans, [312 Mich.App. 504] which guaranteed either no deductibles for treatment or " first dollar" deductibles of approximately $10 for office visits. Plaintiffs also claimed that some of their original health plans had a $2 deductible for generic prescriptions and a $5 deductible for name brand prescriptions.

         On April 12, 2012, defendant announced plans to unilaterally alter its retirees' healthcare coverage. According to plaintiffs' complaint, defendant sought to move retirees under the age of 65 into a BCBS-M " Community Blue-2" insurance plan, and retirees over the age of 65 into a BCBS-M " Medicare Advantage, Mid-Option" insurance plan. Plaintiffs alleged that the new plans " would include co-pays and deductibles amounting to $1,000.00 to $1,500.00 per year, per retiree" and would require retirees who previously paid $2 and $5 co-pays for their prescriptions to pay $5 for generic prescriptions and $20 for name brand prescriptions.

         In June 2012, individual retirees established the HWRA to oppose defendant's proposed changes. However, following two meetings between defendant and the HWRA, defendant maintained that its retiree healthcare benefits expired at the term end of the relevant CBAs, giving defendant the discretion to alter retiree health insurance coverage. On July 9, 2012, the city council approved defendant's alterations, and on August 1, 2012, the changes became effective.

          [312 Mich.App. 505] In October 2012, plaintiffs filed a complaint alleging breach of contract including violation of the Contract Clauses of the United States Constitution. Plaintiffs sought a declaration that defendant breached its contracts, an injunction against further alteration of retiree benefits, and an order returning to retirees their previous health insurance coverage. Plaintiffs also sought class certification for the 88 members of the HWRA. The trial court initially refused to certify the membership of the HWRA as a class. However, following a motion hearing on June 28, 2013, the court instructed plaintiffs to reintroduce their motion for class certification, and instructed defendant to bring a motion for summary disposition on the question of whether a municipality may unilaterally alter the healthcare benefits of its retired employees.

         At a hearing in September 2013, the court addressed both motions. First, the court granted plaintiffs' motion for class certification in part, defining the certified class to include all of defendant's employees who (1) were covered by a CBA at the time of retirement, or (2) had a personal contract with defendant at the time of retirement. However, the trial court did not identify the specific persons included in the class certification. Next, addressing defendant's motion for summary disposition, the court relied on the Sixth Circuit Court of Appeals' holding in Reese v CNH America LLC, 694 F.3d 681 (CA 6, 2012) to conclude as a matter of law that employers may unilaterally alter retirees' health insurance coverage ...


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