Union wins suit against Pawtucket; mayor reveals $2.3M deficit
January 13th, 2012 at 6:39 pm by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Rhode Island’s largest public-sector union declared victory Friday in a lawsuit against Pawtucket, just hours before the mayor revealed the city is running an unexpected $2.3 million deficit.
Superior Court Judge Sarah Taft-Carter ruled Jan. 5 that Pawtucket cannot force retired school employees to start sharing the cost of their health insurance premiums because they are entitled to the benefits stipulated in the contract that was in effect when they retired, according to Council 94.
The contract guaranteed all retired school employees age 58 or older family health insurance coverage from Blue Cross & Blue Shield of Rhode Island until they became eligible for Medicare at age 65.
A spokesman for Grebien was not available for comment on the suit. Rhode Island’s municipalities owe $3.5 billion in retiree health benefits to their employees. Providence is awaiting a decision by Taft-Carter in a different suit on whether the city can move retired employees to Medicare when they reach age 65.
Council 94 filed the lawsuit after the city began charging the retired school employees for part of the cost of their health insurance premiums in 2007. A decision in 2010 by Superior Court Judge Jeffrey Lanphear “did not fully resolve the dispute,” Council 94 said, which is why it went before Taft-Carter.
Taft-Carter found that the retired Pawtucket school employees’ health insurance from age 58 to 65 is a vested benefit, “and thus they cannot be altered by the defendants without plaintiffs’ consent.” She made a similar ruling in Council 94′s favor last fall in a case challenging changes made to state pensioners’ cost-of-living adjustments.
“The court’s decision represents a significant victory for retirees by affirming that employers cannot unilaterally cut retirement benefits,” J. Michael Downey, Council 94′s president, said in a news release. “We look forward to having the court determine the appropriate remedy for these retirees.” It’s unclear how much that could cost.
Separately, Grebien on Friday ordered all city employees in Pawtucket to get prior approval “on a case-by-case basis” before spending money after discovering the city is running a $2.3 million for the current fiscal year, which ends June 30. Pawtucket’s budget was $205 million in 2010-11.
The city began the 2011-12 fiscal year with a deficit projected at $13 million, which Grebien’s office said was later eliminated. The mayor said he is “optimistic” the new deficit can be tackled with “rigorous fiscal management.” Grebien defended his budget in a speech last May he titled “Saving Pawtucket from Bankruptcy.”
Pawtucket is the latest to join the list of Rhode Island cities struggling to get their finances under control. Providence has yet to fully eliminate its $110 million deficit for 2011-12. East Providence is now under direct state oversight. Woonsocket’s school department recently disclosed a surprise deficit, and Central Falls remains in bankruptcy, as well.
An earlier version of this post incorrectly said the lawsuit involved benefits for retired teachers; it involves benefits for retired school department employees, excluding teachers.
(photo: City of Pawtucket)
Tags: budgets, council 94, donald grebien, municipal, organized labor, pawtucket, retiree health, unions
Nesi's Notes covers politics and the economy in and around Rhode Island for WPRI.com. (Twitter: 
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Its not the fault of the unions that Pawtuket is in financial crisis, look at the place, no business, no draw to the city…save money by cutting all the benefits for the dregs on SSI
Join East Providence and CF in bankruptcy Pawtucket.Unions ruin everything they touch.
The unions do they have their own judge???
Unions are such a demoralizing presence.
Contracts are legal obligations, so the ruling is not really a surprise, whether it was a union contract or a corporate contract.
Hate to say it, but the IDIOT, MORONIC, SELFISHLY UNINVOLVED VOTERS had every opportunity and legal right to STOP this at every election, when it was going down. In East Providence, the IDIOT VOTERS fell for union stooge candidates glossy brochures of lies and threw out their first fiscally responsible school board and now they are a bunch of working class, blue collor, dope smoking, self-absorbed (in a go-nowhere life) morons with a bankrupt city to show for their pathetic, ignorant, toothless lives. Just look at those dopes trudging into the voting places without a CLUE. Sad, really.
And by the way, 90% of those MORON VOTERS will never come close to making what 1 union JANITOR makes in pay and pension during their lives !
Taxpaid- you speak the truth.
“Working Families Coalition”…..ha ha ha ha ha..good grief,gimme a break!
stop all overtime in every city dept.
Don’t blame the unions for the stupid mistakes of the Mayor. He has been in office for just over 1 year and has broken almost every contract in the city. These contracts were properly negotiated. He has many other grievances that the city will most likely have to make good on, and pay legal fees. He is only costing the city more money.
So, don’t blame the Unions. Contracts work BOTH ways !
There are lots of lawsuits in the private sector being lost by employees over the very same issue. In the private sector, the rule in the courts has been that the words “lifetime benefit” means lifetime of the plan itself, and not the retiree’s physical lifetime. When a company wants to end the plan, it’s that simple.
Thus it boils down to a question of whether the terms of the Pawtucket contract clearly spell out that the contract absolutely means “physical lifetime of the employee”. In this case, I think Judge Taft-Carter stretched the contract meaning to suit her apparent bias.
Now it goes to appeal.
Pawtucket it time to take chapter 9 and have these contracts nulled and void. In Rhode Island it is time for the urban core governments to all take chapter 9. Tell these fecal public sector workfare hacks they don’t matter.
Sorry Gary M, in union contracts, lifetime means the lifetime of the worker, not the lifetime of the City of Pawtucket. Debating the semantics of ” lifetime” is indeed displaying bias.
Snow,
It’s more than just semantics as many in the private sector have found. In the 1998 GM case (before they went bankrupt), the retiree’s took the case to court and lost over the single interpretation of the word “lifetime”.
The issue was that the plan provider (GM) reserved the right to interpret all meanings of the terms in the contract. Since the word “lifetime” was not specifically spelled out to mean the physical lifetime of the worker, the plan provider reserved the right to have it mean the lifetime of the plan itself.
In the GM case there were two classes of litigants, those who just retired, and those who retired by signing a special “early retirement” agreement granting them the lifetime benefits. Those who signed the special contract were protected, but those who simply retired (from the same plan) were not protected.
GM was allowed to interpret the meaning of the term “lifetime” for those who simply retired (the general retirees), but could not end the benefits for those who signed the special contract which specified that lifetime meant physical lifetime.
The irony being that both parties retired from the same retirement plan. You can read the case at:
http://bulk.resource.org/courts.gov/c/F3/133/133.F3d.388.94-1937.94-1898.94-1897.94-1896.html
Snow,
I forgot to mention that the special contract signed by the early retirees used the words “your lifetime” which were not in the retirement plan language itself and made all the difference between the two classes of emplyees.
Unions “negotiated” contracts with self-serving administrators who did not have the taxpayers best interests first in their minds. The sweet deals unions managed to get are NOT deserved nor are they for the most part earned. File bankruptcy and get this corrected. If the union thugs will NOT help they get no sympathy nor any more “grease”. Your days are over and it is about time.