State Supreme Court will not reverse course on retiree health benefits ruling

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  • The state Supreme will not issue an order blocking its own March 2022 decision in a legal fight over government retiree health benefits. That decision allowed retirees to pursue a lawsuit to restore a discarded premium-free health care option.
  • The State Health Plan, retirement system, and Treasurer Dale Folwell had asked the high court to issue a "writ of prohibition" blocking the 2022 decision.
  • Justices voted along party lines in 2022 to allow the retirees' suit to move forward. Since that vote, the court has moved from a 4-3 Democratic majority to a 5-2 Republican majority.

The state Supreme Court has rejected a request to overturn its earlier decision allowing government retirees to pursue a lawsuit that could restore a discarded premium-free health care option.

The decision affects 220,000 retirees.

An order issued Friday indicated that justices have denied the request for a “writ of prohibition.” The State Health Plan, Teachers’ and State Employees’ Retirement System, and Treasurer Dale Folwell had asked for the writ to block a 2022 state Supreme Court ruling.

Democrats held a 4-3 majority on the state Supreme Court when issuing the earlier ruling. Republicans now hold a 5-2 majority.

A 4-2 decision in March 2022 allowed the case to proceed. A court filing this June urged the high court to throw out its 15-month-old decision.

“This Court’s decision was without jurisdiction and legal authority, so it is void,” wrote private attorneys representing the state health and retirement plans and Folwell.

The earlier decision sent the case back to a trial judge.

“Without this Court’s intervention, the Superior Court will continue to proceed without lawful authority,” the June court filing continued. “Defendants therefore seek this Court’s issuance of a writ of prohibition to correct its own past irregular and unauthorized actions.”

“The Writ of Prohibition is an extraordinary remedy. This is an extraordinary case,” the lawyers wrote. “Defendants, therefore, respectfully submit that the extreme circumstances present here merit the issuance of the Writ and remedy requested.”

The court filing argues that the Supreme Court did not have a “quorum of four neutral Justices” to be able to consider the case.

“This Court therefore acted without jurisdiction or legal authority,” according to the brief. “Though this Court attempted to invoke the Rule of Necessity to sidestep the jurisdictional necessity of a quorum, Plaintiffs had no right to be heard by this Court, so this Court improperly applied the Rule of Necessity as if it were the ‘Rule of Discretion.’”

Retirees objected to the “writ of prohibition” in their own June court filing.

“The Writ of Prohibition is an extraordinary writ reserved for situations in which a lower court must be stopped from unlawful activity causing irreparable harm. No such thing is occurring here,” retirees’ lawyers wrote. “There is nothing extraordinary happening that needs to be prohibited.”

“Remarkably, the Defendants’ Petition seeks to prohibit nothing, but otherwise asks for everything,” according to the brief. “Though claiming not to seek a review on the merits of this Court’s 15‐month‐old decision, Defendants seek complete eradication of that opinion, therefore reverting back to a Court of Appeals opinion that six Justices of this Court reversed.”

“Thus, the Defendants ask for nothing a Writ of Prohibition is designed to do, and everything it has never once been used to accomplish,” retirees’ lawyers added.

The case dates back to the General Assembly’s decision in May 2011 to authorize the State Health Plan to charge premiums under certain coverage options. Twenty-six plaintiffs led by retired NC Supreme Court Chief Justice Beverly Lake filed suit in April 2012. They argued “that, by charging members a premium, Defendants had impaired Plaintiffs’ lifetime contract for premium-free healthcare benefits,” according to the brief.

Class-action certification in 2016 expanded the list of plaintiffs. Lake is still listed as the lead plaintiff, though he died in 2019.

A unanimous NC Court of Appeals panel ruled in 2019 against the retirees. Appellate judges agreed the plaintiffs had failed to prove the existence of a valid contract.

The state Supreme Court agreed to take the case in February 2020, though “this Court did not acknowledge its lack of a quorum when it granted Plaintiffs’ petition,” according to a court filing from the Health Plan.

In January 2021, the state Supreme Court announced that five of seven justices were disqualified from hearing the case “based on familial relationships with potential class members” who might benefit from the court’s decision. Plaintiffs urged the court to rely on a Rule of Necessity to move forward with the case. Defendants objected.

The high court granted the plaintiffs’ request. In the end, only Chief Justice Paul Newby recused himself from hearing the case. The March 2022 decision ended up splitting the court along party lines, with the court’s four Democrats outvoting their two remaining Republican colleagues.

“By allowing Plaintiffs’ Petition for Discretionary Review, this Court acted without both jurisdiction and legal authority,” according to the Health Plan’s lawyers. “An order or judgment entered by this Court without jurisdiction, or authority to act, is void and a nullity. All proceedings of the North Carolina Supreme Court in this case were conducted without jurisdiction or lawful authority, so the opinion of the Court of Appeals is the last lawfully entered judgment in this case.”

“This Court should enter a Writ of Prohibition against the Superior Court, prohibiting it from
acting except as directed by the remand order of the Court of Appeals,” the brief continued.

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 the premium-free coverage provided before the 2011 law took effect. They seek reimbursements for premiums they have paid.