Judge delays action on union’s benefit complaint
Detroit – Detroit’s bankruptcy judge on Wednesday delayed action on the city’s request to force a public safety union to stop fighting a health care benefit change outlined in its debt-cutting plan.
Attorneys for Detroit filed the motion asking U.S. Bankruptcy Judge Thomas Tucker to halt the Detroit Police Lieutenants & Sergeants Association from pursuing action over a spousal coverage change. The city calls the union’s action a “direct attack” on its landmark bankruptcy plan.
The union in February filed a charge with the Michigan Employment Relations Commission and a Wayne County Circuit Court complaint to compel the city to allow active DPLSA members to include their city retiree spouses on their medical plan.
The actions came after some active members of the union received notification in January that their spouses, who retired from the city and had been covered on the family or two-person plan, would no longer be carried.
“I do want to take a bit more time to think about the arguments made by the parties here,” Tucker said, adding he’ll take the motion under advisement and rule later.
About 300 of Detroit’s general and uniform employees are impacted by the spouse benefit changes that went into effect Feb. 1, eliminating health care coverage for the retired spouses of some active workers.
Detroit attorney Charles Raimi in court Wednesday argued that the union is seeking to “upend the provisions” of the city’s plan of adjustment. The action he claims is barred by the debt-cutting plan and the terms of a collective bargaining agreement negotiated between the city and unions.
“They want to siphon dollars out of the city’s general fund money that’s … needed for city services and use that money for a special deal for the retired spouses married to (union) members,” he said. “These types of deals are exactly what led the city into bankruptcy in the first place.”
Raimi noted that under the city’s bankruptcy agreement, the city contributed $450 million toward funding two new independent health care trusts created to provide retiree benefits. The Voluntary Employee Beneficiary Associations — or VEBAs — are intended to include the retired spouses at issue, as well as others who retired by Dec. 31, 2014.
But Barbara Patek, an attorney for the union, countered that the union isn’t violating the city’s bankruptcy plan by seeking to have the coverage restored for about a dozen impacted members.
“It’s a benefit DPLSA bargained for for its members; the right for dependent spousal coverage,” she said.
Patek said the complaint raised is “not an assault on the plan.” The coverage, she said, should be permitted based on the collective bargaining agreement. If they intended for it to be prevented, “they ought to have said it,” she added.
Detroit’s former emergency manager Kevyn Orr implemented the spouse benefit changes in 2014 and continued them for 2015, city officials have said.
On March 1, 2014, the city dropped its traditional health insurance plan for retirees not eligible for Medicare. Instead, retirees and survivors were given monthly stipend checks of $125 or $175, depending on income level.
The VEBAs, one designated for general retirees and a second for public safety retirees, began providing benefits on Jan. 1.