Supreme Court hears Pontiac health care arguments

Michael Gerstein
The Detroit News

Lansing — The Michigan Supreme Court heard oral arguments Wednesday about whether Pontiac’s emergency manager was allowed in 2012 to discontinue a $3.47 million contribution to the police and fire retiree health care trust fund.

An attorney for the Board of Trustees for the Police and Fire union in Pontiac argued before Michigan’s highest court that the state-appointed emergency manager’s move was unconstitutional. But an attorney for the city countered that it was within the authority of Pontiac’s emergency manager at the time to stop making the payments because of the financial emergency.

The Michigan Court of Appeals has ruled that Emergency Manager Louis Schimmel did not exceed his authority to change a labor contract agreement.

Justices’ questions were centered on whether the emergency manager’s order could be considered a retroactive application of law, how to determine if it was and whether that violated the state constitution.

Ronald Lederman, an attorney for the police and fire trust fund, said the order amounted to “at a minimum, quasi legislative” action because the state-appointed officials “are acting upon authority granted to them by the legislature and as such those orders, just as administrative regulations that are issued by agencies, are subject to the same standards of interpretation … as are statutes.”

An attorney for Pontiac, Stephen Hitchcock, said the move was legal. In a brief, he also argued that “there is no confusion whether the Emergency Manager wanted his order to apply to the contract in question.”

Hitchcock also argued that health care benefits do not constitute “accrued financial benefits” because “you can’t measure them like you can a pension benefit.”

Health care benefits “are constantly in motion and changing, the plans are constantly changing, insurance coverage is constantly changing,” he said.

Pontiac emerged from emergency management in 2013.

The seven justices will now weigh the arguments and release their decision at an unspecified time.