Michigan Supreme Court Finds That Retirees Are Not Entitled to Lifetime Healthcare Benefits

On May 30, 2019, the Michigan Supreme Court issued its published opinion in Kendzierski v Macomb County, ruling that the County had not promised to provide retirees with lifetime healthcare benefits. The plaintiffs, a group of retirees, had argued that the collective bargaining agreements (CBAs) they retired under promised lifetime healthcare benefits because certain provisions, such as one requiring employees to enroll in Medicare at age 65, suggested that healthcare benefits would continue even after the CBA expired. The retirees argued that this discrepancy between the CBAs’ expiration date, and provisions suggesting that healthcare benefits would continue after the CBAs expired, rendered the CBAs ambiguous, permitting evidence extrinsic to the contract to be considered.

The Supreme Court rejected these arguments. The Court first held that, unless the CBAs explicitly promised to provide retirees with healthcare benefits for life, lifetime benefits could not be presumed. The Court next held that, in the absence of explicit contractual language promising retirees with lifetime healthcare benefits, the general durational clause controlled. In other words, the Court held, unless a contract provision promised to provide retirees with benefits for life, retirees were only guaranteed healthcare benefits until the CBAs they retired under expired. The Court rejected the retirees’ argument that the CBAs contemplated lifetime benefits because certain contract terms alluded to future actions (e.g. enrolling in Medicare at age 65), finding that those terms could still be performed during the CBA’s general durational term. The Court therefore found that the CBAs at issue did not confer retirees with lifetime healthcare benefits, but rather, only promised to provide retirees with healthcare benefits until the CBA they retired under expired.

The Supreme Court’s decision in Macomb County is consistent with the decision Keller Thoma attorneys obtained on behalf of a municipal client in a similar case involving retiree healthcare benefits. If you would like to discuss the Macomb County decision, and how it may affect you, please contact a Keller Thoma attorney at (313) 965-7610.

Categories: Case Alerts, KT

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