Nevada appeals retiree subsidy ruling

The Public Employee Benefits Program board voted Friday to appeal a Las Vegas judge's ruling that would force up to 3,500 retirees out of the plan.

Judge Mark Denton granted summary judgment to the Las Vegas Metropolitan Police Department, ruling the department doesn't have to pay the state-mandated subsidy for retirees. The subsidy was imposed by the 2003 Legislature to help reduce skyrocketing premiums paid by local government and school district retirees. It requires local governments to pay at least the same amount the state does to subsidize benefits for its retirees.

Metro officials protested from the day the plan was introduced, arguing they shouldn't have to pay because their benefits are negotiated through collective bargaining. They have refused to pay and, if they now lose on appeal, would have to pay PEBP more than $900,000 in back subsidies.

During that session they were told by lawmakers the intent was to make them pay, like the school district and other local governments.

Sen. Bob Beers, R-Las Vegas, advised Metro during one hearing that, even if they fought the payment, it wasn't a question of whether they would pay the subsidy but when.

Metro, however, took the issue to court and convinced Clark County District Judge Mark Denton to rule that the Metro health trust wasn't under NRS288, which requires the subsidy, but under NRS287 which provides for collective bargaining. He said employee groups which receive benefits through a bargained health trust are exempt from the subsidy requirement.

According to PEBP Director Leslie Johnstone, state law only allows public entities governed by NRS287 to send their employees to PEBP.

She said that means not only the 100 Metro retirees in PEBP but all other local government and school retirees who received benefits through a health trust are no longer eligible to be in PEBP. The largest group is the estimated 1,900 Clark County School District retirees who would be ousted.

Johnstone said the hearings on the legislation which imposed the subsidy will clearly show the Supreme Court that lawmakers intended Metro to pay the subsidy and that workers who were covered by a health trust should not be exempted.

Clark County Education Association and Nevada State Education Association lawyers attended Friday's meeting, and pledged their full support to appeal the ruling. Mike Dyer told the board he doesn't believe the state has any choice but to appeal because of all the potential litigation from retirees who lose coverage.

"The litigation you will find yourself in if you choose not to appeal is an ocean by comparison," he said.

He agreed with Johnstone, pointing out that lawmakers in 2003 authorized creation of a rural health trust to put very small bargaining groups of local government workers together to lower their premiums. He said that law wouldn't mean anything if that trust wasn't eligible to send retirees to PEBP.

Representatives of the Retired Public Employees of Nevada and the American Association of Federal, State and Municipal Employees also urged the board to appeal.

The vote by the board was unanimous to appeal the ruling, ask for a stay blocking its impact while the appeal is argued and to ask the Supreme Court to expedite.

Johnstone said they need an answer quickly because a large number of Clark County teachers within five years of retirement are planning to retire early because of another law approved in 2007. That provision says that after Oct. 1 2008, PEBP will only accept retirees if their governmental entity also has its active members insured through PEBP. Until that date, individual retirees can decide on their own to join PEBP.

The law was passed to stop local entities from dumping less healthy retirees on the state benefits program while keeping their younger, healthier active members in their own plan.

Dyer said there are as many as 5,000 Clark teachers who could retire early. But Johnstone has warned they should keep an eye on this case because, if Denton's ruling stands, they would then lose their PEBP benefits after retiring.

The notice of appeal must be filed by Oct. 17. Johnstone said with open enrollment approaching at the end of the year, it would be best if the issue was resolved by Nov. 30.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.