Judge lets city retirees avoid Medicare

PROVIDENCE, R.I. (WPRI) - The city of Providence suffered a costly legal defeat on Monday as a judge ruled the Taveras administration can't force retired police officers and firefighters to sign up for Medicare next month.

Superior Court Judge Sarah Taft-Carter, who ruled against the state government in a major pension case last year, granted Providence retirees an injunction that blocks the city from moving them and their spouses to the federal health insurance program for the elderly until a full trial is held.

"It is clear that the city continues to suffer a sever financial crisis," Taft-Carter wrote in her decision, and therefore has "a legitimate public purpose" for moving the retirees to Medicare. But she blamed the city for failing to take steps to scale back its promises to retirees in contracts signed before the current crisis.

The judge's decision - and her skepticism toward the city's claims - is likely to raise alarm bells at City Hall and on Smith Hill, as the Medicare case was widely seen as a test of both Providence's and the state's ability to get courts to allow changes in the generosity of benefits promised years ago.

"Mayor Taveras is extremely concerned and disappointed with the decision," spokesman David Ortiz told WPRI.com in an email. "He and his staff are still reviewing the 47-page decision and reviewing our options."

Taft-Carter said her ruling Monday "involves a preliminary injunction, which requires only a reasonable likelihood of success on the merits, not certainty of success" - meaning the retirees are likely but not certain to defeat the city in court when the trial is finished.

Failing to force the city to continue the retirees' Blue Cross & Blue Shield of Rhode Island coverage "would leave them irreparably harmed," she said.

Providence began offering retired police officers lifetime Blue Cross coverage in 1977, with prescription drug coverage following in 1982. Both benefits were awarded during the first tenure of former Mayor Buddy Cianci, and were not changed by his successors, according to the trial record. Firefighters received a similar deal.

The General Assembly passed a law last year explicitly allowing Providence and other cities to move retirees to Medicare even if their original union contracts stipulated they would receive private health insurance for the rest of their lives. The city told 283 police and fire retirees eligible for Medicare it would cancel their Blue Cross by July 1. The deadline to enroll in Medicare is Wednesday.

The Providence Retired Police and Firefighter's Association filed suit in October, arguing the new state law and a related city ordinance are both unconstitutional. The retirees want Taft-Carter to permanently bar Providence from canceling their Blue Cross coverage and moving them to Medicare.

City lawyers argued in court that it cannot afford to offer lifetime health benefits to retirees and would save $6 million annually by moving them to Medicare. The Taveras administration said health benefits account for more than 15% of Providence's annual budget, costing about $100 million a year for the retirees alone.

Rhode Island’s municipalities owe $3.5 billion in unfunded retiree health benefits to their current and former employees, and Providence makes up $1.5 billion of that amount. Taft-Carter ruled against Pawtucket earlier this month in its attempt to force school clerical retirees to pay part of the cost of their health insurance.

Taft-Carter said the retirees "stand to incur potentially thousands of dollars in new healthcare costs to retain insurance - expenses that could force them to choose between other necessities and forgoing medical treatment." A savings of $6 million amounts to less than 1% of Providence's total unfunded retiree health liability, she noted.

"The public does have a clear interest in the financial health of its cities and towns, but the public interest is not simply synonymous with the interest of government," she said.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi