CARSON CITY — A legal dispute that could have a major impact on access to health care for thousands of retired local government workers was argued Thursday before the Nevada Supreme Court, which is expected to rule quickly in the matter.
The court has been asked to decide whether local government retirees who worked for the Metropolitan Police Department are eligible to join the state-administered insurance plan to receive their health care coverage.
If they are eligible to join the state Public Employees Benefits Program upon retirement, the court will clarify whether the state can then require the local government agency to pay a legislatively mandated subsidy to help cover the cost of providing the health insurance coverage to its retirees.
The state Public Employees Benefits Program, the agency that manages the health insurance program for state employees and retirees as well as participants from some local governments, brought the appeal, seeking to overturn a lower court ruling that found the Police Department did not have to pay the state plan a subsidy for its retirees.
Deputy Attorney General Deonne Contine, representing the state plan, told the court the legislative intent was clear that the health trust operated on behalf of Las Vegas police officers was intended to be included in the subsidy requirement.
But Adam Segal, the attorney for the Police Department, disagreed, saying the plan, a trust that is operated independently of the Police Department, was excluded in legislation passed in 2003. The exclusion of plans that come about from collective bargaining agreements was brought to the attention of lawmakers in 2004, but nothing was done in subsequent sessions to correct the oversight, he said.
The Legislature passed the measure as a way to ease the cost of health insurance coverage for retirees from local governments participating in the state system who were facing increasingly higher premiums.
“These are cops,” Segal said after the hearing. “They’re not trying to disobey laws. They’re trying to follow laws. They feel that paying the subsidy would be in violation of the law and a misuse of the money because the statute doesn’t clearly require the payment. They are in a quagmire.”
Leslie Johnstone, executive officer of the state plan, said if the argument used by police supporting its decision not to pay the subsidy is upheld, its retirees soon could have to find other health insurance coverage.
About 150 retired Las Vegas police retirees could be forced out of the state health plan completely.
The ruling also would apply to the Clark County School District and the 1,900 retirees now participating in the state health plan.
In all, more than 3,000 local government retirees could be affected and forced to seek more costly alternatives for their health care coverage, Johnstone said.
State health plan officials say the Police Department now owes about $1.1 million through Dec. 31 for its 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 who has 15 years of service with a local government entity should receive a monthly subsidy of $365.34 to be a part of the state plan.
Segal, in comments made after the hearing, disputed the suggestion that a decision in favor of the police would require the state plan to stop providing health care coverage to the local government retirees.
“Anyone saying this case is about eligibility is trying to get people riled up,” he said.
The state health plan can be an attractive option for local government retirees. Under the program, some retired Clark County teachers are getting access to health care plans for less than $50 a month.
The genesis of the dispute is a decision made by the Nevada Legislature in 2003 to require nonstate public employers to pay a subsidy to have their retirees covered by the state plan.
All local government agencies except Las Vegas police and two Caliente local government agencies have been paying the subsidy since the law took effect.
The Police Department challenged the subsidy requirement. In an August ruling, District Judge Mark Denton agreed with the agency.
Several employee groups, including the Clark County Education Association and the Nevada State Education Association, have filed legal briefs in support of the state health benefits agency in the dispute.
While the court ruling could affect many of those local government employees now in the state health plan, a separate law passed by the Legislature in 2007 will make the issue moot for most current local government employees.
The new legislation states that the state health plan will stop accepting local government workers who retire after Sept. 1, 2008, unless the agency insures its current employees with the state.
Therefore, the option of enrolling in the state plan at retirement will disappear for some local government workers, including teachers with the Clark County School District.
Contact Capital Bureau reporter Sean Whaley at firstname.lastname@example.org or (775) 687-3900.