News: Quick Takes

State Supreme Court to hear health care case impacting 222,000 state government retirees

Image from N.C. Judicial Branch website
Image from N.C. Judicial Branch website

The N.C. Supreme Court is scheduled to hear oral arguments Monday in a case that could affect retirement benefits for 222,000 former government workers and surviving spouses.

A ruling in the plaintiffs’ favor could mean hundreds of millions of dollars in additional costs for the State Health Plan.

The case started in 2012 with 26 initial plaintiffs, led by retired state Supreme Court Chief Justice Beverly Lake. Class-action certification in 2016 expanded the list of plaintiffs. Lake, the lead plaintiff, died in 2019.

Challengers object to a 2011 law allowing the State Health Plan to charge state workers and retirees a monthly premium for standard health care coverage, known as the Regular State Health Plan. Plaintiffs argue that the state had breached its contract to provide them with premium-free health insurance.

They want the state to resume premium-free coverage and reimburse them for premiums they have paid.

Oral arguments will take place almost 2 1/2 years after retirees first asked the Supreme Court to take up the case. The retirees won an initial courtroom victory in May 2017, but the N.C. Court of Appeals reversed the trial judge and ruled against the retirees in 2019.

The case has been delayed for much of the past year as the Supreme Court tried to determine whether it would have enough justices to be able to hear the case.

A January court filing revealed that five of the seven sitting state Supreme Court justices had “members of their families who are within the third degree of kinship by blood or marriage and either are or may be members of the plaintiff class.”

In August, the Supreme Court agreed to proceed with the case, invoking a “Rule of Necessity.”

“This decision rests upon the following considerations: (1) the significance of this case to the citizens of North Carolina arising from the large number of potential class members, (2) the potential impact of any decision that the Court might make in this case upon the public fisc, (3) the likelihood that the Court’s decision will provide further guidance concerning the extent of the General Assembly’s authority to modify the terms and conditions of State employment, and (4) the importance of fulfilling the Court’s duty under Article IV of the Constitution of North Carolina to resolve a matter properly presented for its consideration.”

Chief Justice Paul Newby did not take part “in the consideration or decision” to move forward with hearing the case.

The case could have limited impacts beyond current plaintiffs. A 2017 state law ended retirement health benefits for any state workers hired now and in the future.

Still, a ruling in the retirees’ favor would add new costs to the State Health Plan. State Treasurer Dale Folwell’s office oversees the health plan. Folwell warned earlier this year about the plan facing underfunding of tens of billions of dollars.