RALEIGH — State Treasurer Dale Folwell filed a writ of prohibition that seeks to overturn a 2022 ruling issued by the then-Democrat majority state Supreme Court in a case involving retirement health care benefits.
The writ alleges “this court acted without the quorum of four neutral Justices” as required by state law in ruling the case could proceed and that the court “therefore acted without jurisdiction or legal authority.”
“This court’s decision was without jurisdiction and legal authority, so it is void,” the writ’s conclusion states. “Without this court’s intervention, the Superior Court will continue to proceed without lawful authority. Defendants therefore seek this Court’s issuance of a writ of prohibition to correct its own past irregular and unauthorized actions.”
Tim O’Connell, the executive director of the NC Retired Governmental Employees Association, disagrees.
“To take care of them in the retirement years, based upon a contractual promise, is being a good steward for North Carolina,” O’Connell, told ABC 11 in an interview about the case.
In 2022, the N.C. Supreme Court ruled 4-2 down party lines that the case involving retirees seeking premium-free retirement benefits could proceed despite a unanimous N.C. Court of Appeals ruling in 2019 that was upheld by an appellate court which said the plaintiffs had failed to prove there was a valid contract.
The case originated with actions taken in May 2011 by the General Assembly that allowed the State Health Plan to charge premiums for some health care options covered by the plan. A lawsuit was filed in April of the following year by former N.C. Supreme Court Chief Justice Beverly Lake, who passed away in 2019. That lawsuit became a class-action suit in 2016.
In February 2020, the then-Democratically controlled state Supreme Court agreed to take the case. A few months later, in January 2021, the high court announced the disqualification of five of the seven sitting justices due to conflicts of interest, but only one justice ended up recusing — Chief Justice Paul Newby, who was then the highest-ranking associate justice.
Folwell’s writ argues that complying with the plaintiff’s demands comes at a high cost that “may significantly affect the State’s future budgets.”
“If the trial court’s order is affirmed, that affirmance could generate a damages award that exceeds one hundred million dollars,” states the writ. “The trial court also entered injunctive relief that would require the State to provide all 220,000 class members with a particular level of premium-free health benefits for the duration of their retirements. The costs to comply with the injunctive relief over the course of all class members’ retirements would far exceed the amount of direct monetary damages.”
Retired workers are already covered under a zero-cost Medicare plan, per Folwell’s office.
Following the filing by Folwell in the retirement health care case, his office issued a press release indicating according to audits conducted, local governments in the state are facing a $7.6 billion shortfall in retiree health care.
“Those are jarring numbers to be sure,” Folwell said. “For far too many years local governments typically budgeted on a pay-as-they-go basis, covering only today’s costs with no plan for the future expenses. That is a risky, kick-the-can-down-the-road approach. Deferred liabilities increase liability costs.”
In question are health care supports for retirees known as Other Post-Employment Benefits (OPEBs).
“In addition to the $7.6 billion amassed by local governments, the state of North Carolina has incurred a $25 billion shortfall,” Folwell’s press release says. Additionally, of the 287 local governments providing OPEB, only 23 have assets in legally binding trusts to address long-term shortfalls.
Per the release, an April 2022 report indicated the median OPEB liability among towns and counties is $5,251,338, but Folwell says 59 counties and 41 municipalities have OPEB unfunded liabilities of $10 million or more and another 185 are under $10 million.
OPEB unfunded liability examples included Charlotte at $531,962,000, Mecklenburg County at $514,883,109, Raleigh at $190,900,860, and Wake County overall at $415,753,783.
Retirees living longer will be more costly and strain local governments who give retirees the option to stay on their health plans, per Folwell’s release. Similarly, inflation is also a factor.
“The cost of medical care typically outpaces other sectors of the economy, and local governments are saddled with higher expenses,” the press release states. “The price of medical care has grown 110.3% since 2000, according to the Peterson-Kaiser Family Foundation Health System Tracker.”