Victory for Protection of Retiree Benefits

In Requa v. Regents of the Univ. of California, a California appeals court handed a victory to a group of retired public servants seeking to protect their retiree health insurance.  The retirees spent decades working at the Lawrence Livermore National Laboratory.  Their University-sponsored group health insurance was cancelled when the Laboratory was transferred from the University to a private group.  The retirees filed a lawsuit, seeking reinstatement of their insurance.  While a lower court dismissed the lawsuit, the Court of Appeal said that was a mistake.

Relying on a California Supreme Court decision, Retired Employees Assn. v. County of Orange, the Court of Appeal found that a governmental body can be bound by an implied contract (a contract created by conduct rather than explicit words), so long as there is no legislative prohibition against such an arrangement.  And, the Court continued, the rights created by such a contract can “vest” if that was the intent of the parties involved.  When an employee benefit “vests” it then belongs to the employee regardless of their future employment.

Turning to the Livermore retirees, the Court found that it was a mistake to dismiss the lawsuit because the retirees had produced enough evidence on their claims at this point in the case.  Should the case go to trial, the retirees will have to show that the Regents “clearly intended” to provide them with the University-sponsored group health insurance during the full retirement period.  We will continue to follow this case.

By Jake White

Legal Developments