For More Information Contact:
Lance Robertson, 984-4716
Eugene Water & Electric Board

Sharon A. Rudnick, 541-485-0220
Harrang Long Gary Rudnick PC

Oct. 7, 2008

Court approves settlement in retiree benefits lawsuit

The Lane County Circuit Court on Tuesday (Oct. 7) gave final approval to a settlement of litigation between the Eugene Water & Electric Board and its active and retired employees over retirement health insurance costs.

The retirees and employees claimed that EWEB was required to provide them certain continuing health care benefits after retirement, and that EWEB had reduced those benefits improperly.  The settlement clarifies EWEB’s post-retirement health care insurance benefits.

EWEB General Manager Randy Berggren said the settlement is a fair resolution of the ongoing legal dispute resulting from changes in post-retirement health care benefits the utility’s elected commissioners approved in 1990 and 2003.

 “The settlement reflects hard work and compromise on both sides,” said Berggren.  “It provides EWEB retirees and their dependents with generous and affordable heath insurance. It also provides the utility with more certainty around future insurance costs and it allows EWEB to make changes going forward to respond to the unpredictable nature of those costs.”

Specifically, the retirees and employees claimed that early promises required EWEB to provide health care insurance after retirement at no cost or low cost, and that EWEB had increased the costs in 2003 and 2004 contrary to a common understanding.  After a trial in late 2004 involving six retirees and one employee, Circuit Judge Charles Carlson rolled the retirees’ costs back to 1990 levels.

In late 2005, other retirees and employees filed a class action lawsuit, which was put on hold awaiting appeal of the first case, which is known as the Lauderdale case. In early 2008, the Oregon Court of Appeals affirmed the judgment, but it remained subject to review by the Oregon Supreme Court.  The circuit court’s approval of the settlement on Tuesday resolves both lawsuits.

The settlement approved by the court on Tuesday also provides retirees hired before and during the early 1990s with retirement health care benefits at the costs set in 1990.  Retirees agreed to move out of the EWEB’s private group plan at age 65 and accept Medicare and group supplemental coverage, considered comparable to the benefits of employees.  In return, the settlement provides cash payments to retirees to compensate them for added premiums in the 2003-04 change. The settlement also provides current employees hired through 2002 with payments into individual health savings accounts for use with current and future medical expenses. The payments vary in amount, according to when an employee retired, was hired or is eligible to retire.

The settlement reserves to EWEB the power to make changes, for more recently hired employees, as EWEB decides is necessary.

The settlement will cost EWEB $3,080,000. However, the settlement will greatly reduce EWEB’s unfunded liability for future retiree medical insurance costs, from about $80 million to $35 million. The settlement covers 414 retirees and 313 current employees.

The Honorable Michael R. Hogan, U.S. District Court judge for the District of Oregon, mediated the parties’ dispute, leading to the settlement.