Dean Born v. City of Slidell
2015 La. LEXIS 2184
La.2015Background
- Dean Born worked 24 years for City of Slidell and retired August 1, 2008; he met §21-21(b)(1) criteria to continue city health insurance with the City paying 100% of the premium.
- On August 26, 2008 the City adopted Ordinance No. 3493 requiring retirees at age 65 to apply for Medicare Parts A & B and enroll in City-provided Medicare Advantage; those ineligible for Medicare could remain on the City plan.
- In May 2013 the City notified Born he would be removed from the City plan upon turning 65 and must enroll in the Medicare plan; Born sued July 25, 2013 seeking declaratory and injunctive relief.
- Trial court denied City's prescription exception and held Born’s right vested under the ordinance in effect at retirement; the First Circuit affirmed, relying on its prior Singletary decision.
- The Louisiana Supreme Court granted review to decide (1) whether Born’s claim was prescribed and (2) whether the City could retroactively apply Ordinance 3493 to force Medicare enrollment.
Issues
| Issue | Plaintiff's Argument (Born) | Defendant's Argument (City) | Held |
|---|---|---|---|
| Applicable prescription period | Claim is for deferred compensation; 3-year prescriptive period runs from when payment is exigible — here when City attempted to remove him at age 65 | Prescription began when Ordinance 3493 was enacted (2008); suit filed in 2013 is prescribed | Court held 3-year prescription applies and began when benefit became exigible (age 65), so suit timely |
| Whether §21-21 (as in effect at retirement) created a contract / vested right | §21-21 created a contractual, vested right to continue the City plan when conditions were met | City contends plan reservation permitting amendment/termination allows change in eligibility (including via ordinance) | Court held retiree acquired a vested contractual right; City may not retroactively divest that right |
| Whether Ordinance 3493 is substantive or procedural and whether it may be applied retroactively | Retroactive application would impair contractual obligations and divest vested rights; substantive change cannot be applied retroactively | Ordinance is a permissible plan modification to control costs and manage public funds | Court held the Ordinance is substantive; retroactive application to Born would impair vested contractual rights and is impermissible |
| Effect of Plan’s reservation-of-rights clause | Reservation did not authorize retroactive removal here because ordinance would remove Born from the promised plan rather than a permissible amendment | Reservation allows termination/amendment of plan at any time and for any reason, including by amending referenced ordinance | Majority: reservation did not permit retroactive divestment of vested retiree rights; concurrence disagreed, believing reservation and ordinance reference sufficed to permit change |
Key Cases Cited
- Singletary v. City of Slidell, 97 So.3d 1087 (La. App. 1st Cir. 2012) (first‑circuit decision holding Ordinance 3493 could not be applied retroactively to divest a retiree of vested plan rights)
- Ledoux v. City of Baton Rouge, 755 So.2d 877 (La. 2000) (three‑year prescription for deferred compensation claims; prescriptive period begins when claimant can act on claim)
- Knecht v. Bd. of Trustees for State Colleges & Universities, 591 So.2d 690 (La. 1991) (employer promise of benefits accepted by employee action can create vested rights)
- Fishbein v. State ex rel. LSU Health Sci. Ctr., 898 So.2d 1260 (La. 2005) (liberative prescription analysis for claims to recover compensation related to retirement benefits)