Retirees can stay with state benefits plan

Up to 3,500 retired local government and school employees can breathe a bit easier in the wake of a Nevada Supreme Court ruling that says they are legally entitled to be members of the state health benefits program.

The high court ruled unanimously on Thursday that the Las Vegas Metropolitan Police Department must pay the state-ordered subsidy for its retirees who choose Public Employee Benefits Plan coverage.

That ruling overturns the summary judgment granted by Clark County District Judge Mark Denton, who said in August Metro was exempt from the requirement. He said Metros employee benefits are set in collective bargaining and provided through a health trust not controlled by NRS287 - the section of law requiring the subsidy.

But PEBP Executive Officer Leslie Johnstone said the unintended consequence of that ruling is that only employees of public bodies governed by NRS287 can be covered by PEBP. If the ruling stood, she said, as many as 3,500 local government and school district retirees now covered would have to be kicked out of the plan.

After hearing complaints from local retirees about the huge premiums they had to pay because they don't have the subsidy provided state workers who retire, the 2003 Legislature mandated local governments and school districts provide their retirees who join the plan the same subsidy the state provides its retirees.

Metro refused to pay the subsidy and sued. Judge Denton agreed with Metro that the police agency should be exempt. He also exempted Clark County's firefighters, who are covered by a similar bargained trust.

PEBP responded that the Legislature clearly intended to require all agencies including Metro to pay the subsidy and argued benefit trusts are governed by NRS287.

The Supreme Court agreed with PEBP on every argument in the case.

"We conclude that the district court misinterpreted the subsidy requirement and, consequently, improperly granted declaratory relief to Metro and Clark County," states the opinion by Justice Jim Hardesty.

When Metro objected during hearings on that legislation, their lobbyist was told by Sen. Bob Beers, R-Las Vegas, that it wasn't a question of whether Metro would end up paying, but when.

Beers said Thursday the lawsuit was a regrettably bad piece of advice by Metro's lawyers because legislative intent was perfectly clear in this case. He said he hopes that Metro has "taken steps to improve quality of its counsel because these are costly incidents when they happen."

The court further ruled that bargained for health trusts are covered by NRS287 and that, therefore, employees covered by those trusts while active workers are eligible to join and be covered by PEBP once they retire.

That section of the ruling ensures that the estimated 3,500 local retirees who are currently members can stay with the plan. That number includes some 1,900 retirees from the Clark County School District as well as smaller groups from numerous other school districts and local governments, including Carson City.

Only about 100 of those retirees are from Metro and most of them joined because they moved to places where Metro's retiree benefits program isn't available.

The court also ruled that the subsidy must be paid on behalf of those who retired before the 2003 law was passed, rejecting Metro's argument of that amounting to applying the law retroactively.

"It is not applying the statute retroactively because it is not charging the employers any amounts related to pre-October 2003 premiums. Instead it is prospectively applying the statute by requiring local government employers to subsidized only premiums that were due for coverage on or after October 1, 2003."

That conclusion, however, means Metro now owes PEBP about $1.3 million in back premiums they have refused to pay since October 2003. By statute, Metro will also have to pay 1.5 percent interest per month on the unpaid premiums.

Clark County, however, is current since the county paid its premiums for firefighters throughout the legal battle.

Johnstone was out of the office and couldn't be reached Thursday but the decision comes with ample time before PEBP begins its open enrollment period in May.

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