employees, teachers’ and state employees’...
TRANSCRIPT
No. ______ TWENTY-SEVEN-A DISTRICT
SUPREME COURT OF NORTH CAROLINA
********************************************
I. BEVERLY LAKE, JOHN B. LEWIS, JR., EVERETTE M. LATTA, PORTER L. McATEER, ELIZABETH S. McATEER, ROBERT C. HANES, BLAIR J. CARPENTER, MARILYN L. FUTRELLE, FRANKLIN E. DAVIS, THE ESTATE OF JAMES D. WILSON, THE ESTATE OF BENJAMIN E. FOUNTAIN, JR., FAYE IRIS Y. FISHER, STEVE FRED BLANTON, HERBERT W. COOPER, ROBERT C. HAYES, JR., STEPHEN B. JONES, MARCELLUS BUCHANAN, DAVID B. BARNES, BARBARA J. CURRIE, CONNIE SAVELL, ROBERT B. KAISER, JOAN ATWELL, ALICE P. NOBLES, BRUCE B. JARVIS, ROXANNA J. EVANS, and JEAN C. NARRON, and all others similarly situated,
Plaintiffs-Appellees, v.
STATE HEALTH PLAN FOR TEACHERS AND STATE EMPLOYEES, TEACHERS’ AND STATE EMPLOYEES’ RETIREMENT SYSTEM OF NORTH CAROLINA, BOARD OF TRUSTEES OF THE TEACHERS’ AND STATE EMPLOYEES’ RETIREMENT SYSTEM OF NORTH CAROLINA, DALE L. FOLWELL, in his official capacity as Treasurer of the State of North Carolina, and the STATE OF NORTH CAROLINA,
Defendants-Appellants.
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
From Gaston County No. COA17-1280
****************************************************
JOINT PETITION FOR DISCRETIONARY REVIEW BEFORE
DETERMINATION BY THE COURT OF APPEALS AND ALTERNATIVE PETITION FOR WRIT OF CERTIORARI
****************************************************
- ii -
INDEX TABLE OF CASES AND AUTHORITIES ............................ iv
INTRODUCTION ................................................................. 2
STATEMENT OF FACTS ...................................................... 6
REASONS FOR GRANTING DISCRETIONARY REVIEW BEFORE DETERMINATION BY THE COURT OF APPEALS .......................................................... 11
I. THIS CASE IS UNIQUELY IMPORTANT TO THE PEOPLE OF THIS STATE. ............................ 11
A. The Outcome of This Case Will Directly Affect Over 200,000 Retirees. .......................... 11
B. The Outcome of This Case Will Affect the State Budget...................................................... 12
C. This Case Will Also Affect Many Local Governments. ................................................... 13
II. THIS CASE INVOLVES SIGNIFICANT LEGAL ISSUES..................................................................... 17
III. DELAY WOULD CAUSE SUBSTANTIAL HARM. .................................................................... 18
REASONS FOR GRANTING THE PETITION FOR WRIT OF CERTIORARI IN THE ALTERNATIVE ............ 20
ISSUES TO BE BRIEFED ..................................................... 21
VERIFICATION FOR PETITION FOR WRIT OF CERTIORARI (SAWCHAK) ............................................... 24
VERIFICATION FOR PETITION FOR WRIT OF CERTIORARI (CARPENTER) ............................................. 25
CERTIFICATE OF SERVICE ............................................... 26
- iii -
EXHIBIT
Superior Court’s Order Granting Plaintiffs’ Motion for Partial Summary Judgment and Denying Defendants’ Motion for Summary Judgment on Liability (May 19, 2017)
- iv -
TABLE OF CASES AND AUTHORITIES
Cases Page(s) Bailey v. N.C. Dep’t of Revenue,
353 N.C. 142, 540 S.E.2d 313 (2000).................................. 17
Bailey v. State, 348 N.C. 130, 500 S.E.2d 54 (1998)................................... 16
Faulkenbury v. Teachers’ & State Emps.’ Retirement
Sys., 345 N.C. 683, 483 S.E.2d 422 (1997) ....................... 16
Fisher v. Flue-Cured Tobacco Coop. Stabilization Corp., 369 N.C. 202, 794 S.E.2d 699 (2016) .......................... 12, 21
Gilbert v. N.C. State Bar,
363 N.C. 70, 678 S.E.2d 602 (2009) ................................. 20
Robinson v. Lincoln Cty., No. 10 CVS 112 (Lincoln Super. Ct.) ................................. 14
Umberger v. Pike Corp.,
368 N.C. 765, 781 S.E.2d 803 (2016) ................................. 12
Statutes
N.C. Gen. Stat. § 7A-27(b)(3)(a) ........................................... 20
N.C. Gen. Stat. § 7A-31(b) (2015) ............................................ 2
N.C. Gen. Stat. § 7A-31(b)(1) ............................................... 2, 3
N.C. Gen. Stat. § 7A-31(b)(2) ......................................... 2, 3, 17
N.C. Gen. Stat. § 7A-31(b)(3) ........................................ 2, 4, 18
- v -
N.C. Gen. Stat. § 7A-32(b) .................................................... 12
N.C. Gen. Stat. § 135-5(a1) ......................................................13
N.C. Gen. Stat. § 135-48.47 ....................................................13
Act of July 20, 1971, ch. 1009,
1971 N.C. Sess. Laws 1588 ................................................. 6
Act of Apr. 11, 1974, ch. 1278, 1973 N.C. Sess. Laws 454 ................................................... 6
Act of June 23, 1982, ch. 1398,
1982 N.C. Sess. Laws 288 .................................................. 6
Act of Aug. 14, 1987, ch. 857, 1987 N.C. Sess. Laws 2098 ................................................ 6
Act of Aug. 1, 2006, ch. 174,
2006 N.C. Sess. Law 630 ................................................... 6
Act of May 11, 2011, ch. 85, 2011 N.C. Sess. Laws 119 ................................................ 7, 20
Rules
N.C. R. App. P. 15(a) ................................................................ 2
N.C. R. App. P. 21(a)(1) ...................................................... 2, 20
Other Authorities Associated Press, Appeals Court Sides with State
Retirees, Burlington Times News (June 17, 2014) ......... 15
- vi -
Laura Douglass, State Treasurer Talks of Reining in
Costs, The Pilot (Oct. 20, 2017) ....................................... 4 Allison Latos, 220,000 Retirees Claim Victory Against
NC Over Health Insurance Costs, WSOC-TV (June 8, 2017) ............................................................................. 15
State Treasurer of North Carolina, Press Release,
Treasurer Folwell Announces New Unfunded Liabilities Projections for State Health Plan (Mar. 15, 2017) ............................................................................... 5, 8
Treasurer: Judge’s Ruling May Cost State $100M-plus,
WLOS (May 22, 2017) ..................................................... 15 Univ. of N.C. School of Gov’t, County Salaries in N.C.
(2015) ............................................................................... 14
No. ______ TWENTY-SEVEN-A DISTRICT
SUPREME COURT OF NORTH CAROLINA
********************************************
I. BEVERLY LAKE, JOHN B. LEWIS, JR., EVERETTE M. LATTA, PORTER L. McATEER, ELIZABETH S. McATEER, ROBERT C. HANES, BLAIR J. CARPENTER, MARILYN L. FUTRELLE, FRANKLIN E. DAVIS, THE ESTATE OF JAMES D. WILSON, THE ESTATE OF BENJAMIN E. FOUNTAIN, JR., FAYE IRIS Y. FISHER, STEVE FRED BLANTON, HERBERT W. COOPER, ROBERT C. HAYES, JR., STEPHEN B. JONES, MARCELLUS BUCHANAN, DAVID B. BARNES, BARBARA J. CURRIE, CONNIE SAVELL, ROBERT B. KAISER, JOAN ATWELL, ALICE P. NOBLES, BRUCE B. JARVIS, ROXANNA J. EVANS, and JEAN C. NARRON, and all others similarly situated,
Plaintiffs-Appellees, v.
STATE HEALTH PLAN FOR TEACHERS AND STATE EMPLOYEES, TEACHERS’ AND STATE EMPLOYEES’ RETIREMENT SYSTEM OF NORTH CAROLINA, BOARD OF TRUSTEES OF THE TEACHERS’ AND STATE EMPLOYEES’ RETIREMENT SYSTEM OF NORTH CAROLINA, DALE L. FOLWELL, in his official capacity as Treasurer of the State of North Carolina, and the STATE OF NORTH CAROLINA,
Defendants-Appellants.
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
From Gaston County No. COA17-1280
****************************************************
JOINT PETITION FOR DISCRETIONARY REVIEW BEFORE DETERMINATION BY THE COURT OF APPEALS AND ALTERNATIVE
PETITION FOR WRIT OF CERTIORARI
****************************************************
- 2 -
The parties to this appeal jointly petition this Court for discretionary
review before determination by the Court of Appeals. See N.C. Gen. Stat.
§ 7A-31(b) (2015); N.C. R. App. P. 15(a). Immediate review is appropriate
because the subject matter of this appeal has significant public interest, the
appeal involves legal principles of major significance, and delay in this
Court’s review is likely to cause substantial harm. N.C. Gen. Stat. § 7A-
31(b)(1), (2), (3). The parties also jointly petition the Court, in the
alternative, for a writ of certiorari. See N.C. R. App. P. 21(a)(1).
INTRODUCTION
In this case, plaintiffs, a class of retired teachers and state employees,
allege that the State breached contracts that require the State to give
plaintiffs premium-free health benefits at a certain fixed level of coverage.
The trial court entered summary judgment in plaintiffs’ favor. The court
ordered the State to pay damages and to provide plaintiffs with a court-
ordered level of health benefits for the duration of their retirements.
The trial court’s ruling meets three of the statutory criteria for
immediate review by this Court.
First, the question whether state retirees have a contractual right to
premium-free health benefits is an issue of exceptional public importance.
- 3 -
N.C. Gen. Stat. § 7A-31(b)(1). The outcome of this case will directly affect
over 220,000 retired teachers and state employees. The enormous number of
North Carolinians affected by this case highlights the need for direct review
by this Court.
This case is unusually important for another reason as well: the
outcome of this case may significantly affect the State’s future budgets. If
the trial court’s order is affirmed, that affirmance could generate a damages
award that exceeds one hundred million dollars. The trial court also entered
injunctive relief that would require the State to provide all 220,000 class
members with a particular level of premium-free health benefits for the
duration of their retirements. The costs to comply with the injunctive relief
over the course of all class members’ retirements would far exceed the
amount of direct monetary damages.
Second, immediate Supreme Court review is appropriate because this
appeal involves legal principles that are significant to the State’s
jurisprudence. N.C. Gen. Stat. § 7A-31(b)(2). Whether the law recognizes a
retiree’s contractual right to a specific level of health benefits is a profoundly
important legal issue. That issue also includes other significant legal
- 4 -
questions, such as how to define and implement contracts within the ambit
of a retiree health benefit program.
Third, delay in resolving this appeal would cause substantial harm for
the State and plaintiffs alike. Id. § 7A-31(b)(3). If this appeal were to go to
the Court of Appeals, a year or more would likely pass before the Court of
Appeals decided the case. After that delay, this Court would be almost
certain to receive a notice of appeal or a petition similar to this one.
For the State, a delay of a year or more would impede efforts to
strategically plan for the future of the State Health Plan. Currently, the
health plan’s unfunded future spending—that is, the difference between the
State’s reserves for retiree health benefits and the plan’s estimated future
costs for future benefits—is estimated1 in the range of thirty-five billion to
forty-three billion dollars.2 While this lawsuit remains fully unresolved, the
1 The estimated future spending includes costs projections for all retirement health benefits, including benefits to be provided to current employees who are not part of the Plaintiff class. The estimate is not meant to be an estimate of costs related to the specific issues raised in this case. The Plaintiffs do not take a position as to the accuracy or relevance of such estimates.
2 See Laura Douglass, State Treasurer Talks of Reining in Costs, The Pilot (Oct. 20, 2017), available at http://www.thepilot.com/news/state-treasurer-talks-of-reining-in-costs/article_4eaf873a-b5c4-11e7-85e6-
- 5 -
State will not be able to consider the full range of measures that it could
pursue to address future spending concerns.
Delay would also harm the plaintiff class directly. As retirees, the class
members are generally older. Over four thousand class members are
projected to die every year. The longer this case continues, the more likely it
is there will be class members who will never be able to enjoy relief to which
they may be entitled. Meanwhile, uncertainty about the extent of future
health coverage may discourage class members and their dependents from
seeking medical treatment. Delay in the appellate process would withhold
certainty from the very people who need it most.
In sum, by any measure, this case deserves this Court’s immediate
review. The parties respectfully and jointly request that the Court exercise
its discretion to do so.
4fb7a5ec890c.html (thirty-five billion); State Treasurer of North Carolina, Press Release, Treasurer Folwell Announces New Unfunded Liabilities Projections for State Health Plan (Mar. 15, 2017), available at https://www.nctreasurer.com/inside-the-department/News-Room/press-releases/Pages/Treasurer-Folwell-Announces-New-Unfunded-Liabilities-Projections-For-State-Health-Plan.aspx (forty-three billion).
- 6 -
STATEMENT OF FACTS
A. The Development of the State Health Plan
Since 1972, the State has offered health benefits to its employees. Act
of July 20, 1971, ch. 1009, § 1, 1971 N.C. Sess. Laws 1588, 1588. In 1974, the
State extended these benefits to retired state employees. Act of Apr. 11, 1974,
ch. 1278, § 1, 1973 N.C. Sess. Laws 454, 454.
In 1982, the State codified the terms of coverage under the State Health
Plan, including the eligibility provisions for retired state employees and
teachers. Act of June 23, 1982, ch. 1398, § 6, 1982 N.C. Sess. Laws 288, 289-311.
Amendments to the eligibility requirements to receive premium-free health
benefits were enacted in 1988 and 2006.3 Act of Aug. 14, 1987, ch. 857, § 9,
1987 N.C. Sess. Laws 2098, 2101; Act of Aug. 1, 2006, ch. 174, §§ 1-3, 2006 N.C.
Sess. Laws 630, 630-31. (See also Doc. Ex. 4522-23)
For many years, retirees always had access to at least one health
benefit plan at no cost to the retiree, and the State often offered other plans
with differing benefits and sometimes added premium costs. Since 2006, the
3 The currently defined plaintiff class includes all currently retired employees who were hired prior to the 1 October 2006 effective date of the 2006 amendment.
- 7 -
health plans offered by the State to retirees have included at least two
“preferred provider organization” (PPO) plans.4 Under one of these plans,
the 70/30 PPO Plan, the health plan generally pays 70% of covered health
expenses after the member pays the plan deductible (an annual figure that
the member must pay toward her own medical expenses). Under the other
plan, the 80/20 PPO Plan, the health plan pays 80% of covered health
expenses after the member pays the deductible. (Doc. Ex. 58, 63)
Before 2011, neither of these plans required employees or retirees to
pay a monthly premium for individual coverage (as opposed to coverage of
other family members).5 (Doc. Ex. 3056-60) In 2011, the General Assembly
authorized the State Health Plan to charge state employees and retirees a
monthly premium for individual coverage under the 80/20 PPO Plan. Act of
May 11, 2011, ch. 85, § 1.2(a), 2011 N.C. Sess. Laws 119, 120. The health plan
4 A PPO plan contracts with a network of medical providers, such as doctors and hospitals. Enrollees in PPO plans pay less when they use providers in their network.
5 On the other hand, since 1982, the State Health Plan has always charged premiums for spouse and family coverage. For example, in 2010, the monthly premium for family coverage under the 80/20 PPO Plan was $580.44. (Doc. Ex. 3059)
- 8 -
began charging premiums for the 80/20 PPO Plan in September 2011. (Doc.
Ex. 3061) Today, the State Health Plan provides health benefits to over
700,000 current and retired state employees and their dependents6—about
seven percent of the State’s population.
B. The Current Litigation
Plaintiffs here, a group of retired state employees and teachers, filed
this lawsuit against the State Health Plan and other government defendants.
The lawsuit alleges that plaintiffs have a contractual right to receive an 80/20
health plan without paying a premium. Specifically, plaintiffs claim that the
State’s benefit-related communications (in conjunction with applicable
statutory language) were an offer to contract. Plaintiffs contend that they
accepted this alleged offer by working for the State for a certain number of
years in order to reach what they contend is a statutorily mandated vesting
period. They allege that the State breached and impaired the alleged
contracts by requiring retirees to pay a monthly premium for individual
coverage under the 80/20 PPO Plan. Plaintiffs go on to claim that the State’s
6 See Press Release, supra, note 1.
- 9 -
decision to charge a premium was an unconstitutional taking of private
property without just compensation. (R pp 15-22)
The Chief Justice designated the case as exceptional under General
Rule of Practice 2.1 and assigned the case to Superior Court Judge Edwin G.
Wilson, Jr. (R pp 33-34)
On plaintiffs’ motion, the trial court certified a class that includes
nearly all retired state employees who were eligible to enroll in the State
Health Plan as of 1 September 2016. The class includes over 220,000 retirees
or their estates. (R pp 375-80)
C. The Trial Court’s Ruling on Summary Judgment
After discovery, the trial court entered summary judgment for
plaintiffs. The court held that the State is contractually required to provide a
particular level of health benefits to the plaintiff class members. The court
defined the required level of benefits as the “regular state health plan” that
had previously been offered premium-free. The Court then found that the
80/20 PPO Plan was the continuation of that regular state health plan. It
held that when the State began charging a premium for the 80/20 PPO Plan,
it breached its contracts with plaintiffs and took their property without just
compensation. (R pp 612-20)
- 10 -
The trial court issued a permanent injunction that requires the State to
give the class members premium-free health benefits that are equivalent to
the 2011 version of the 80/20 PPO Plan for the duration of their retirements.
(R pp 618-19) The court also entered a declaratory judgment in plaintiffs’
favor. (R pp 620)
As damages, the court ordered the State to repay any premiums that
class members have paid for individual coverage under the 80/20 PPO Plan.
The court set out a detailed process for calculating these damages. (R pp
619-20) The court has not yet defined a measure for damages for class
members who chose the 70/30 PPO Plan. The parties have previously agreed
to defer this issue for future proceedings, so the trial court has ordered the
parties to confer regarding any further proceedings required for the
determination of the damages to be awarded to this group. (R p 620)
Defendants have appealed from the court’s order. The Court of
Appeals docketed the appeal on 20 November 2017. (R p 1)
- 11 -
REASONS FOR GRANTING DISCRETIONARY REVIEW BEFORE DETERMINATION BY THE COURT OF APPEALS
I. THIS CASE IS UNIQUELY IMPORTANT TO THE PEOPLE OF THIS
STATE.
The outcome of this appeal will affect the health benefits of over
200,000 North Carolinians. In addition to the currently listed class
members, the outcome of this case could also affect those current state
employees who have already completed the five-year eligibility requirement,
but who have not yet retired. There are estimated to be 265,000 current or
former state employees in this category.
On top of that, every North Carolinian will feel this case’s effects
because the outcome may implicate changes to other retiree health benefit
programs and may affect the State’s budget for years to come. Rarely, if ever,
will this Court have the opportunity to review an appeal with greater
practical importance to the people of this State.
A. The Outcome of This Case Will Directly Affect Over 200,000 Retirees.
The plaintiff class includes over 220,000 retired state employees and
teachers, all of whom have a direct stake in the outcome of this case. As this
Court recently recognized, when a case directly affects hundreds of
- 12 -
thousands of people, the case “implicates the public interest to such a degree
that invocation of [the Court’s] supervisory authority is appropriate.” Fisher
v. Flue-Cured Tobacco Coop. Stabilization Corp., 369 N.C. 202, 208, 794
S.E.2d 699, 705 (2016) (granting review under N.C. Gen. Stat. § 7A-32(b)); see
also Umberger v. Pike Corp., 368 N.C. 765, 765, 781 S.E.2d 803, 803 (2016)
(granting review in a class action case prior to a determination in the Court
of Appeals). The Court’s reasoning applies equally well here, even without
considering the additional 265,000 current employees who could be affected.
B. The Outcome of This Case Will Affect the State Budget.
Affirming the trial court’s order would produce substantial immediate
liability for the State. The General Assembly’s Program Evaluation Division
has concluded that damages in this case could exceed one hundred million
dollars. (Doc. Ex. 3673)
Those damages, moreover, are only a small part of the fiscal impact of
the trial court’s order. In addition to allowing damages, the trial court has
ordered the State to give a fixed level of health benefits, premium-free, to
almost all retired state employees. Because that injunction applies to the
remaining duration of the class members’ retirements, the injunction will
- 13 -
affect the State’s retiree health benefit program for decades.7 The estimated
costs of complying with the injunction measure over a billion dollars. These
unfunded future outlays could affect our state government’s overall financial
outlook.
The cost of retiree health benefits is certainly an issue of public
concern that warrants immediate review by this Court. While this case
remains pending, the State cannot know the full extent to which it can
modify retiree health benefits to address the Plan’s fiscal condition.
Although the parties disagree on the legal issues in this case, they agree that
the outcome of this case will materially affect our state’s public-employee
benefits and government spending.
C. This Case Will Also Affect Many Local Governments.
The outcome of this case will also affect North Carolina local
governments and their employees. For one, employees of some local
governments are allowed to enroll in the State Health Plan. See, e.g., N.C.
7 State employees with twenty years of service can retire as young as fifty years of age. N.C. Gen. Stat. § 135-5(a1). State employees with thirty years of service can retire even younger. Id. § 135-5(a)(1).
- 14 -
Gen. Stat. § 135-48.47. The outcome of this case will affect those employees
directly.
More broadly, a majority of North Carolina county governments
provide health benefits to retired employees.8 The outcome of this case will
provide more certainty to local governments in the administration of their
retirement health benefits.
These issues are already percolating into the State’s court system.
When at least one local government tried to reduce its retiree health
benefits, it confronted a lawsuit much like this one. In 2009, Lincoln County
reduced the level of coverage on its county health plan and began charging
retired county employees premiums for their coverage. A group of retirees
sued, bringing claims similar to those made here. On cross-motions for
summary judgment, the court ruled for the plaintiffs. See Tr. of Hrg., pp. 36-
39, Robinson v. Lincoln Cty., No. 10 CVS 112 (Lincoln Super. Ct. Feb. 14, 2011).
The parties thereafter settled the case.
8 Univ. of N.C. School of Gov’t, County Salaries in N.C. tbl.36 (2015), available at https://www.sog.unc.edu/publications/books/county-salaries-north-carolina-2015.
- 15 -
Similar situations may soon arise in cities and counties across the
state. The outcome of this appeal will enable local governments to assess
with greater certainty the scope of their budget options and allow them to
make more fully informed decisions on the potentially significant costs of
retiree health benefits.
D. This Case Has Already Attracted Significant Public Interest.
Because of the wide reach of the State Health Plan and its impact on
the state budget, developments in this case have seen wide press coverage.9
The public attention to this case reinforces its importance.
E. This Court Has Granted Bypass Petitions in Similar Cases. In the past, when this Court has faced cases of a similar nature and
scale, it has granted immediate review of trial courts’ decisions. For
9 E.g., Allison Latos, 220,000 Retirees Claim Victory Against NC Over Health Insurance Costs, WSOC-TV (June 8, 2017), http://www.wsoctv.com/news/local/220000-retirees-claim-victory-against-nc-over-health-insurance-costs/531437644; Treasurer: Judge’s Ruling May Cost State $100M-plus, WLOS (May 22, 2017), http://wlos.com/news/local/treasurer-judges-ruling-may-cost-state-100m-plus; Associated Press, Appeals Court Sides with State Retirees, Burlington Times News (June 17, 2014), http://www.thetimesnews.com/20140617/appeals-court-sides-with-state-retirees/306179831.
- 16 -
example, this Court granted petitions to bypass the Court of Appeals in
Bailey v. State, 348 N.C. 130, 500 S.E.2d 54 (1998), and Faulkenbury v.
Teachers’ & State Employees’ Retirement System, 345 N.C. 683, 483 S.E.2d
422 (1997).
Like this case, Bailey and Faulkenbury were class actions in which
retired state employees claimed that the State breached contracts by
changing certain aspects of the plaintiffs’ state benefits. The plaintiffs in
Bailey challenged a tax on state and local pension benefits. 348 N.C. at 135,
500 S.E.2d at 57. The plaintiffs in Faulkenbury challenged a reduction in
disability benefits. 345 N.C. at 688, 483 S.E.2d at 426. By granting bypass
petitions in Bailey and Faulkenbury, this Court illustrated that widely
applicable cases pertaining to state retirement benefits warrant this Court’s
direct review.
Direct review is even more appropriate here because this case involves
an especially large class of affected retirees. The class comprises nearly all of
the more than 220,000 retired state employees and teachers. In
Faulkenbury, in contrast, the class generally included only those retired
employees who were or could have been receiving disability benefits. 345
N.C. at 698, 483 S.E.2d at 431. Likewise, the class in Bailey was slightly
- 17 -
smaller than the class here. Bailey v. N.C. Dep’t of Revenue, 353 N.C. 142,
149, 540 S.E.2d 313, 318 (2000) (noting the existence of “approximately
200,000” class members).
The parties in this case differ on whether Bailey and Faulkenbury are
analogous to this case on the merits. Even so, they agree that all three cases
raise similarly weighty issues—issues that warrant this Court’s direct review.
II. THIS CASE INVOLVES SIGNIFICANT LEGAL ISSUES.
This appeal deserves direct review for another reason: it involves
substantial legal issues. See N.C. Gen. Stat. § 7A-31(b)(2).
This appeal centers on an important question of law: Do retired state
employees have a contractual right to a specific level of health benefits
during their retirements? That question, by itself, is important enough to
warrant this Court’s direct review.
Answering that central question, moreover, could involve other
important legal issues. For example:
How does North Carolina law define certain contract terms in
the context of a long-term retiree health care benefit?
How does the General Assembly’s authority to enact statutes
affect the viability of contract theories in this area?
- 18 -
Do this Court’s prior decisions in Bailey, Faulkenbury, and other
cases extend to retiree health benefits?
This Court’s guidance on these issues would affect future litigation on
government benefits. That potential precedential effect fortifies the need for
this Court’s direct review.
III. DELAY WOULD CAUSE SUBSTANTIAL HARM.
There is yet another reason here for direct review by this Court:
delaying a definitive resolution of the key issues in this case would cause
substantial harm to the plaintiff class and the State. See N.C. Gen. Stat.
§ 7A-31(b)(3).
Because the plaintiff class consists of retired state employees, the class
includes many elderly people. The State estimates that over four thousand
class members per year—an average of more than ten per day—are dying
during the pendency of this lawsuit. Thus, if plaintiffs ultimately prevail, a
delay in review by this Court would cause a significant part of the class to
miss out on relief during their lifetimes. On the other hand, if the State
ultimately prevails, delay would deprive these plaintiffs of the opportunity to
plan their finances with certainty.
- 19 -
Delay would also harm class members who remain alive:
If plaintiffs ultimately prevail, class members who enrolled in the
80/20 PPO Plan would be harmed by a delay in compensation for
premiums they have paid. This award (before any deduction for
contingent attorney fees) could exceed $1,500 for some retirees—
a useful sum for those on fixed incomes. (See, e.g., Doc. Ex.
3062)
For the thousands of class members who opted to enroll in the
premium-free 70/30 PPO Plan, delay would prolong the period
during which they are required to pay a higher percentage of
their health benefits. Some class members might respond to
these higher out-of-pocket costs by forgoing treatment.
In addition, as noted above, the trial court’s order limits the State’s
ability to address the State Health Plan’s unfunded future spending. Delay
in resolving this appeal will continue this uncertainty, harming the State’s
overall financial health. With medical costs continuing to increase and
retirements continuing apace, the State urgently needs to engage in long-
term planning to address the current funding shortfall. A definitive strategy
requires a prompt resolution of the legal issues in this case.
- 20 -
If this appeal were to be decided by the Court of Appeals before
returning to this Court, the final resolution of this case would take at least an
additional year. As shown above, that delay would harm thousands of class
members, as well as the state government.
REASONS FOR GRANTING THE PETITION FOR WRIT OF CERTIORARI IN THE ALTERNATIVE
The parties agree that the trial court’s order here is immediately
appealable under the “substantial right” doctrine. See N.C. Gen. Stat. § 7A-
27(b)(3)(a). Among other possible grounds for a substantial-right appeal,
the order limits the State’s ability to enforce state statutes. The statutes at
issue include, but are not limited to, the 2011 statute that expressly allows the
State Health Plan to charge premiums to retirees. See Act of May 11, 2011, ch.
85, § 1.2(a), 2011 N.C. Sess. Laws at 120; see also, e.g., Gilbert v. N.C. State Bar,
363 N.C. 70, 77, 678 S.E.2d 602, 606 (2009) (allowing an immediate appeal
from an injunction that prevented a “defendant from executing its statutory
duties”).
Even so, out of an abundance of caution, the parties jointly request, in
the alternative, that this Court issue a writ of certiorari to review the trial
court’s order. See N.C. R. App. P. 21(a)(1). Certiorari is warranted here
- 21 -
because, as discussed above, this case is exceptionally important. In
addition, immediate review would avert substantial harm to the State and
the plaintiff class alike. In Fisher, for example, this Court used certiorari to
review an order in a class action because of the vast number of people and
entities affected by that order. See Fisher, 369 N.C. at 208, 794 S.E.2d at 705.
Similar considerations make certiorari appropriate here.
ISSUES TO BE BRIEFED
If the Court allows this joint petition, the Appellants will present the
following issues:
1. Did the trial court err by concluding that the State has made enforceable contracts with plaintiffs to give them a specified level of health benefits on a premium-free basis for the duration of their retirements?
2. Did the court err by holding that the State breached and impaired contracts with plaintiffs and violated the Law of the Land Clause by charging plaintiffs a premium for the 80/20 PPO Plan?
CONCLUSION
The parties respectfully request that this Court allow immediate
discretionary review of the trial court’s 19 May 2017 order. In the alternative,
the parties request that this Court issue its writ of certiorari to review the
trial court’s order.
- 22 -
Respectfully submitted, this 5th day of December, 2017.
GRAY, LAYTON, KERSH, SOLOMON, FURR & SMITH, P.A. /s/ Michael L. Carpenter Michael L. Carpenter N.C. State Bar No. 35202 [email protected] Marcus R. Carpenter N.C. State Bar No. 42730 [email protected] Marshall P. Walker N.C. State Bar No. 45040 [email protected] P.O. Box 2636 Gastonia, NC 28053 Tel.: (704) 865-4400 LAW OFFICES OF JAMES SCOTT FARRIN Gary W. Jackson N.C. State Bar No. 13976 280 South Mangum Street, Suite 400 Durham, NC 27701 [email protected] Tel.: (919) 688-4991 TIN, FULTON, WALKER & OWEN, PLLC Sam McGee N.C. State Bar No. 25343 301 East Park Ave.
JOSHUA H. STEIN Attorney General /s/ Matthew W. Sawchak Matthew W. Sawchak Solicitor General N.C. Bar No. 17059 [email protected] I certify that all of the attorneys listed below and to the left have authorized me to list their names on this document as if they had personally signed it. Ryan Y. Park Deputy Solicitor General N.C. State Bar No. 52521 [email protected] Marc Bernstein Special Deputy Attorney General N.C. State Bar No. 21642 [email protected]
Heather H. Freeman Assistant Attorney General N.C. State Bar No. 28272 [email protected]
Joseph A. Newsome Special Deputy Attorney General N.C. State Bar No. 25434 [email protected]
- 23 -
Charlotte, NC 28203 [email protected] Tel.: (704) 338-1220 Counsel for Plaintiffs-Appellees
North Carolina Department of Justice P.O. Box 629 Raleigh, NC 27602 (919) 716-6900 Counsel for Defendants-Appellants
- 24 -
VERIFICATION FOR PETITION FOR WRIT OF CERTIORARI (SAWCHAK)
I, Matthew W. Sawchak, as counsel for the defendants, verify that the
facts stated in the attached petition for certiorari, including any facts
incorporated by reference in that petition, are true to the best of my
knowledge, information, and belief.
Sworn and subscribed before me, this 541 day of December, 2017.
tary Public ignat re
Ancli‘eg 0 n in0A - Notary Public Name
/44,1
My commission expires: (p-5- 0701
VERIFICATION FOR PETITION FOR WRIT OF CERTIORARI (CARPENTER)
I, Michael L. Carpenter, as counsel for the plaintiffs, verify that the
facts stated in the attached petition for certiorari, including any facts
incorporated by reference in that petition, are true to the best of my
knowledge, information, and belief.
Michael rpenter
Sworn and subscribed before me, this 4441 day of December, 2017.
Th. \I a)A910 Notary Public Name
My commission expires:
•■•••■011
APRIL J. YARBRo- NOTARY PUBLIC
CLEVELAND COUNTY NORTH CAIN
My Commission Expires 72k Tr Ari
- 25 -
- 26 -
CERTIFICATE OF SERVICE
I certify that today, I served copies of the attached Joint Petition for
Discretionary Review Before Determination by the Court of Appeals and
Alternative Petition for Writ Of Certiorari on the plaintiffs-appellees by
sending a copy by first-class mail to the following counsel:
Michael L. Carpenter Marcus R. Carpenter Marshall Walker Gray, Layton, Kersh, Solomon, Furr & Smith, P.A. P.O. Box 2636 Gastonia, NC 28053 [email protected] [email protected] [email protected] Gary W. Jackson Law Offices of James Scott Farrin 280 S. Mangum St., Suite 400 Durham, NC 27701 [email protected] Sam McGee Tin, Fulton, Walker & Owen, PLLC 301 East Park Avenue Charlotte, NC 28203 [email protected]
This 5th day of December, 2017.
/s/ Electronically submitted
Matthew W. Sawchak
EXHIBIT
Superior Court’s Order Granting Plaintiffs’ Motion for Partial Summary Judgment and Denying Defendants’ Motion for Summary Judgment on Liability (May 19, 2017)
, . ,
FIt J:::O STATE OF NORTH CAROLINA . 1..=,"- IN THE GENERAL COURT OF JUSTICE < SUPERIOR COURT DIVISION. 7.017 HAY 19 AN 10: 38 12~CVS~1547 COUNTY OF GASTON
.... 0.C. 1. BEVERLY LAKE, JOHN B. hBWIS, JR., EVERETTE M. LATTA, PORTER L. McATBER~Er;rZ7tB~Iff{ S. McATEER, ROBERT C. HANES, BLAIR J. . CARPENTER, MARILYN L. FUTRELLE, FRANKLIN E. DAVIS, THE ESTATE OF JAMES D. WILSON, BENJAMIN E. FOUNTAIN, JR., FAYE IRIS Y. FISHER, STEVE FRED BLANTON, HERBERT W. COOPER, ROBERT C. HAYES, JR., STEPHEN B. JONES, MARCELLUS BUCHANAN, DA VID B. BARNES, BARBARA J. CURRIE, CONNIE SAVELL, ROBERT B. KAISER, JOAN ATWELL, ALICE P. NOBLES, BRUCE B. JARVIS, ROXANNA J. EVANS, and JEAN C. NARRON, and all others similarly situated,
Plaintiffs,
vs.
STATE HEALTH PLAN FOR TEACHERS AND STATE EMPLOYEES, a corporation, formerly Known as the North Carolina Teachers and State Employees' Comprehensive Major Medical Plan, TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM OF NORTH CAROLINA, a corporation, BOARD OF
. TRUSTEES TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM OF NORTH CAROLINA, a body politic and corporate, DALE R. FOLWELL, in his official capacity as Treasurer of the State of North Carolina, and the STATE OF NORTH CAROLINA,
Defendants.
ORDER GRANTING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT
AND DENYING DEFENDANTS' MOTION FOR SUMMARY
JUDGMENT AS TO LIABILITY
. THIS MATTER, was heard on November 14, 2016 before the Honorable Edwin Wilson, Jr., Superior Court Judge presiding pursuant to Rule 2.1 Designation, upon Plaintiffs' Motion for Partial Summary Judgment and Defendants' Motion for Stunmary Judgment as to Liability, anq upon the arguments of counsel (Michael Carpenter and Sam McGee for the Plaintiffs and Marc Be1'1181:ein and Robert Curran for the Defendants), and the pleadings, depositions, answers to interrogatories, admissions, affidavits and stipulations. The COUli finds
that there are no disputed issues of material fact and therefore renders judgment as a matter of law as follows:
Procedural Bac}(:.ground
1. Plaintiffs brought this suit on behalf of themselves and all other similarly situated North Carolina retirees on April 20, 2012.
2. The case was deemed an exceptional case under General Rule of Practice 2.1 and assigned to the undersigned.
3. Discovery was conducted pursuant to the Court's Case Management Order, and by April 27,2016 was substantially complete as to the issues decided herein.
4. Defendants moved to dismiss the ,Complaint on June 29,2012 pursuant to Rule 12(b).
5. Defendants' Motion to Dismiss was denied on May 21, 2013.
6. The Defendants appealed the denial of their Motion to Dismiss to the Court of Appeals.
7. On June 17, 2014, the Court of Appeals affirmed the denial of the Motion to Dismiss in
part and dismissed Defendants' appeal, in pati.
8. Defendants petitioned for discretionary review in the Supreme Court before and aftei' the decision by the Court of Appeals.
9. The North Carolina Supreme Court dismissed Defendants' final Petitions for Discretionary Review and Writ of Certiorari on December 30,2014.
iO. On October 11, 2016, this Court certified a class encompassing the following retired State employees (hereinafter the "Class" and/or the "Class Members"):
(1) All members (or their Estates or personal representatives if they have deceased
since July 1, 2009) of the N.C. Teachers' and State Employees' Retirement System e'TSERS") who retired before January 1, 1988; (2) TSERS members (or
their Estates or personal representatives if they have deceased since July 1, 2009)
who retired on or after January 1, 1988, were hired before October' 1, 2006 and have 5 or more years of contributory service with the State and (3) surviving
spouses (or their Estates or personall'epresentatives if they have deceased since July 1, 2009) of (i) deceased retired employees, provided the death of the former
plan member occ1.lTI'ed prior to October 1, 1986; and (li) deceased teachers, State
employees, and members of the General Assembly who are receiving a survivor's
alternate bene'fit under any of the State-supported retirement programs, provided the death of the former plan member occurred prior to October 1, 1986.
2
11. On August 18, 2016, the Court issued an order establishing a schedule for summary judgment motions and setting a hearing. The order indicated that "[a]s the parties have agreed, the briefing and hearing on summary judgment shall be limited to: (1) the issue of liability for all Plaintiffs (and class members, should the class be certified); and (2) the issue of damages for all Plaintiffs (and class members, should the class be certified) for alleged excess premium payments only for periods during which each Plaintiff (and class member) was enrolled in the State Health Plan's 80/20 coinsurance plan. The issue of damages for excess out-of-pocket costs, if any, for Plaintiffs (and class members, should a class be certified) who emolled in the 70/30 and 90/10 coinsurance plans is deferred."
12. On September 14, 2016, ·Plaintiffs filed a Motion for Partial Summary Judgment and supporting materials as to all issues between the parties except as to the issue of damages for excess out-of-pocket expenses, which the parties stipulated and agreed to defer until a later date.
13. On September 14, 2016, Defendants filed a Motion for Summary Judgment on Liability and suppOlting materials.
14. On October 17, 2016 the parties served cross-responses and supporting materials and on November 7, 2016 the palties served cross-replies and supporting materials.
15. The motions were scheduled for hearing and heard before the undersigned at the Forsyth County Hall of Justice on November 14,2016, with the consent of the parties.
16. Said summary judgment motions are properly before the court and are ripe for luling.
Undisputed Material Facts and Conclusions of Law
17. The Defendants offered Class Members certain premium-n:ee health insurance benefits in their retirement if they worked for the State of North Carolina fo1' a requisite period of time (the "Retirement Health Benefits").
18. The Retirement Health Benefits were earned by the Class Members through employment service to the State.
19. The Retirement Health Benefits were offered as part of the Class Members' overall retirement benefits package through the Retirement System for Teacher's and State Employees.
20. The Retirement Health Benefits are described alongside the other retirement benefits offered to Plaintiff Class Members in Chapter 135 of the North Carolina General Statutes.
21. The Retirement Health Benefits are defened compensation and are a pmt of the contract between Class Members and the Defendants.
3
22. The Class Members vested into the Retirement Health Benefits upon reaching certain employment service milestones.
23. Class Members vested in the Retirement Health Benefits as follows:
a. For Class Members who retired before January 1, 1988, vesting occurred upon their retirement.
b. For Class Members who retired on or after January 1, 1988, vesting occurred upon the earlier of January 1, 1988 if they had already earned five years of contributory service as of that date or at a later date upon their subsequent earning of five years of cOlltl'ibutory service as defined in Chapter 135 of the North Carolina General Statutes.
c, For surviving spouse Class Members (or their Estates or personal representatives if they have deceased since July 1, 2009) of (i) deceased retired employees, provided the death of the fonner plan member occurred prior to October 1, 1986; and (ii) deceased teachers, State employees, and members of the General Assembly who are receiving a survivor's alternate benefit under any of the State" supported retirement programs, provided the death of the former plan member occun'ed prior to October 1, 1986, vesting occun'ed upon the deceased spouse" employee's retirement date.
24. The promise of the Retirement Health Benefits in exchange for employment service to the State and as part of the overall compensation package constitutes a contract between the Class Members and the Defendants.
25. Beghming in 1982, the State Health Plan offered one primary health plan that it was required to offer to all Class Members on a non"contdbutory (premium-free) basis fol' the duration of the Class Member's retirements subject to the vesting described above.
26. Over the same time period, the State Health Plan also offered optional health plans that . differed in the type of benefits offered and that were not required to be offered premiumfree.
27. The cUl'rently offered 80/20 "Enhanced" Plan (formerly called the "Standard" Plan) was the continuation of the primary "regular state health plan" that had been offered premium-free from 1982 until August 31, 2011.
28. The Retirement Health Benefits consist of an entitlement to a non-contributory (premium-free) health plan equivalent to the 80120 regular state health plan that had been long offered and provided to Class Members (hereinafter the "80/20 Standard Plan").
4
29. The most appropriate way to measure the value of a health plan received by a member of that plan and to compare the value between offered plans is through the calculation and use of a plan's actuarial value. Through the use of actuarial values, it can be determined whether a given plan is equivalent to another plan 01' not - the effective actuarial equivalency (hereinafter such calculation methodology referred to as "Equivalent").
30. From September 1,2011 through 2016, the 80/20 Standard Plan required the payment of a premium in order to enroll in said plan.
31. The health planes) offered by the State Health Plan at the 70/30 level and refen'ed to by the State Health Plan as the "Basic" and "Traditional" Plans from 2011~2016 is of a lesser value than the 80/20 Standard Plan and was not and is not Equivalent to the 80/20 Standard Plan.
32. The base Medicare Advantage Plans offered by the State Health Plan to Medicare retirees from January 1,2014 through December 31,2016 were at least Equivalent to the 80120 Standard Plan.
33. "When the General Assembly enacted laws which provided for certain benefits to those persons who were to be employed by the state and "local governments and who fulfilled certain conditions, this could reasonably be considered by those persons as offers by the state 01' local government to" guarantee the benefits if those persons fulfilled the conditions." Faulkenbury v. Teachers' & State Emples. Ret. Sys., 345 N.C. 683, 691,483 S.E.2d 422, 427 (1997).
34. "[P]ul'suant to the plaintiffs' contracts, they were promised that if they worked for five years, they would receive certain benefits if they became disabled. The plaintiffs fulfilled this condition. At that time, the plaintiffs' right~ to benefits in case they were disabled became vested. The defendants could not then reduce the benefits." Faulkenbury v. Teachers' & State Emples. Ret. Sys., 345N.C. 683, 692,483 S.E.2d 422, 428 (1997).
35. "A public employee has a right to expect that the retirement rights bargained for in exchange for his loyalty and continued services, and continually promised him over many years, will not be removed 01' diminished." Baileyv. State, 348 N.C. 130, 141,500 S.E.2d 54,60 (1998).
36. The contract to provide the Class Members the Retirement Health Benefit was breached when Class Members were forced to pay premiums for the 80/20 Standard Plan struiing in September of 20 11.
37. The "Contract Clause" of the United States Constitution provides that "No State shall ... pass any ... Law impairing the Obligation of Contracts .... " U.S. Const. art. I, § 10.
5
38. Under the thl'ee~part test utilized by North Cmolina, an unconstitutional impairment of contl'act exists where (1) there is a contractual obligation, (2) the state's actions impaired
that contract, and (3) the impairment was not reasonable and necessary to serve an important public purpose. See Bailey, 348 N.C. at 140, 500 S.E.2d at 60 (quoting U.S. Trust Co. ofN. Y. v. New Jersey, 431 U.S. 1 (1977».
39. The Defendants substantially impaired the contracts with the Class Members.
40. The impairment was neither l'easonable nor necessary to serve an important public
purpose.
41. Class Members who paid premiums for their individual enrollment in the 80120 Standar'd
Plan since Septembel' 1, 2011 through the entry of this Order are entitled to damages for
breach of contract commenstU'ate with the amount of premiums paid by each such Class
Member, which amount varied based on the year and whether they were eligible for
Medicare coverage.
42. The base premium rates for the 80120 Standard' Plan is as follows for the applicable
period oftime for retired Class Members:
80/20 Standard Plan Retirees' Monthly Premium Rate Plan Year~Rate Period Non-Medicare Medicare 09/01/2011~06/3012012 $21.62 $10.00
07/01/2012-12/31/2012 $22.76 $10.52
o 1/01120 13~06/30/2013 $22.76 $10.52 07/01/2013-12/3112013 $22.76 $10.52
o 1I01l2014~12/31120 14 $63.56 $00.00
01/01l2015~12/3112015 $63.56 $00.00
01/01/2016-12/3112016 $104.20 $00.00
0110112017 -12/3112017 $105.04 $00.00
43. The calculation of the exact amount of monetary damages payable to the Plaintiff Class
for excess premiums paid for the 80/20 Standard Plan is calculable based on the records
and data kept by the Defendants in their normal course of business.
44. The calculation and determination of the monetary damages for those Class Members
who were enrolled in the 70/30 Basic Plan from September 1,2011 through 2016 (or any part of that time period) will be the subject of further proceedings in this Court as
previously agreed and stipulated by the parties.
45. The Class Members' contractual right to the Retirement Health Benefits is "property"
protected by the "Law of the Land" clause of the North Carolina Constitution. N.C.
6
Const. art I, § 19 ("No person shall be ... in any manner deprived of his ... property, but by the law of the land"); see e.g., Bailey, 348 N.c.at 154-55, 500 S.E.2d at 68-69 (a vested employment benefit "confers a contractual right, which is also a property right, the uncompensated impairment of which by subsequent legislation can constitute a taking in violation of the Law of the Land Clause").
46. Imposing premiums on the 80/20 Standard Plan fi'om September 1, 2011 forward constituted a "taking" under state law of Class Members' private property by restricting and/or eliminating Class Members~ contractual right to the non-contributory 80120 Standard plan and reducing a vested retirement benefit.
47. Defendants have taken these property rights from the individual Class Members without just compensation. Defendants violated Class Members' rights under out' State Constitution and the Plaintiffs are entitled to partial summary judgment as a matter of law for said violations of Article I, Section 19, of the Constitution of North Carolina (the "law of the land" clause).
48. In addition to monetary damages, permanent injunctive relief, specific performance, and a writ of mandamus are appropriate to enforce the provision of the Retirement Health Benefits to the Class going forward. .
Based on the foregoing facts, conclusions of law, and application of applicable North Carolina law, the Court hereby ORDERS, ADJUDGES, and DECREES as follows:
A. The Plaintiffs' Motion for Partial Summary Judgment is GRANTED.
B. The Defendants' Motion for Summary Judgment as to Liability is DENIED.
C. Judgment is hereby entered in favor of the Plaintiff Class and against the Defendants as described below.
D. Defendants shall provide the 80/20 "Enhanced" Plan (as offered by the State Health Plan in September 2011), 01' its Equivalent, premium-fi:ee to all non-Medicare-eligible Class Members for the duration of their retirements.
E. Defendants shall provide either or both the Base Medicare Advantage Plan (as offered by the State Health Plan in 2014 to Medicare-eligible retirees) or its Equivalent, or the 80/20 Enhanced Plan (as offered by the State Health Plan in September 2011) or its Equivalent, premium~free to all Medicare~eligible Class Members for the duration of their retirem en ts 0
F. Defendants are enjoined from charging (01' withholding from a pension payment) any premium to a Class Member for their individual enrollment in any plan or plans that is or are offered by the Defen~ants pursuant to paragraphs D and E of this Order.
7
G. The relief in paragraphs D, E and F is hereby enforced as a permanent injunction and a writ of mandamus is hereby issued by this Court to the Defendants to effectuate and enforce said provisions.
H. The Plaintiff Class is entitled to the recovery of monetary damages in the amount of premiums actually paid by any and all Class Members for enrollment in the 80/20 Standard Plan from September 1, 2011 through the date of the entry of this Order, provided that each Class Member shall be entitled only to the repayment of premimTIs that are attributable to their individual enrollment and not to any premiums that are attributable to, for exanlple, enrollment of a spouse, child or family.
1. The foregoing monetary damages shall be paid into a common fund established by tillS Court and shall be administered and paid to Class Members (after . deduction for such reasonable costs, attorneys' fees, and other administrative costs as appear) subject to further order of this Court.
J. No later than two months after the date of this Order, the Defendants shall (a) calculate the monetary damages attributable to each Class Member consistent with this Order; (b) transmit that inforination to the Plaintiffs; and (c) pl'ovidean explanation of the calculations in sufficient detail to allow a meaningful review by the Plaintiffs. The damage calculations shall include reference to the damages due each Class Member. Plaintiffs shall be entitled to audit and verify the methodology, process and any information provided by Defendants and retain expert(s) to assist with the verification of any such damage calculations and data. Such audit and verification process shall include the following requirements in phased order: (1) conferral between those persons calculating the damages on behalf of Defendants and the expert(s) retained by Plaintiffs in order to agree on a methodology and process for the calculation of t11e damages, including the relevant data sources, and the agreed-upon data fields to result from the calculations; (2) agreement and application between the foregoing on test-case options to. test the methodology and dafa sources on an interim basis and prior to the full calculations and make any adjustments to the methodology and process as may be needed; (3) after calculation of the damages by Defendants, the creation of a one percent stratified· sampling and confirmation of the attributable damages for the sample by Plaintiffs ~ stratified between calculation categories of persons and data, such categories to be defined consistent with the agreed upon methodology and process; and (4) adjustments 01' recalculations as may be necessary and agreed~upon between the parties based on the sampling and final review. If the parties calmot agree on a calculation methodology 01' on the results therefrom, as promptly as possible and no later than three months after the date of this Order, the parties shall bring any disagreements to the attention of the Court, which will adjudicate any such dispute and provide additional guidance as necessary. No later than four months after the date of this Order 01' two weeks after the Court's resolution of any disagreements (whichever is later), the parties
8
will submit the final damage calculations to the Court along with a recommendation for
further action by.the Court to memorialize the calculations as a monetary judgment.
K. A declaratory judgment is hereby entered as follows:
a. The Retirement Health Benefits are contractual and part of the Class Member's
deferred compensation.
b. The contract betwecen the Class Members and the Defendants for the Retirement
Health Benefits entitles each Class Member to non~contributory (premium-free)
health insurance under the 80/20 Standard Plan, or its Equivalent, for the duration
of their retirements.
c. The Defendants breached the contract for the Retirement Health Benefits when
Class Members began to be charged premiums for the 80/20 Standard Plan on
September 1, 2011.
d. The Defendants impaired the contract fo1' the Retirement Health Benefits with the
Class Members when premiums were assessed against Class Members starting in
September 1,2011 for enrollment in the 80/20 Standard Plan.
e. The breaches and impairments described above deprived Plaintiffs of earned
benefits ·and constitute a deprivation of property in violation of the "Law of the
Land Clause" of Article 1, Section 19 of the North Carolina Constitution.
L. Within fifteen (15) days of the issuance of this Order, counsel for Plaintiffs and
Defendants shall confer and determ~ne a schedule and amended case management plan to
complete any necessary discovery, motion practice, or trial for the determination of the
damages to be awarded to the Plaintiff Class Members who elected the 70/30 "Basic" or
"Traditional" Plan or the CDHP Plan from September 1, 2011 to the present.
M. The relief entered in paragraphs D through I shall be stayed until 35 days after the later of: (1) the resolution of any appeal made by the Defendants, or (2) the entry of a final
judgment.
This the /'1 ,v1"..., day of ___ ---+-I~_, 2017. l
t,/\ iJ. -~ 4---Edwin O. Wilson, Jr. Designated Superior Court Judge (Rule 2.1)
9