Opinion ID: 2779007
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: ¶3 Plaintiffs claim that MCGO § 17.14(7)(ee)(1) (2011) impairs their vested contract right to reimbursement of Medicare Part B premiums when they retire.5 Accordingly, we must decide whether § 17.14(7)(ee)(1) (2011)'s prospective modification of the County's obligation to reimburse Medicare Part B premiums at retirement for Susan Schwegel, Susan Jaskulski, members of Wisconsin Federation and members of County Attorneys who were of retirement age, had 15 years of credited service to the County, but who did not retire by the dates established in § 17.14(7)(ee)(1) (2011), breached a vested contract right. ¶4 Plaintiffs moved for summary judgment enjoining the application of MCGO § 17.14(7)(ee)(1) (2011) and requiring the County to continue to reimburse Medicare Part B premiums for affected plaintiffs when they retire and become Medicare- 4 The parties entered into a Stipulation of Facts for purposes of summary judgment. Facts employed herein were taken from that stipulation. 5 A vested contractual right is one that cannot be abrogated without breaching the contract from which it arises. See Society Ins. v. LIRC, 2010 WI 68, ¶69, 326 Wis. 2d 444, 786 N.W.2d 385. 3 No. 2012AP2490 eligible. The County moved for summary judgment dismissing the plaintiffs' action. ¶5 The facts relevant to the parties' cross-motions for summary judgment are not in dispute.6 In 1937, the legislature instructed counties with populations of 500,000 or more to establish retirement systems for their employees. Ch. 201, Laws of 1937. ¶6 Effective January 1, 1938, Milwaukee County created the Milwaukee County Employees Retirement System (MCERS) pursuant to Chapter 201 of the Laws of 1937. Although MCERS was created by the County, it was then controlled by the State. The Laws of 1945 again addressed the State-controlled MCERS. Ch. 138, Laws of 1945. Those laws provided in relevant part: (2) CONTRACTS TO ASSURE BENEFITS. The benefits of members . . . and of beneficiaries of deceased members . . . shall be assured by benefit contracts as herein provided: (a) . . . [E]ach member and beneficiary having such a benefit contract shall have a vested right to such annuities and other benefits and they shall not be diminished or impaired by subsequent legislation or by any other means without his consent. ¶7 Effective January 1, 1955, Milwaukee County first participated in health insurance for its employees. The County did so under Chapter 17 of the Milwaukee County General Ordinances. MCGO § 17.14(8) (1955). In the years following, § 17.14 was amended many, many times. We relate only those amendments that bear on the dispute before us. One such 6 See note 4 above. 4 No. 2012AP2490 amendment occurred in 1967, when Milwaukee County began providing health insurance for retired employees. § 17.14(7) (1967). ¶8 In 1965, the legislature granted home rule authority over MCERS to Milwaukee County. Ch. 405, Laws of 1965.7 The 1965 shift to home rule empowered Milwaukee County to make any changes in such retirement system which hereafter may be deemed necessary or desirable for the continued operation of such retirement system. Id. at § 2. Chapter 405 of the session laws also provided that no such change shall operate to diminish or impair the annuities, benefits or other rights of any person who is a member of such retirement system prior to the effective date of any such change. Id. 7 Section 2 of Chapter 405, Laws of 1965, provides: For the purpose of best protecting the employes subject to this act by granting supervisory authority over each retirement system created hereunder to the governmental unit most involved therewith, it is declared to be the legislative policy that the future operation of each such retirement system is a matter of local affair and government and shall not be construed to be a matter of state-wide concern. Each county which is required to establish and maintain a retirement system pursuant to this act is hereby empowered, by county ordinance, to make any changes in such retirement system which hereafter may be deemed necessary or desirable for the continued operation of such retirement system, but no such change shall operate to diminish or impair the annuities, benefits or other rights of any person who is a member of such retirement system prior to the effective date of any such change. 5 No. 2012AP2490 ¶9 In 1989, the County limited those employees who qualify for continuation of health insurance benefits upon retirement at County expense: The County shall pay the full monthly cost of providing such coverage for employes who commenced their employment with Milwaukee County prior to July 31, 1989. MCGO § 17.14(7)(a) (1989). The County also limited the continuation of retiree health insurance benefits at County expense through a years-of-service requirement: [t]he provisions of (a) shall apply to retired members of [MCERS] with 15 or more years of creditable pension service as a County employe. § 17.14(7)(h) (1989). At the time both individual plaintiffs began employment with Milwaukee County, the County's retirement health insurance benefits included Medicare Part B premium reimbursement for those employees who had met the criteria set out in § 17.14(7)(h) (1989).8 ¶10 In 1996, MCGO § 17.14(7)(h) was again amended. The amendment provided: The provisions of this subsection are 8 Susan Jaskulski began County employment on June 15, 1989. Susan Schwegel began County employment March 19, 1990. Although MCGO § 17.14(7)(h) (1989) internally references a date limitation for continuation of health insurance at County expense, by 2011, this start-of-employment limitation was no longer present in Chapter 17. Instead, in 2011, § 17.14(7)(dd) (2010), provided the conditions required for continuation of health insurance benefits at County expense. 6 No. 2012AP2490 considered a part of an employee's vested benefit contract as more fully set forth in 201.24(5.91).9 ¶11 In 2011, an amendment adding language to MCGO § 17.14(7)(ee)(1) (2010) restricted the applicability of paragraph (ee) that addressed payment of Medicare Part B premiums for retired employees. After the 2011 revision, § 17.14(7)(ee)(1) read: The provisions of section (ee) shall not apply to members not represented by a collective bargaining unit who retired and began receiving benefits from the Milwaukee County Employees Retirement System after April 1, 2011, nor to members represented by the . . . Association of Milwaukee County Attorneys . . . who retired and began receiving benefits from the Milwaukee County Employees Retirement System after December 31, 2011, nor to members represented by the Federation of Nurses and Health Professionals who retired and began receiving benefits from the 9 Plaintiffs note the reference to 201.24(5.91) appears to have been a drafting error and should have been 201.24(5.10). The County does not dispute plaintiffs' contention; accordingly, hereinafter, we refer to § 201.24(5.10), rather than § 201.24(5.91). MCGO § 201.24(5.10) (1996), provided: Members who retire with sufficient pension service credit as noted in chapter 17 of the Code, or the appropriate labor agreement, shall be provided with paid health insurance as noted in chapter 17 of the Code, however such benefit shall not be funded via the pension fund. 7 No. 2012AP2490 Milwaukee County Employees Retirement System after December 31, 2012.10 ¶12 In summary, after the 2011 amendment to MCGO § 17.14(7)(ee)(1), the Medicare Part B reimbursement modification required that members of County Attorneys had to retire on or before December 31, 2011, and members of Wisconsin Federation had to retire on or before December 31, 2012, in order to secure County reimbursement for Medicare Part B premiums upon retirement. ¶13 Both parties moved for summary judgment. The circuit court granted plaintiffs' motion, concluding that qualifying employees have a vested benefit contract requiring Medicare Part B premium reimbursement, and the County's refusal to reimburse premiums upon those employees' retirements would constitute a material breach of their vested rights. The circuit court noted that it relied on Welter v. City of Milwaukee, 214 Wis. 2d 485, 571 N.W.2d 459 (Ct. App. 1997), and Rehrauer v. City of Milwaukee, 2001 WI App 151, 246 Wis. 2d 863, 631 N.W.2d 644, which may have conflicted with Loth v. City of Milwaukee, 2008 WI 129, 315 Wis. 2d 35, 758 N.W.2d 766. 10 Wisconsin Federation and the County were parties to a collective bargaining agreement covering Wisconsin Federation's wages, hours, and conditions of employment, including coverage under the County's group health insurance program. The Wisconsin Federation-County collective bargaining agreement expired December 31, 2012. County Attorneys and the County were parties to a collective bargaining agreement covering County Attorneys' wages, hours, and conditions of employment, including coverage under the County's group health insurance program. The County Attorneys-County collective bargaining agreement expired December 31, 2011. 8 No. 2012AP2490 ¶14 The court of appeals reversed and granted summary judgment to Milwaukee County. Wis. Fed'n of Nurses & Health Prof'ls, Local 5001 v. Milwaukee Cnty., 2013 WI App 134, ¶16, 351 Wis. 2d 421, 839 N.W.2d 869. The court of appeals reasoned that it was bound by Loth. Id., ¶11. The court of appeals agreed with the circuit court that Loth appears at odds with both Welter . . . and Rehrauer . . ., and that Loth discussed neither decision. Id. The court of appeals, however, declined to discuss or distinguish either Welter or Rehrauer. Id. Rather, applying Loth, the court of appeals concluded that employees were merely eligible for vested benefits until they had completed all prerequisites, including actually retiring, and that the County was not restricted from modifying Medicare Part B premium reimbursement until employees' eligibility matured into entitlement by employees fulfilling all the conditions necessary to receipt of the benefit.11 Id., ¶14. ¶15 We granted plaintiffs' petition for review and now affirm the decision of the court of appeals.