Court overturns ruling, says police must pay retiree subsidy

CARSON CITY — In a decision Thursday affecting health insurance policies of many local government retirees, the Nevada Supreme Court reversed a lower court and said the Metropolitan Police Department must pay a subsidy to a state plan for its retirees.

The high court’s 31-page decision overturns a decision by District Judge Mark Denton, who had sided with the Police Department in holding that it did not have to pay the subsidy.

Had Denton’s decision been upheld, about 150 Las Vegas police retirees could have been forced out of the state’s Public Employees Benefit Program. Also, upholding Denton’s decision would have affected organizations not a party to the lawsuit, including the Clark County School District, which has about 1,900 teacher retirees enrolled in the state plan.

Leslie Johnstone, chief of the state program, had said that without the high court’s reversal, more than 3,000 local government retirees would be forced to seek more costly alternatives for health care coverage.

The Police Department now owes about $1.2 million through March 31 for 150 retired participants, based on a subsidy cost of about $35,000 a month for the group.

The subsidy varies depending on length of service. A retiree with 15 years of service should get a monthly subsidy of about $365 to be part of the state plan.

It’s an attractive option as some retirees are getting access to health care plans for less than $50 a month.

Several employee groups, including the Nevada State Education Association and the Clark County Education Association, filed legal briefs in support of the state health benefits agency in the dispute.

Clark County Education Association Executive Director John Jasonek said the ruling appears to be good news for retired teachers who have been fearful about losing their health insurance plan.

Had the ruling determined the subsidy no longer had to be paid by employers, the retirees would have had to pick up the cost themselves.

The Supreme Court ruling affects many local government employees now in the state health plan, but a law passed by the Legislature in 2007 makes the issue moot for most current local government workers.

The new law says that the state health plan will stop accepting government workers who retire after Sept. 1 unless the agency insures its current employees with the state. That means the option of enrolling in the state plan at retirement goes away for some local government workers, including teachers with the Clark County School District.

District officials, who could not be reached late Thursday, fear that might cause a teacher exodus set off by a desire on the part of retirement-eligible employees to have state coverage.

In their unanimous decision, justices said Denton misinterpreted the subsidy requirement. The state law is ambiguous, the justices said, but the law must be interpreted broadly so that retirees who want the state coverage can get the subsidy.

State law “must be read in its broad sense as generally granting to local governments authority to provide health insurance to their employees,” justices said. “Consequently, collectively bargained-for health trusts fall within that statute’s scope.”

“Since such health trusts are statutorily authorized health insurance programs, local government retirees who were previously covered by health trusts and who elected PEBP coverage upon retirement are entitled to the statutory subsidy.”

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