Delaware Superior Court rules in favor of state retirees, halts Medicare Advantage plan

Bay to Bay News | by Joseph Edelen

Delaware Superior Court granted a motion Wednesday to delay the state’s implementation of its new Medicare Advantage plan.

The decision marks a significant victory for state retirees, including the cases’ plaintiffs: Retirees Investing in Social Equity (RISE) Delaware, state retiree Thomas Penoza and former state Sen. Karen Peterson.

Since August, pensioners have organized against the switch, citing concerns that retirees and legislators were not a part of discussions regarding the change. The lawsuit filed by RISE Delaware, Mr. Penoza and Ms. Peterson claimed that the Department of Human Resources, State Employee Benefits Committee and the Delaware Division of Statewide Benefits bypassed procedures under the Delaware Administrative Procedures Act while approving the new Medicare Advantage plan.

“I took no pleasure in having to sue state officials with whom I worked for many years,” Ms. Peterson said. “But retirees are entitled to the medical coverage they were promised during their years of working for the state, and somebody had to fight back.”

Delaware Superior Court Judge Calvin L. Scott Jr. ruled Wednesday the change in coverage will cause “irreparable harm” for retirees should the state move forward with implementation of the plan. According to the ruling, a state agency’s decision may be stayed by the court “only if it finds, upon a preliminary hearing, that the issues and facts presented for review are substantial and the stay is required to prevent irreparable harm.”

The defendants’ argument that the court did not have the authority to render a stay was rejected, as the motion is permitted under the Delaware Administrative Procedures Act. Judge Scott ruled the plaintiffs provided “sufficient information” that the State Employee Benefits Committee “improperly implemented a policy change.”

Under the ruling, the state is required to guarantee pensioners’ access to the health care insurance and benefits they had prior to the start of Delaware’s Medicare open enrollment period on Oct. 3. Retirees had until Oct. 24 to decide whether to opt out of the Medicare Advantage plan, though opting out would have left them with no state-provided health care coverage.

Emily David Hershman, a spokeswoman for Gov. John Carney, said the administration is evaluating its next steps following the ruling.
“We are reviewing today’s interim ruling and our appeal options. We are committed to providing state pensioners high-quality, accessible and affordable health care benefits, which the transition to a custom designed Medicare Advantage plan provides,” Ms. Hershman said.

RISE Delaware co-founder and retiring state Rep. John Kowalko said he was grateful for the court’s consideration of their argument due to the stress the change has caused the state’s 30,000 retirees.

“To ensure that retirees are not deprived of their access to health care ensures that the state honors its promise and obligation to state retirees to provide health care benefits that suit them,” Rep. Kowalko said. “That’s what I think is most important; I am elated by the decision, and I am proud. I am very much appreciative of the judge’s considerations and decision in this matter.”

Delaware’s General Assembly is set to reconvene Wednesday to consider legislation that would provide oversight to the state’s Medicare Advantage plan. Rep. Kowalko plans on filing legislation in the coming days that would provide retirees an option to either keep the current Medicfill plan or opt into the Medicare Advantage plan over the next three years. Rep. Kowalko hopes the bill will be heard when the chambers reconvene, as it will show “the General Assembly is going to appreciate the court’s order to take necessary and proper steps to ensure health care insurance and benefits are available.”

After urging a pause in the implementation of the plan last month, Senate Majority Whip Elizabeth “Tizzy” Lockman, D-Wilmington; Senate Majority Leader Bryan Townsend, D-Newark; and Senate President Pro Tempore Dave Sokola, D-Newark, released a statement regarding Wednesday’s Delaware Superior Court decision.

“Our number one concern is the health and welfare of state pensioners,” Senate Democratic leadership said.

“After hearing the concerns of state retirees, we requested a pause in the Carney administration’s planned transition to a new, privately managed health care system.”

“Now that a pause has been ordered by the Delaware Superior Court, we intend to use this opportunity to continue our efforts to work with state pensioners to ensure any changes to their health care benefits live up to our commitments to them, protect their health and welfare, keep the program solvent, and are properly communicated.”

In a joint statement from House Democratic leadership, Speaker of the House Pete Schwartzkopf, D-Rehoboth Beach, and House Majority Leader Valerie Longhurst, D-Bear, said they “received significant outreach from (their) constituents, and we share many of their concerns.”

“State pensioners deserve the benefits they worked for and were promised. Since learning the details of the planned transition, legislators engaged the administration in negotiations and secured several concessions to the original agreement. The House and Senate also drafted legislation to further protect our retirees and add more oversight, including giving retirees a seat at the table,” the statement said in part.

“Throughout this process, we have closely followed the court case regarding the move to the new health care system. The Superior Court ordering a pause injects uncertainty into this situation for our retirees, but we are committed to supporting them throughout this process. Legislators will re-engage the administration and our retirees on next steps and how to ensure that current and future pensioners are protected and receive the best possible care.”

Mary Graham worked with RISE Delaware as a legal liaison between the organization and its lawyers; the same lawyers who won a similar case for New York City retirees earlier this year. Ms. Graham said the ruling will offer a more transparent, inclusive process for retirees.

“This interim ruling in practical effect means that 30,000 elderly retirees should not be forced in 2023 to go to a dangerous Medicare Advantage plan where an insurance company decides what is ‘medically necessary,’ and puts them through a wringer of doctor network restrictions and some 2,000 prior authorizations that delay and deny care. The state should have to go through a proper government process with transparency and citizen participation in the selection of a Medicare plan,” Ms. Graham said.

While the ruling will stop the Medicare Advantage plan from being the only state-provided healthcare coverage come Jan. 1, a trial will be held in Delaware Superior Court to make a final determination in the case as soon as possible.

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