After more than a year of legal battles, a judge in Montgomery ordered the reversal of a 2016 increase in Alabama teachers’ health insurance premiums after finding the governing body that made the decision did so in violation of the Alabama Open Meetings Act.
As Lagniappe previously reported, teachers in Mobile and across the state felt an increase in premiums last October after a rate hike approved by the board of the Public Education Employees’ Health Insurance Plan (PEEHIP) took effect with the new fiscal year.
The premium change meant a $15 increase in the cost of an individual plan, a $30 increase in the cost of a family plan and the doubling of a monthly surcharge paid by members whose spouses are covered through other insurance carriers.
Over the past 10 months, those increases have added up for teachers and support staff in Alabama’s public schools. More than anything, PEEHIP policyholders were vocally upset about the timing of those increases, which took effect just as teachers were beginning to feel the effects of a 4 percent pay raise approved by the Alabama Legislature in 2016.
With Montgomery County Circuit Judge Johnny Hardwick’s decision, PEEHIP members will soon see refunds of the money generated by those increased premiums, which the court had previously ordered PEEHIP to keep in a separate account until the lawsuit was resolved.
While it’s unclear exactly how or when refunds will be administered, Hardwick was clear in his ruling it would be distributed “back to the PEEHIP members.”
Based on the base rates, those refunds could be up to $800 for policyholders with family coverage and up to $650 for those with single coverage. The ruling also invalidates the higher rates going forward.
While the PEEHIP board has already announced plans to appeal the ruling, Hardwick’s decision was a substantial victory for the Alabama Education Association, which filed suit over the increases last May. After the decision, current and former leaders issued a statement calling Monday “a great day for the AEA and for all public education employees.”
“For many of our members, the PEEHIP board’s actions completely took away a legislative pay raise that was so richly deserved. For everyone else, it took a large portion of it,” AEA Executive Director Brenda Pike, Ph.D., said. “We hope the PEEHIP board members will take this opportunity to reflect on their action and will take appropriate steps to ensure that the increases will not go into effect, in accordance with the judge’s order.”
As stated, Hardwick’s ruling did not find PEEHIP’s board at fault for passing a premium increase, but instead agreed with AEA that board members violated Alabama law by the manner in which those increases were approved last spring.
While the board approved the increases during an advertised meeting on April 27, 2016, the contentious agenda item was discussed separately during an earlier meeting that same day — a meeting the public and AEA representatives were prevented from attending.
In previous court documents, lawyers for the PEEHIP board argued the earlier meeting that day was merely a “private training session” that wouldn’t be subject to public notice under the Alabama Open Meetings Act.
In a 2016 interview with Lagniappe, Don Yancey, deputy director of the Retirement Systems of Alabama, referred to the pre-meeting as a “working session,” which he said would not be uncommon for the board to hold before voting on a complicated matter such as a premium increase.
“It was not a board meeting. It was not called as a meeting, not announced as a meeting and there was no deliberation between the board members,” he said at the time. “There’s lot of things we present that are very complicated, and we’ve always tried to educate the board in advance.”
However the meeting is described, Hardwick’s ruling found it to have been conducted illegally, which AEA past president and lawsuit plaintiff Sheila Remington described as an attempt by the board to “ram through a premium increase without public discussion or debate.”
However, there is at least some concern with how PEEHIP’s budget could be impacted by refunding last year’s premium increases, which RSA attorneys and Yancey have both argued were passed to help shore up a $140 million deficit and keep the program solvent.
Yancey previously told Lagniappe that if PEEHIP were to refund those monies, he could say with “reasonable certainty” that the program “would not be able to continue operating.” However, AEA has downplayed those concerns, pointing out the increases were never a part of PEEHIP’s budget.
In a press release after Hardwick’s ruling was issued, AEA said the chief accountant for RSA told legislators the organization “wasn’t counting” that money while speaking about PEEHIP’s funding in the 2017 state budget deliberations.
“The fact that PEEHIP has functioned just fine without these funds should inform the board members that their action wasn’t the dire necessity their staff told them it was during the illegal closed meeting,” AEA Associate Executive Director Theron Stokes said. “As we have from the beginning, and as Judge Hardwick noted in his order, AEA stands ready to work with the PEEHIP staff and to give guidance and perspective to the PEEHIP board in crafting a solution to any funding shortfall that does not unduly burden our members.”
PEEHIP, on the other hand, has said it “respectfully disagrees” with Hardwick’s ruling, and by Monday evening had confirmed plans to appeal the decision to the Alabama Supreme Court.
Additionally, attorneys for the program said they plan to seek a stay in the case, which could effectively freeze Hardwick’s’ decision until the appeal is resolved.