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McIntyre disagreed with Bernero on retiree health insurance premiums

July 20, 2018

May 31, 2019 update: This story is about conflicting legal arguments from current and former Lansing city attorneys in regard to retiree health care. James Smiertka argued that "retirees follow actives" meant that retiree coverage changed with each new contract for active union members. Janene McIntyre argued that it meant coverage continued at the level provided in the contract in effect at the time of retirement. A 5/30/2019 Michigan Supreme Court decision seems to agree with Smiertka.

Former Lansing city attorney Janene McIntyre's departure in April 2016 may have been due in part to her position on an issue that would have cost the City a lot of money. If her legal opinion had been accepted, the City would have had to reimburse a group of retirees for health insurance premiums deducted from pensions since March 2010.

The retirees were members of the Teamsters 580 union who retired on or after February 20, 2004. In the 2003-2007 collective bargaining agreement (CBA), the City agreed to pay 100% of health insurance premiums for both active members and "eligible retirees." The City's justification for initiating deductions was that the 2007-2012 CBA provided for contributions toward health insurance from both active members and retirees. In regard to retirees, this could have been interpreted to mean members who retired during the 2007-2012 contract period. However, the City looked back at the provision in the 2003-2007 agreement that "eligible retirees shall be covered by the same insurance as active bargaining unit members" and decided it meant that, since active members now had to pay premiums, members who retired under the 2003-2007 contract must do so as well.

The retirees learned of this in a March 29, 2010 memo from the City's Finance Department saying premiums would start being deducted from their pensions. It said:

As a Teamsters 580 retiree retiring February 2004 or after, your health benefits are the same as active Teamsters 580 members and are changing as a result of the recently negotiated contract.

This, of course, was very upsetting to the retirees. They had retired with the expectation they were entitled to city-paid health insurance for life. After trying unsuccessfully to get an explanation from the Bernero administration, they took their concerns to city council's Ways and Means Committee where the issue was on the agenda almost every week from October 2014 to March 2018. The committee ended their investigation at a March 22 meeting attended by City Attorney Jim Smiertka and Chief Labor Negotiator Nicholas Tate. They had before them a March 15 memo from new mayor Andy Schor in which he said

The statement of what the retiree healthcare benefits are to be under the 2003-2007 CBA appears to be stated clearly and unambiguously on its face, that is, the language is clear to me that retirees healthcare benefits are to be the same ones that active Teamsters 580 receive and, as such, will change for the retirees if and when they change for the active employees.

Schor based his decision on a July 31, 2017 memo from Smiertka, a holdover from the Bernero administration.

In October 2016, a November 23, 2015 memo from McIntyre to Bernero materialized under mysterious circumstances. The story is that someone dropped it off at the Teamsters union hall in Lansing. In that "privileged" memo, McIntyre provides a thorough, well-documented legal analysis of the issue. In her conclusion, she disagrees with the administration's position. She sides with the Teamsters 580 retiree group.

I will attempt here to summarize the arguments of both Smiertka and McIntyre, but I encourage you to read the actual memos (Smiertka and McIntyre). McIntyre's provides some good background information.

Smiertka's main argument is that the language is clear and unambiguous:

[T]he clear and unambiguous meaning of "eligible retirees ... shall be covered by the same insurance as active bargaining unit members" is that retirees are to receive what the active members members receive for health care. Because the active union members will receive healthcare under current CBAs, the retirees' health care will change from time to time to match the current benefit.

He also cited Michigan Supreme Court decisions that said "contractual obligations will cease ... upon termination of the bargaining agreement," and "when a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life."

McIntyre does not agree that the language is unambiguous:

• There are two reasonable interpretations. The affected retirees and union leadership believed that it meant coverage was to be the same as active members in the current contract, not future contracts.

• When contracts with other City unions included "retirees follow actives" language, they  provided more clarification if it meant anything other than that retiree coverage is the same as current actives.

• It has been interpreted differently for other groups. The City's contract with department heads contains "retirees follow actives" language, yet the City has not changed coverage for earlier retirees when coverage for active members changed.

McIntyre also argues that a CBA is the product of informed understanding and mutual assent between union and employer. In this case, the union was not involved in the discussion which resulted in the City's interpretation.

Finally, she does not understand why, if the City determined that Teamsters 580 members who retired on or after February 20, 2004 must pay premiums, those who retired under the 2003-2007 contract before February 20, 2004 were not also required to pay. And what about those who retired under previous contracts that contained the same "retirees follow actives" language?

It may be that the City's position had more to do with money than sound legal analysis. As Bernero is quoted at the bottom of this August 20, 2015 Lansing State Journal story, "[I]t's hard to make people happy all the time and balance the budget."

McIntyre went on leave January 8, 2016 under the Family Medical Leave Act. This was less than two months after her memo to Bernero. On February 19, Bernero announced that she was on a leave of absence for an indeterminate period of time. She resigned officially on March 4, 2016 and received a $160,000 payout from the City. (source)

Here is a collection of documents pertaining to the Teamsters 580 retiree health care issue:

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