DRYDEN, N.Y. — Former Tompkins Cortland Community College President Dr. Carl Haynes and eight other retired TC3 executives recently withdrew their request for a court-ordered injunction that would postpone or prohibit the College from making highly protested changes to their 2020 health care plans.
Interim TC3 CFO Bill Talbot credited excellent communication and team creativity for bringing the two sides to accept an agreement, but Haynes, speaking on behalf of plaintiffs, said that “none of us are happy about having to do so.”
He added that “There was no communication, excellent or otherwise. There was no involvement of two sides to this agreement.”
While the parties formally settled on a plan for retired executives to enroll in a two-year plan that will include supplemental reimbursements and Medicare premium offsets for those who are eligible and in need of them, Haynes said he and his co-plaintiffs remain disaffected, having accepted this outcome only in the face of looming non-negotiable insurance plan deadlines by which they had to enroll in a plan or risk losing 2020 coverage altogether.
“Community colleges across the country are seeing reduction in enrollments,” said Talbot. “We are trying to reinvent ourselves with programs that offer skill sets required by local businesses, micro degrees, and new programs that allow students to get a job here and stay local. We are actively reducing costs by necessity. We have had a fantastic health care program, but we pay a huge percentage of the cost, so our difficult task has been, how do we lower that cost without lowering options for employees?”
Haynes, who was active TC3 President for 23 years and an employee for 48, said plaintiffs proposed a solution that would provide the college with significant cost savings during negotiations, but the College would not accept it, “for reasons unknown to me,” he said. “I personally feel the way the college treated us was shabby and shameless, and I don’t understand it.”
The bottom line, he said, is that TC3 leadership restricted their health care plan options and eliminated access to preferred plans that were previously secured under contractual agreement.
“They limited our plan options and took the better plans away,” he said. “This was totally forced on us and no one would discuss our concerns with us. We were entitled to have those choices just as every other employee and retiree has except us.”
The proposed changes were first announced in a late August 2019 letter from TC3’s benefits coordinator which outlined two important changes to retirees’ 2020 health care plans: first, that the College would no longer be reducing Medicare premiums, and second, that the Classic Blue and PPO plans would no longer be offered to retirees.
The letter notes, and Talbot points out, that the College offered these options through the Tompkins County Municipal Health Insurance Consortium. The Professional Administration Association (PAA), Faculty Association, and Civil Service Association, which together comprise collective bargaining for 328 TC3 active employees and retirees, filed a grievance in mid-September to request that the College reverse course on any benefits coverage changes for retirees based on specific articles in their collective bargaining agreement.
The unions won their grievance, and in response, a mid-October letter from the TC3 Human Resources Director to the PAA indicates that the College agreed to clarify health plan options for Association retiree members and stated that the College “will not change a retiree’s access to the plan they are currently on.” The College also agreed to offer the Platinum Metal Level plan and Medicare Supplemental plan to Association retirees, as well as the option to go to Classic Blue, which some did, Haynes said.
Haynes and the other eight plaintiffs in this action were not represented by any of these unions, but based on language used in their appointment letters and retirement letters, as well as the College’s apparently longstanding practice of using PAA agreement items to cover retired executives, they anticipated that any changes made to PAA member coverage would be extended to them as well.
Dr. Haynes wrote to the Board of Trustees in early November to request that the nine executive retirees also be covered by PAA guidelines; that the Medicare premium credits be restored; and that access to Classic and PPO plans be reestablished.
The Board met at least twice to consider the request and issued a letter around Nov. 20. Haynes’ affidavit states this letter was “informing us all that the Board would not rescind the proposed changes for the (9) executive staff retirees.”
Citing the College’s rising healthcare cost from 8% to 12% of the total operating costs in three years as a root cause, the letter indicates that non-union retirees would have two-year access to four metal level plans and the Medicare Supplemental Plan. Executive retirees could continue to supplement premiums with the equivalent of an individual’s Medicare premium, but collecting on this benefit would prohibit later reimbursement of the actual Medicare premium into a Health Retirement Account.
With the open enrollment period now overlapping with the holiday season, plaintiffs filed a Nov. 26 request for a temporary restraining order and both a preliminary and permanent injunction: the first action would temporarily halt the proposed changes from going into effect; the second would table them pending outcome of the case; and the third ultimately prohibit them.
TC3’s case transpired amidst a smattering of similar legal complaints in the face of cut, reduced, or cancelled retiree benefits in a variety of professional sectors across the country in recent weeks. On Dec. 24, 2019, a USA Today-owned Michigan paper reported that 560 Michigan Education Association retirees filed suit against their own union in an attempt to halt health care coverage changes. In Oct. 2019, AT&T retirees filed suit for miscalculation of retirement benefits under the guidelines of the Employee Retirement Income Security Act (ERISA).
One month later, a U.S. Court of Appeals ruling (Stone v. Signode Industrial Group LLC, (7th Cir. 2019), also referenced ERISA and upheld retirees’ claim to a lifetime benefit obligation because of employed “durational language,” an “unambiguous” offer of lifetime benefits in their plan documents, and the strength of “extrinsic evidence” that included verbal assurance from a benefits coordinator that their plan would remain the same as long as they had retired under their specific sought-after agreement.
While private sector cases and suits against unions are not substantively comparable to TC3’s case, they point to rippling waves of uncertainty about benefits once presumed to be legally sound and secure. A current U.S. Department of Labor informational brief entitled “Can the Retiree Health Benefits Provided By Your Employer Be Cut?” points out that while retirees should be aware that their benefits can change, the legality of any changes are entirely dependent on the specific language in the Summary Plan Document (SPD), and advises that employees read benefits proposals very carefully.
Haynes et al v. TC3 is distinct from comparable cases in that the nine plaintiffs were not explicitly covered by a union agreement. Anthony Elia, Esq. of Miller Mayer, LLP argued on their behalf that they are nonetheless entitled to all aspects of PAA coverage guidelines because their employment contracts and retirement agreements specifically referenced entitlement to the same benefits and conditions as other administrative staff.
Elia stated that the College “made promises” to the plaintiffs about their health benefits that constituted contractual obligations; that it was “wrong” to breach these contractual obligations; and that while the economic benefit of the breach to the College was minimal, the difference in costs to retirees could be “enormous” if they get sick and require extensive or ongoing treatment under the new plans.
Talbot said that the College’s share of the cost of the premiums for the Classic and PPO plans was still significant even for these nine people, and that under the proposed plans, even if all experienced a catastrophic event and the College reimbursed employees fully, the College would still realize a reduction in costs.
“We expect this solution to both lower the costs for the College and its members while minimizing any loss of a member’s healthcare and coverage,” Talbot said. “We have to try new things to lower healthcare costs, because money paid to health insurance companies can’t be invested in new programs and doesn’t help students.”
“In an effort to settle, during the time when we were running up against the clock,” Haynes said, “we offered an opportunity for the college to save thousands of dollars for those of us who were Medicare-eligible to opt for the Medicare supplement plans. Even though these Medicare-eligible people wanted the Classic Blue option, they agreed to go to the Medicare Classic to save the college money, with the proviso that for those of us that were not Medicare eligible, 3 or 4 people, would still have the same choices of Classic Blue as other administrative staff.” This proposal was rejected, he said.
“Our temporary misunderstanding,” Talbot stated in an email, “now settled, was resolved with a creative 2-year self-funded supplemental cap reimbursement plan that the College designed and offered for all employees and retirees that adopted the new Health Care plans this year.” The final settlement also includes HRA Medicare reimbursement in addition to premium offset supplements, Haynes said.
“There was no misunderstanding,” Haynes said. “We were not provided the opportunity to choose our plans voluntarily like all other employees and retirees. For those who have a longer window before they get to Medicare, they would have stayed with Classic Blue, and they have the right to do that.”
“Our active and retired employees make TC3 who we are,” Talbot said. “While the College continues to be fiscally responsible with county, state and student’s funds, we do so with respect for those employees and retirees that serve us today or have served in the past.”
“From a personal perspective,” Haynes said, “my heartfelt feelings are that the College leadership has chosen to deny us our contractual rights as retirees. I loved this College and our community. We all served admirably and we were not treated equitably. The trust has broken now and I am saddened by that.”
The agreed-upon plan will be in place for the next two years, and Haynes said the settlement agreement preserved the right to bring additional legal action against the College if future breach of contract rights occur.
An inquiry made to Harris Beach attorney Thomas Smith, Esq. was not returned. Current TC3 President Orinthia T. Montague was unavailable for comment by publication time.