Nearly a decade after they first sued to regain University of California health care, Lawrence Livermore National Laboratory retirees have reached an $84.5 million settlement that provides a range of benefits: reimbursement for those who lost financially, support for future medical premium payments and a promise of future medical coverage if the federal government should ever drop its support for health care.
The settlement is subject to approval by the court, and the retirees themselves will be able to review and comment.
Absent major changes or objections, the first benefits to the roughly 9,000 retirees could come through in mid-2020, according to those familiar with the anticipated schedule.
The earliest payments are likely to be $1,000 to each retiree, to compensate for the added expense they incurred as a result of losing UC health care. This benefit would also be paid to the estates of qualified retirees who passed away.
The settlement provides for creation of a $60 million trust fund that can be used to lower the cost of medical care for retirees for the next 20 years; and another $20 million to cover past damages.
It also provides for what is being called a “backstop,” a court-supervised requirement that University of California will reinstate UC-sponsored programs if retiree health care benefits are terminated or materially changed by LLNL’s operating manager.
Beyond the $84.5 million settlement, the University will also cover attorney’s fees of $12 million.
Asked why it had accepted an agreement that fell short of its original goal of reinstatement in the UC health care system, the retirees said in their prepared comments that the settlement “provides health coverage equivalent to that offered current UC retirees.”
The University and the partnership that operates LLNL today “will remain under court monitoring to assure this result,” according to the retiree statement.
“Continuing to a trial might have required another four years… We wished to provide closure and repayment to both the deceased and the living as soon as possible.”
To Ernest Galvan, a San Francisco attorney who has argued retiree benefits cases before the state Supreme Court, the settlement is very impressive, a successful David vs. Goliath case.
Galvan did not represent any of the parties in the retiree lawsuit, but acknowledged sympathy for the retirees’ cause.
The attorneys for the retirees “were extremely well prepared… against the much better funded University of California attorneys, so they had to be twice as smart and twice as nimble… They did a great job,” he said.
He believes public employers around the state will now be on notice that they cannot simply decide to save money by eliminating retiree benefits.
If the University of California, with all its resources, has ended up with an $85 million obligation plus $12 million in attorney’s fees after a lengthy lawsuit, he reasoned, city and county benefits managers should be aware that they may be legally vulnerable and financially exposed if they act without considering retiree interests.
LLNL declined comment on the settlement on the grounds that it was not a defendant and had not reviewed the decision.
A spokesperson for the University California said that “we are pleased to have reached an agreement with the retirees of the Lawrence Livermore National Laboratory that provides them and their families security for their health care benefits.”
The spokesperson restated UC’s institutional position that “these retirees do not have a vested contractual right to University-sponsored retiree benefits,” but the settlement “will help offset cost” of the benefits.
He said that the National Nuclear Security Administration “is providing the majority of the funding” for the settlement, but declined to be more specific on the ground that the agreement will not be complete until the court finally approves it.
UC managed the Laboratory from its founding in 1952, so LLNL employees were University employees just as they are at Berkeley or UCLA. In 1961, the University’s Board of Regents authorized the expansion of health care benefits to cover UC retirees as well as active employees.
Laboratory retirees enjoyed UC health care benefits until 2008, shortly after a for-profit consortium called Lawrence Livermore National Security LLC replaced UC as manager. Retirees were then forced to find health care in individual, industrial-style programs, some of which were less reliable and more expensive than UC’s had been.
In addition, there was no certainty of continued health care coverage, which many of the retirees felt they were promised as UC employees – and which they later documented in court.
Then and later, many of the retirees claimed that they had made career decisions at least partly on the basis of these promises.
In face-to-face meetings with senior University managers in Oakland in 2008-9, they tried to negotiate a return to UC health care. When that didn’t work, they formed a grassroots organization called the UC Livermore Retiree Group under the leadership of retiree Joe Requa. They began raising funds and, in 2010, filed suit.
The fundraising was remarkably effective, eventually bringing in more than $900,000 from more than 1,000 donors.
The suit became a class action in 2014. As the years dragged on, the retirees experienced both wins and losses. Significantly, they won two major court of appeal decisions, including one that reversed a ruling that would have decertified the class.
To Jay Davis, one of the named retiree plaintiffs in the lawsuit, the financial support provided by the Retiree Group was invaluable for making it possible to bring in actuarial expertise.
This was used to analyze benefits, project medical costs and predict survival rates, according to a Retiree Group statement.
The analyses “gave us the resources to outthink and outfight the University of California,” he said.
“The University was just not prepared for a lawsuit by people who could do that depth of analysis... The problem they got into was that when we had an argument, they had to argue with our numbers.”
Two other named plaintiffs, Wendell Moen and Donna Ventura, felt a strong connection with the old Laboratory that had been operated by the University of California. They felt little allegiance to the for-profit partnership, Lawrence Livermore National Security LLC, that took over in late 2007.
Ventura recalls her 32 years at the Laboratory as “a good career.” It felt like something of a “betrayal” when “the LLC took over” and UC health care suddenly was no longer available.
To Moen, anxiety among class members grew out of the recognition that future contractors might have no loyalty to retirees — and that their health care could disappear.
“I think that’s where the lawsuit drew its support from so many people,” he said. “There was nothing that would compel another organization (in the future) to respect the employment that we had with the University.”
Davis finds it both sad and ironic that if the current settlement had been offered at the start of the lawsuit nearly a decade ago, “we would have taken it in a minute.
“In the meantime, 2,500 retirees have died. That, I think, weighs on us more than anything else. We have lost friends who will never know how this came out.”