A deal’s a deal E-mail
Written by Mark Nichols   

The California Supreme Court has ruled that health benefits for government retirees may not be eliminated if state and local governments had promised workers those benefits. The court’s decision will make it a lot harder for state and local governments to balance the books on the backs of public sector employees by cutting health benefits to retirees.

In short, if elected officials in previous years signed contracts that promised benefits would last a lifetime, current office holders are required to honor those agreements.

The justices decided that retired Orange County employees had a contract that prevented the county from changing health care benefits that would have dramatically increased the premiums of many retirees.

"Under California law, a vested right to health benefits for retired county employees can be implied under certain circumstances from a county ordinance or resolution," Justice Marvin R. Baxter wrote for the court.

Retirees sued Orange County back in 2007 after officials changed the health benefit program to save money. A federal trial court sided with the county and an appeals court turned to the California Supreme Court to clarify state law in the case.

"This decision says that when you are in the process of doing public employee pension reform, you have to respect the rights of current retirees," Ernest Galvan told the Los Angeles Times’ Muara Dolan recently.

Galvan is the lawyer representing more than 5,000 Orange County retirees and their family members.  "If you promised them a particular benefit when they were working and promised that would be part of their retirement, then that is a promise you have to keep."

Attorneys for cities and counties said the fight is far from over and were pleased the court “established a hurdle,” for government employees to prove they had a contractual agreement in the first place.

"The good news for cities and counties is that the court made it clear that you need very strong evidence that the elected officials intended to create a lifetime benefit," Jonathan V. Holtzman, who represented associations of California cities and counties, told the LA Times.

The case will now go back to the U.S. 9th Circuit Court of Appeals.

Lawyers said they expect the lawsuit to be sent back to the trial court to determine whether there was evidence of “clear promises” that were spelled out in the contract agreements.

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