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Court of Appeals rules Medford doesn't owe retirees benefits

The city of Medford has won an appeal against a public works employee who said the city was obligated to provide him health insurance after he retired.

The Oregon Court of Appeals ruling handed down today is the second defeat of opponents to Medford's practice of ending health insurance for employees when they retire. A former city attorney also sued and lost in a case that went before the Oregon Supreme Court last year.

Joseph Bova believed the city owed him insurance coverage under a legislative statute that mandates local governments "insofar as and to the extent possible," make coverage available to the retired employee and his or her spouse until they are eligible for Medicaid.

A trial court judge agreed with him in 2009 and ordered the city to extend health benefits to its retired employees. Then, in 2010, Bova said the program on offer was insufficient and the coverage offered was not the same as the one he enjoyed while an active employee. A trial court judge again agreed with him and held the city in contempt.

The city appealed.

Until 1990, the city offered retirees continuing health insurance. The city began to phase out the practice when it entered into an agreement with the Oregon Teamster Employers Trust to cover its police officers. It then added its management to the plan in 2001, and in 2002, nonmanagement employees in the parks and recreation and public works departments were added.

When Bova first sued the city in 2008, the legislative statute held that Bova only had to show that there was coverage in the marketplace available to retirees, regardless of the cost to the city.

But the Oregon Supreme Court changed that standard while Bova's case was still in litigation. Under the new standard, the city could have said that the existing insurance was "unreasonably burdensome."

"Because that was not the correct standard to test the evidence presented on summary judgment, and because the city might have created a different evidentiary record under the (new Supreme Court standard), we decline to exercise our discretion to affirm the trial court's ruling," Judge Timothy Sercombe wrote in the panel's ruling.

— Nigel Duara, Associated Press