Feb. 6, 2014 – A federal appeals court recently rejected a retired Milwaukee County employee's claim that she had a vested right to cost-free health insurance and the county engaged in an unlawful taking by requiring her to pay any amounts toward her medical care in retirement.
Esther Hussey worked for Milwaukee County for 30 years, staring in 1961. Ten years later, Milwaukee passed ordinances to govern health insurance benefits to county employees. The county covered monthly premiums for active and retired employees.
Although Milwaukee’s health benefits coverage changed over time, Hussey never paid any co-payments, co-insurance, or deductibles associated with medical care. For much of Hussey’s employment, the plan seemed to cover “monthly costs,” not just premiums.
Before she retired in 1991, Milwaukee adopted a “fee-for-service plan” that specifically required employees to pay the deductible, copay, and other fees associated with care. Despite this change, Hussey said the county continued to pay all her monthly costs after she retired.
It wasn’t until 2006, she said, that she was required to pay fees. Then in 2012, the costs went up. The county’s plan only covered premiums that Medicare did not cover. And associated Medicare costs caused her bills to rise.
Hussey filed a lawsuit alleging that she had a vested right to receive cost-free health care as a retiree and not providing it constituted a taking of property. Under the U.S. and Wisconsin constitutions, private property cannot be taken with just compensation.
She said the county should pay just compensation in the form of money she was required to pay for health care costs. Originally filed in state court, the county removed the case to the U.S. District Court for the Eastern District of Wisconsin.
The district court judge granted summary judgment to Milwaukee County. And in Hussey v. Milwaukee County, No. 12-3625 (Jan. 29, 2014), a three-judge panel for the U.S. Court of Appeals for the Seventh Circuit affirmed that decision.
While Hussey relied on cases that suggest a vested benefit cannot be modified or eliminated, the panel ruled that Hussey had no vested right to begin with. (Note: Hussey passed away while the appeal was pending. Her estate continued with the appeal.)
“Hussey held a secure and durable right to participate in the health care insurance plans that the County offered to active employees without having to pay an insurance premium,” wrote Judge John Lee, a federal district judge sitting by designation.
“She never had the right, however, to a health care insurance plan that allowed her to obtain health care services on a completely cost-free basis,” Judge Lee wrote.
The panel noted that Milwaukee’s benefits plan, over the years, covered premiums only. Whether she was asked to pay copays, deductibles, or coinsurance was of no consequence, the panel ruled, because Hussey still had no vested right in those costs.
