California Supreme Court Confirms Retiree Health Care as Vested Benefit
In Retired Employees Association of County, Inc. v. County of Orange, the California Supreme Court held that a vested right to health benefits for retired county employees can be implied under certain circumstances from a county ordinance or resolution. From 1985 to 2007, Orange County combined active and retired employees into a single pool for the purpose of calculating health insurance premiums. The single-pool methodology had the effect of lowering the premiums that retirees had to pay. In 2007, the County split the pool, and the Retired Employees Association sued in federal court to continue the previous method of determining premiums. The federal court asked the California Supreme Court to decide, as an abstract legal question, “whether, as a matter of California law, a California county and its employees can form an implied contract that confers vested rights to health benefits on retired county employees.” The County claimed that such an implied contract would be unconstitutional, and that it would violate the Government Code. The California Supreme Court rejected those arguments. The Court ruled that it is possible for a vested right affecting health benefits to be implied and binding, depending upon the facts and circumstances of a given case.
Author: Anne Yen
