Public officials are among the 40 current and retired city workers named in a lawsuit that alleges the City of Martinsville breached a 2010 settlement agreement to pay health insurance premiums.
Those identified in the filing include retired Martinsville Police Chief Eddie Cassady, retired Martinsville Fire Marshall Ted Anderson, and Ruth Easley, Commissioner of the Revenue, as well as a host of other current/retired employees.
The suit is seeking a declaratory judgement, financial compensation for any difference in retirees’ benefits and the benefits received by currently active employees, costs and attorney’s fees and other relief the court deems necessary.
Filed Aug. 18 in Martinsville Circuit Court by attorney James W. Haskins, of the Martinsville-based Young, Haskins, Mann, Gregory & Wall, P.C., the lawsuit alleges that as an inducement to employment, the city promised to pay health insurance premiums while those listed in the filing were actively employed.
Furthermore, upon retirement, the city would continue to pay health insurance premiums until the retiree reached age 65.
In its summary of facts, the 14-page lawsuit states the city offered the incentive package to prospective employees for more than 40 years. The city made good on that offer until July 1, 2002, when it began paying only a portion of health insurance premiums for its retired employees.
That led to the retirees paying the remaining amount each month for their health insurance premiums, and the monthly amounts retired employees were required to pay steadily increased over the years, until each retiree paid $172.63 per month from July 2008 through July 2009, the filing alleges.
From July 1, 2002, to April 1, 2010, the city’s failure to make good on its promise and pay retiree health insurance premiums resulted in the retirees collectively paying an estimated $465,000 in health insurance premiums, the document states.
In 2010, a majority of the affected retirees sought legal counsel to enforce their employment agreement and recover the amounts they were forced to pay for their health insurance premiums, according to the filing.
However, before litigation began, the city and the retirees/employees agreed to mediate the issue. That occurred on April 19, 2010, and resulted in a Settlement Agreement, which specified in part, that the city would pay 100 percent of retirees’ health insurance premiums for July, August, September and October 2010, and pay the retirees $15,000, plus mediation costs, the filing states.
The agreement was endorsed and approved by then Mayor Kathy Lawson, as well as then City Manager Clarence Monday and then City Attorney Eric Monday.
The city also agreed to pass an ordinance, thus making parts of the agreement a law, stating that “the city not treat retirees as a separate class for purposes of health insurance premium ratings. The city may continue to use a blended rate for establishing premium amounts,” the filing stated.
The ordinance codifying the agreement was passed on June 22, 2010, and on July 13, 2010, Clarence Monday, in his capacity as city manager, briefed Martinsville City Council on the ordinance, stating in part that “employees were commonly told that a benefit of coming to work for and continuing to work for the city was the city would pay their health insurance upon retirement,” the document states.
In a 2000 review, to protect taxpayers as the city faced economic challenges, Clarence Monday said the city administration “enacted a policy to reduce the amount paid for a portion of health insurance for its retirees. In reality, a lack of clarification resulted as to specific execution of this policy.”
Noting “the gap widened between what the city paid for its retirees’ health insurance as compared to active employees,” Clarence Monday said, “the disparity escalated,” and retirees who worked under the city manager’s jurisdiction sought legal counsel.
“The city faced a real potential for expensive and lengthy litigation,” Clarence Monday said, noting those involved decided on mediation “to identify an optimal outcome.”
With adoption of the ordinance, Clarence Monday noted the city was in compliance with policy, and “retirees are treated with the respect and appreciation they deserve for their public service, the solution is cheaper than risks faced by the city if this had went to litigation,” and the taxpayer was “protected with a clear-cut phase-out policy moving forward.”
On July 10, 2013, Clarence Monday clarified to council members that “city retirees will be treated the same as active city employees so there is not confusion.”
The court filing notes that the city initially complied with the terms of the agreement and ordinance, but “within several years … began to violate” the terms of each, it alleges.
Noted is an examination of the city’s Administrative Policies and Procedures Manuals, Revised Feb. 1, 2010, and Aug. 1, 2022. The section “clearly shows” the city “had no intention of complying” with the agreement or the subsequent ordinance passed by the city on June 22, 2010 “and the defendant would continue to treat retirees … as a separate class for the purpose of health insurance premium ratings and health insurance premium payments,” the court document states.
On or about Nov. 1, 2021, Lawson, in her position as Mayor, acknowledged the city was not adhering to its ordinance, the filing noted.
