Judge says Duluth may not change retiree health-care benefits

A judge on Wednesday ordered that the city of Duluth -- at least for the time being -- can make no change in the health insurance benefit levels of two retired city employees and the spouse of another retired city employee.

Retired city employees Hartley Conrad and Paula Savela; and Carol Griak, the wife of a retired city employee, had filed a complaint against the city seeking a temporary restraining order last month.

Sixth Judicial District Judge Kenneth Sandvik granted the request after a hearing Wednesday morning in St. Louis County District Court in Duluth.

Sandvik told the parties he was basing his decision on a stipulated agreement reached in April between Duluth City Attorney Bryan Brown and attorneys Don Bye and Shelly Marquardt, who represented the plaintiffs. In that stipulation, it was agreed that the city would make no change in health insurance benefits without prior reasonable notice to the plaintiffs and their attorneys.

"We finally got the temporary restraining order that we've been looking for the last couple of months," Bye said after the hearing. "That's a clear indication to the city that they cannot change the terms of coverage for retirees."

Sandvik, who normally handles cases in Lake County and Cook County, is hearing the Duluth case because all Duluth judges but one recused themselves from hearing it and the city removed the lone Duluth judge who was willing to hear it.

The city opposed the plaintiff's motion for a temporary restraining order. The city argued that the plaintiffs' health-care plans and coverage, including benefits and deductibles, have remained constant since their enrollment. The city said it has made no changes in benefits or increases in deductibles in 2008 that would negatively affect the plaintiffs' coverage.

John "Mac" Lefevre, a Minneapolis attorney with experience representing cities, schools and townships and who is representing the city in the case, told the court that there is no actual or threatened harm to the retirees to support the temporary restraining order.

The Duluth City Council voted to hire Lefevre's firm to represent the city after the City Attorney's Office cited a conflict of interest.

Lefevre argued that the plaintiffs are asking for

"an order to interfere with the city administration without justification." He accused the plaintiffs of trying to make the court the "super administrator of the city's health plan."

"This litigation has become part of the problem and not part of the solution," Lefevre said.

The plaintiffs' attorneys allege that their clients have been left in a situation where they face continuing uncertainty about their level of coverage. Blue Cross and Blue Shield of Minnesota is the administrator of the plan.

Outside the courtroom after the hearing, Marquardt said the plaintiffs question whether the city is telling Blue Cross and Blue Shield to reduce the level of the retirees' benefits, or whether there is a miscommunication between the city and its plan administrator. "Either way, the retired employees are bearing the brunt of it," she said.

Sandvik scheduled another hearing in August to decide whether to continue on to a preliminary or temporary injunction, which would extend the order he issued Wednesday. He suggested to the parties that they consider entering "meaningful settlement discussions."

MARK STODGHILL covers public safety and courts. He can be reached weekdays at (218) 723-5333 or by e-mail at mstodghill@duluthnews.com .