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» Subscribe To E-AlertsIn a recent opinion in Doyle v. City of Medford, the Oregon Supreme Court clarified the obligation of local governments in Oregon to make available the same health insurance coverage to their retired employees that they make available to current employees.
An Oregon statute, ORS 243.303, provides that local governments "shall, insofar as and to the extent possible," make the same health care insurance coverage available to retired employees as they make available to current employees. A group of retirees from the City of Medford brought suit asserting that the statute creates a "property interest," of which the city deprived them when it failed to make available the same health insurance coverage that it makes available for its current employees.
The Ninth Circuit certified the following question to the Oregon Supreme Court: "What amount of discretion does [ORS] 243.303 confer on local governments to determine whether or not to provide health insurance coverage to their employees after retirement?"
In answering the question, the Oregon Supreme Court concluded that the statute creates an obligation for local governments to make health insurance coverage available for retirees. Although the obligation is limited to making coverage available "insofar as and to the extent possible," the local government neither has "total discretion" to decline to make coverage available to retirees nor the latitude to choose health insurance coverage for its current employees without regard to whether the insurer is willing to offer coverage to retirees. Depending on the circumstances, the local government may be excused entirely from its obligation if it can demonstrate that it was not possible, under the statutory standard, to make coverage available. But the local government cannot make this showing by pointing solely to the fact that its chosen provider does not offer retiree health insurance coverage.
Public employers in Oregon who do not currently make available the same health coverage to their retired employees as current employees should carefully examine whether it is possible to do so.
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