Retirees suing city over benefits

Cam Gillam took a job as a Columbia firefighter 20 years ago in part because he knew when he retired the city would give him free health insurance for life.

But earlier this year, after years of multi-million-dollar deficits created by poor accounting practices and increasing health care costs, City Council members voted to charge the now-retired Gillam $33.18 per month for less coverage than he had before.

Now Gillam, and 12 other retired firefighters and police officers, have sued the city over the changes in their retirement health benefits - joining dozens of other retired municipal employees across the state who are suing local governments for changing their minds.

"Some of my (clients) could easily have worked a few more years had they known that this was on the horizon," said Nancy Bloodgood, an attorney with the Foster Law Firm who is representing the retired Columbia employees. "That's the problem. They did rely on this, and a lot of them retired when they didn't need to retire."

For years, local governments were able to woo employees who could have earned higher salaries in private industry by providing generous benefits, including free health insurance.

But a change in national accounting standards recently forced local governments across the country to start charging their employees premiums for health insurance - including employees who have already retired - or run up a multi-million-dollar debt for taxpayers.

Those changes have prompted several lawsuits, including ones in the cities of Greenville and Gaffney, where employees argue that because the city told them they would have free health insurance once they retired, they relied on that information to retire early and to not purchase supplemental health insurance plans.

But local governments have pushed back against that claim, arguing that no city official was authorized to promise employees free health care for life and that "any reliance upon such alleged promises would have been unreasonable."

That's the argument the city of Gaffney used successfully in a 2007 lawsuit brought against it by three of its retired employees. And it's the argument the city of Greenville is using as its defense in a lawsuit brought by 15 retired police officers.

"One council can't bind the next one. The plaintiffs should have better sense than to rely on it," said Fred Suggs, an attorney with the Ogletree Deakins law firm who is representing the city of Greenville in its case.

But Bloodgood said she is relying on two other arguments:

- Under Columbia's form of government, city employees work for the city manager, who makes administrative decisions, which is a contract.

- By not telling city employees their benefits could change, it caused those employees to retire when they otherwise would not have.

Gillam was one of several retired employees who served on a city committee given the task of interviewing potential health care providers for the city's new plan. He left the committee once he filed his lawsuit.

Councilman Daniel Rickenmann, who is working with the committee, said he was disappointed with the lawsuit, pointing out the city is not obligated to supplement health insurance for retirees' spouses and children, but does it anyway.

"I'm not sure what the basis of their lawsuit is," Rickenmann said. "The (employee) handbook has 'this is not a contract' stamped all over it."