Estate of Esther Hussey v. Milwaukee County
740 F.3d 1139
7th Cir.2014Background
- Esther Hussey retired from Milwaukee County in 1991 after long service; she and similarly situated retirees participated in the County health plan without paying insurance premiums at retirement.
- MCCGO § 17.14 was amended over time (1971, 1989, 1993, 1996) to extend employee health coverage to retirees and to state the County would pay premiums or ‘monthly costs’ for eligible retirees.
- Hussey’s 1991 benefits booklet stated retirees may participate on the same basis as active employees and that the County "will make the full premium contribution on behalf of the retiree."
- Over the years the County changed carriers, plan design, and cost-sharing (deductibles, co-payments, co-insurance); beginning in or after 2006 retirees were sometimes required to pay such cost-sharing and the County changed Medicare coordination in 2012.
- Hussey sued in state court claiming the County’s change (requiring deductibles/co-pays/co-insurance) deprived her of a vested property right in “cost-free” health insurance (takings/due process); the case was removed to federal court and the magistrate judge granted summary judgment to Milwaukee County; Hussey appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hussey has a vested property right in cost-free (no deductibles/co-pays/co-insurance) retiree health care | Hussey: ordinances, plan booklet, and past practice created a vested right to receive health care without out-of-pocket cost | County: ordinances only promise participation in the same plan as actives and payment of premiums/monthly costs, not payment of all service-specific charges | Court: Hussey has a vested right to participate premium-free (County pays premiums/monthly costs) but not a right to cost-free health care; summary judgment for County affirmed |
| Whether ordinances’ language (premiums/monthly costs) includes deductibles/co-pays/co-insurance | Hussey: plain meaning and practice created broader entitlement | County: ‘‘premium’’/"monthly cost" refers to insurer premiums, not episodic service charges | Court: language is plain and unambiguous — premiums/monthly costs do not cover deductibles/co-pays/co-insurance; no vested right to those payments |
| Whether changes in benefit coordination with Medicare or plan cost-sharing violated vested rights | Hussey: changes increased retiree out-of-pocket costs, modifying vested benefit | County: ordinances tie retiree coverage to whatever is provided to active employees; changes did not single out retirees or eliminate County promise to pay premiums | Court: change in coordination and cost-sharing did not put retirees in a worse position than actives and did not violate any vested right beyond premium payment |
| Whether historical practice (years without charges) created a separate property right | Hussey: long practice of no out-of-pocket charges created entitlement | County: past practice alone cannot create a property interest absent ordinance/statutory support | Court: historical practice insufficient to create a property interest beyond what ordinances and plan documents promise |
Key Cases Cited
- Bd. of Regents of State Colls. v. Roth, 408 U.S. 564 (1972) (property interests are created by existing rules or understandings, not the Constitution)
- Town of Castle Rock v. Gonzales, 545 U.S. 748 (2005) (property interests defined by state law and municipal ordinances)
- Germano v. Winnebago Cnty., 403 F.3d 926 (7th Cir. 2005) (state law can create property interest in continued group insurance)
- United States v. Rosenbohm, 564 F.3d 820 (7th Cir. 2009) (clear statutory language is conclusive absent contrary intent)
- Diehl v. Twin Disc, Inc., 102 F.3d 301 (7th Cir. 1996) (changes to benefits coordination may not worsen retirees relative to what they would have without Medicare)