Retirees dealt ultimatum in fight to retain benefits

• Duluth City Hall

File photo / News Tribune

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Duluth city retirees will have to post a $750,000 bond with the court if they want to stop the city from shifting them to a new health insurance plan next month.

The city had asked District Judge Kenneth Sandvik to require a bond of at least $1 million if he decided to offer a temporary restraining order to the retiree group. But Sandvik ruled Tuesday that a $750,000 bond — still a large potential liability for the retirees — would be enough.

Retired city employees sued the city over its plan to move them to the same plan that current employees have, arguing that they should continue to receive the level of coverage they were receiving when they retired. Sandvik ruled that the city can move retirees to plans used by current employees. But an ad hoc committee of retirees announced Dec. 10 that it was going back to court to seek an injunction preventing the move while they appeal the judge’s decision.

City Attorney Gunnar Johnson said the city asked for a $1 million bond because an appeal can easily last a year, and the cost of retirees’ current coverage is estimated to be about $1.25 million more per year than the coverage the city wants to provide.

If the retirees aren’t able to post the required bond, the city said its human resources office will mail out new benefit cards to retirees in January.

“I feel the city is wrong to be implementing these changes until our appeal is heard,” said Patrick Alexander, a member of the ad hoc retiree committee. He said it’s premature to tell whether affected retirees — about 1,300 people in all — will put up the money that would be required to post the $750,000 bond.

Attorney Don Bye, who represents the retirees, said his clients are exploring their options.

If retirees post a bond and ultimately lose their case, they could be required to cover any additional expenses the city of Duluth incurs as a result of continuing their insurance at past levels.

Despite the latest potential setback in coverage, Bye said: “Legally, this shouldn’t take anything away from our appeal.”

Former Duluth police chief Eli Miletich, who leads the retiree committee, has said that overall benefits for retirees will be drastically reduced. The city is counting on saving millions of dollars by shifting retirees to the new plan. But in recent letters to retirees, the city said the amount retirees pay in premiums will not change, and some benefits, such as lifetime maximum payment and generic drug co-pays, will improve for the majority of retirees.

Retirees can contact Blue Cross Blue Shield or ClearScript Customer Service Center phone numbers located on their current ID cards with questions regarding their health or pharmacy benefits plan.

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