Retirees and pensioners from the state of Delaware’s workforce have launched a lawsuit against two government officials responsible for enforcing a change in their health insurance. The action was brought in Delaware Superior Court by RISE Delaware, a nonprofit founded after state authorities announced a plan to move seniors to a Medicare Advantage program.
RISE seeks to prevent the planned shift to the Advantage program on January 1, 2023. Karen Peterson, a retired state senator and one of the lawsuit’s plaintiffs, said, “My entire adult life was spent working and paying into Medicare. The state’s plan to transfer my Medicare coverage to Highmark, which will decide which medical services I am eligible for, is wrong.”
Peterson stated, “My doctors, not an insurance company that generates profits by refusing and delaying treatment, should choose my medical care.”
Changes to state pensioners’ health insurance induce anxiety. Claire DeMatteis, Secretary of the state’s Department of Human Resources, and Cerron Cade, Director of the Office of Management and Budget, are named as defendants in the claim. Cade also serves as co-chairman of the State Employee Benefits Committee, the government organization responsible for administering employee and retiree benefit coverage.
Wednesday, DeMatteis, and Cade declined to comment.
The complaint says that the State Employee Coverage Committee “quietly approved a regulation” that substantially alters the healthcare benefits Delaware retirees rely on. It was done without consulting those who would be most affected or following the norms of transparent governance.
In doing so, the plaintiffs assert, the committee violated the Administrative Procedures Act, which outlines the procedural standards for adopting, amending, and appealing regulations.
According to the plaintiffs, the State Employee Benefits Committee:
- Did not submit the necessary notice to the Register of Regulations;
- Did not receive any written public comments;
- Did not conduct public hearings;
- Did not provide at least 30 days for public discussion;
- Ignored public submissions of evidence; and
- Did not give findings and conclusions.
The case claims that the State Employee Benefits Committee’s decision to require all state retirees who are Medicare-eligible to enroll in the Medicare Advantage plan is illegal. According to the lawsuit, had the committee followed the Administrative Procedures Act, plaintiffs and countless other state retirees would have been able to reject the reduction of their healthcare benefits. Also, the affected parties would have been able to explain why this path was unwise and damaging.
RISE also contends that the state’s contacts with retirees over the Medicare Advantage plan have been, at best, confused and deceptive. A representative of RISE stated, “The statements provided to retirees have, at worst, obscured the realities of Medicare Advantage…”
Wednesday, in an interview with Delaware LIVE News, Peterson described the case as “quite basic.” “The state failed to adhere to the criteria for free debate in implementing regulations,” she stated. During a town hall meeting on September 12, DeMatteis stated that it was too late to stop implementing the revised plan.
Peterson disagrees. She stated, “The contract has not been signed; therefore, it is not too late.”
Rep. John Kowalko, D-Newark, has been leading the fight against the transfer to Medicare Advantage. He called the plan “an outrage against retirees” and said that Gov. John Carney “and his henchmen” were “nearly inhumanly” cruel. “State retirees are not as prominent in this administration’s hearts and thoughts as they should be,” Kowalko added. “Because now that pensioners have completed their careers, the governor says, ‘Move on. Enjoy your future as best you can’.”
DeMatteis stated in a prior interview that the adjustment is being implemented to reduce the state’s $10 billion unfunded commitment for retiree healthcare. She said that, if left unaltered, this obligation would likely reach $31 billion by 2050.
Kowalko’s reaction is twofold: pensioners will suffer because the state failed to reduce that obligation in the past. Also, the state will continue to waste taxpayer resources on pet projects like extending Legislative Hall.
“Neither this governor nor his predecessors attempted to fund this commitment,” he claimed. “Therefore, they sought the way of least resistance to alleviate the burden, and they viewed retirees as that path.” According to Kowalko, the plan is a “privatization of Medicare intended to produce profits for Highmark and others.”
During the town hall meeting, DeMatteis stated that Highmark Blue Cross Blue Shield “is prepared to and will lose money on this plan,” which drew chuckles from the audience.
According to DeMatteis and others, the modification will align state retirees with the health insurance standards that active and public-sector retirees have enjoyed for decades. According to Kowalko, the government should not look to for-profit businesses as a model when considering how to treat its seniors.
Kowalko stated, “Of course the private sector wants these initiatives. They save money for themselves and their shareholders. The difference is that the government made a promise to its pensioners. We owe them,” he declared. “We are expected to maintain our assurance that their advantages will exist in the future and will not be slashed and sold off to make a profit for Highmark.”
RISE started a GoFundMe campaign to assist in funding its legal challenge. The fundraising collected $13,771 in two days. The organizers hope to raise a total of $150,000. Peterson stated that she and others contributed $7,500 to file the complaint, which seeks a swift conclusion.
“From October 3 through October 24, enrollment is open,” stated Peterson. “As a result of our desire for a simplified system, we would cross our fingers that this issue would be remedied in time for people to make a decision.”
RISE ultimately seeks a declaration that DeMatteis and Cade broke the law and failed to carry out their responsibilities, as well as an injunction blocking the execution of the Medicare Advantage plan.
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