Retiree health benefits vested, rules Wisconsin Court of Appeals.

Byline: David Ziemer

A retired city of Milwaukee employee is entitled to full health care benefits, even though the city lowered its health care benefits for retirees before he retired, the Wisconsin Court of Appeals held on Dec. 27.

Albert Loth, born in 1945, was hired as an accountant by the city in 1984. At the time, the city provided free medical benefits to retirees between the ages of 60 and 65, who had been employed at least 15 years.

In 2002, the city adopted Resolution 020479, eliminating the free health insurance benefits.

Loth retired shortly after turning 60 in 2005. Thereafter, the city deducted health insurance premiums from his retirement checks, pursuant to the resolution.

Loth sued, but Milwaukee County Circuit Court Judge Patricia D. Mc-Mahon granted summary judgment in favor of the city.

Loth appealed, and the court of appeals reversed, in a decision written by Judge Joan F. Kessler, and joined by Judge Ralph Adam Fine. Judge Patricia S. Curley dissented.

Relying on several precedents, the court concluded that, once Loth worked 15 years, the right to free medical benefits on retirement had vested, and could not be unilaterally withdrawn by a city resolution.

In Schlosser v. Allis-Chalmers Corp., 86 Wis. 2d 226, 271 N.W.2d 879 (1978), the Supreme Court enforced a promise of employer-paid life insurance for salaried employees at retirement after age 65 against a company claim that it had the right to change the insurance benefit for those who had retired, and that employees who retired before age 65 were not eligible for the benefit.

The Supreme Court concluded that the rights vested upon the employee having performed the work, and reaching age 65 was merely a condition precedent.

Later, in Roth v. City of Glendale, 2000 WI 100, 237 Wis.2d 173, 614 N.W.2d 467, the court held that, as to employees represented by a union, free health care benefits for retired employees could not be eliminated under a new collective bargaining agreement which eliminated that benefit.

More recently, the court held that a class of non-union employees of Milwaukee County were entitled to accrued sick leave, which was repealed before they retired. Champine v. Milwaukee County, 2005 WI App 75, 280 Wis. 2d 603, 696 N.W.2d 245, review denied, 2005 WI 134, 282 Wis. 2d 722, 700 N.W.2d 273.

The court in Champine held that benefits granted in 2000 could not be changed retroactively in 2002, even to those employees who did not retire before the change...