LansingDetroit retirees and the city’s largest labor union on Thursday reinstated a lawsuit seeking to block the city’s cuts to retiree health insurance, signaling a potential stalemate in bankruptcy negotiations.
The Official Committee of Retirees, American Federation of State, County and Municipal Employees and two retiree associations originally sued Detroit and Emergency Manager Kevyn Orr in October over sweeping reduction in health care benefits for 23,500 retired city workers.
In early November, the retiree plaintiffs voluntarily withdrew the complaint after the city agreed to negotiate the issue in closed-door mediation sessions, which have intensified this week because Orr hoped to file a debt-cutting plan in early January.
Orr’s plan called for ending traditional health insurance for retirees younger than age 65 and giving them a $125 monthly check to use toward purchasing private health insurance. In November, the city agreed to delay start of the new health plans from Jan. 1 to March 1 to facilitate negotiations with the retiree groups and AFSCME.
Disabled retirees younger than 65 were to get a $200 monthly payment for their health insurance needs under the new plan, while more than 10,500 retirees older than 65 would be offered a Medicare Advantage plan with city-funded premiums.
The changes could leave 8,000 former city employees with “inferior coverage” that costs more and provides less coverage, according to the retiree committee attorney Matthew Wilkins.
“The impact of the city’s decision on the retirees will be devastating,” Wilkins wrote in the lawsuit.
Last week, the retiree committee said it might re-file the lawsuit after city officials mailed retirees the same information about the health plans that they distributed last fall.