In an appeal by the Kitch Firm’s Appellate and Labor and Employment Practices, the Michigan Supreme Court has reversed the Court of Appeals, and held that healthcare benefits of retired public employees do not vest unalterably for life, absent express vesting language in the collective bargaining agreement (“CBA”). The decision brings widespread relief to Michigan public employers who, under the Court of Appeals decision, faced the prospect of being obliged to provide lifetime, unmodifiable, healthcare benefits based on common CBA provisions.

In Kendzierski v Macomb County, some 1600 retirees brought a class action asserting that provisions in the collective bargaining agreements with the County created a vested right to lifetime and unalterable benefits, and that the County breached those contractual rights by modifying certain deductibles and copays. The County maintained that it was not contractually barred from modifying benefits, although the County had every intention of continuing to provide healthcare coverage for its retirees.

The Supreme Court, in a four to two decision authored by Justice Markman, held that the duration of retiree benefits was determined by the three durational clause in the CBAs, unless there was a provision specifically extending those benefits beyond the term of the CBAs. The majority rejected the conclusion of the Court of Appeals that there were ambiguities in the written agreements permitting the court or jury to resort to extrinsic evidence outside the contracts to determine whether vesting was intended by all parties.

Significant support for the position of the County and other Michigan public employers was provided by an Amicus Curiae Brief filed on behalf of the Michigan Municipal League, Michigan Association of Counties, Michigan Townships Association and State Bar of Michigan, Public Corporation Law Section.

Sue Zitterman is with the firm’s appellate practice and has been with the firm since 1983. Ms. Zitterman concentrates her practice on appellate and complex litigation and trial support in cases originating with the Kitch firm, as well as those being handled at the trial court level by other firms.

Karen Berkery leads the firm’s labor and employment law practices. A member of the firm since 1989, Ms. Berkery focuses her practice on the defense of management in disputes concerning employers, as well as physician peer review litigation

Michigan Supreme Court Rules For Public Employers Against Presumed Vesting Of Retiree Healthcare Benefits