Michigan Supreme Court Ruling Finds That Retirees Are Not Entitled to Lifetime Healthcare Benefits
june 5, 2019
On May 30, 2019, the Michigan Supreme Court issued its ruling in Kendzierski v Macomb County, and held that a group of unionized retirees were not entitled to lifetime and unalterable health insurance benefits.  Thus, once the applicable collective bargaining agreement (CBA) expired, Macomb County was permitted to unilaterally alter retiree health insurance benefits.
Kendzierski was a class action lawsuit brought by approximately 1600 unionized Macomb County retirees. The retirees alleged Macomb County breached their CBAs when it unilaterally altered retiree healthcare benefits. The Macomb County Circuit Court concluded that retirees were entitled to lifetime healthcare benefits that could be reasonably modified by Macomb County. On appeal, the Michigan Court of Appeals also concluded that retirees were entitled to lifetime benefits; however, those benefits could only be modified with the consent of the retirees.
The Michigan Supreme Court disagreed with the analysis of the lower courts regarding the vesting of lifetime benefits. Rather, the Court looked at the language in the CBAs and determined that the general durational clause was applicable and that retirees were not entitled to lifetime benefits. The Court recognized that a CBA could provide for benefits that continue after the expiration date of the agreement but refused to infer lifetime benefits where the CBA is silent regarding the duration of retiree benefits.
The issue of retiree healthcare benefits has been widely litigated in the federal courts. The United States Supreme Court rulings over the last five years have provided private employers with guidance on CBA interpretation relating to retiree healthcare vesting. Now, with Kendzierski, the Michigan Supreme Court aligns Michigan law with the federal precedent and provides guidance to public employers with a unionized workforce. The key takeaway is that the guarantee of retiree healthcare survives only as long as the duration of the CBA, unless there is a different durational term specifically for retiree healthcare. If you would like to discuss the Macomb County decision, and how it may affect you, please contact a William’s Firm attorney at 810-695-7777, or fill out this form.