N.C. Supreme Court weighs retiree health benefits case

Summary

North Carolina justices considered whether to decertify a class of 220,000 retirees in a long-running health benefits lawsuit.

Why this matters

The decision could determine whether about 220,000 state retirees can pursue claims together or must file individual cases. It also reflects how the North Carolina Supreme Court may handle earlier rulings in major state disputes.

The North Carolina Supreme Court heard arguments Tuesday in a long-running lawsuit over retiree health benefits, as lawyers for the State Health Plan and state treasurer asked the court to decertify a class of about 220,000 retirees.

Before 2011, vested state employees were promised no-cost health care in retirement. In 2011, the Legislature allowed the North Carolina State Health Plan to charge retirees premiums. A group of retirees sued, alleging breach of contract.

In 2016, Superior Court Judge Edwin Wilson certified the retirees as a class. In 2022, the Supreme Court, then controlled 4-3 by Democrats, ruled that the retirees had a right to lifetime enrollment in a premium-free insurance plan and sent the case back to trial court to determine damages.

Now, lawyers for the Health Plan and the treasurer argue the plaintiffs’ claims are too different to proceed as a class action.

Mark Jones, a lawyer for the Health Plan, said an expert for the retirees did not “prove liability in one stroke” as required. Because of that failure, Jones said, “the 2016 class cannot be sustained.”

Mark Carpenter, a lawyer for the retirees, said decertifying the class would be excessive.

“What they are asking you to do is throw the baby out with the bath water,” Carpenter said.

If the court agrees, retirees could be required to file individual claims for compensation.

The court now has a 5-2 Republican majority and recently reversed other prior rulings, including a 2022 school funding decision in the Leandro case.

Justice Richard Dietz, a Republican, led much of the questioning Tuesday. “Our job as courts, in class action, is to defend the rights of the absent class members. That’s the whole purpose of all the protections that we’ve built into class certification,” he said. “If we know the class definition is wrong, we need to fix it.”

In a partial dissent in 2022, Republican Justices Tamara Barringer and Phil Berger Jr. said the trial court should determine whether retirees reasonably relied on a promise of no-cost insurance, citing caveats in some state materials. Chief Justice Paul Newby did not participate in that decision.

Retirees at the hearing said they were frustrated by the delay. Boyd Bennett, a former prisons director who worked 36 years for the state, said requiring individual cases “would swamp the court system all across the state.” He added, “But I gave that up to serve the public and plus to have these benefits that we were told we would have.”

Some plaintiffs have died. The lead plaintiff remains I. Beverly Lake Jr., a former Supreme Court chief justice who died in 2019.

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