Judge Issues Injunction Retaining Retiree Drug Benefits; Lawmakers Pledge Action

A U.S. District Court judge has issued an injunction that will retain prescription drug benefits for state retirees.

Judge Peter J. Messitte granted a preliminary injunction on Wednesday following a hearing in Greenbelt.

At issue is a change to prescription drug benefits for state government retirees, which were set to shift from the state’s retiree health care program to Medicare Part D, beginning in January.

But state government retirees argued that the changes made to their prescription drug benefits long after their employment were illegal and would dramatically drive up their costs.

Kenneth Fitch, one of the lead plaintiffs in the lawsuit, worked for Maryland for 23 years starting in 1989. He currently pays $930 in co-pays each year under the state’s plan. The cost of his medications will increase to $11,683.10 in January 2019, according to the lawsuit.

The preliminary injunction, which was issued orally by Messitte on Wednesday, will remain in effect for the duration of the case, meaning that retiree prescription benefits are unlikely to change this year. The injunction comes just before the start of open enrollment, on Oct. 15.

Breon L. Johnson, an attorney for the state retirees, said his team and attorneys for the state government are working to craft an agreement on the delay, which would be reviewed by the judge.

Johnson said the injunction could mean that state lawmakers will have a chance to undo the change during the next legislative session.

In 2011, lawmakers passed pension reform, including a change that would shift retirees from the state’s prescription benefit plan to Medicare for Medicare-eligible retirees by July 2019, intended to coincide with the closure of the “donut hole” coverage gap in Medicare Part D.

But when federal lawmakers made a move to close the “donut hole” coverage gap earlier, on Jan. 1, Maryland lawmakers passed legislation to align the state’s shift with the same date.

Retirees were notified in May, and many of them were caught off-guard, with cost estimates on the Medicare website shooting their anticipated prescription costs through the roof.

Lawmakers have traded blame over the decision since the public outcry. The office of Gov. Lawrence J. Hogan Jr. (R) noted that the shift was approved during a previous administration and faulted the General Assembly for accelerating the shift to Jan. 1.

While the Hogan administration supported a bill to keep the transition date of July 2019, officials opposed a bill to extend state coverage until Jan. 1, 2020. Lawmakers ultimately chose the Jan. 1 date to align with the open enrollment period.

Over the summer, Hogan and legislative leaders struck a deal that would have created a $33 million one-year reimbursement program for retiree prescription costs and promised emergency legislation during the 2019 session.

On Thursday, Sen. Katherine A. Klausmeier (D-Baltimore County), Sen. James N. Mathias Jr. (D-Lower Shore), Del. Eric Bromwell (D-Baltimore County) and Del. Edward P. “Ned” Carey (D-Anne Arundel) issued a statement criticizing the handling of the transition.

“The Department of Budget & Management’s mis-management of this transition caused a great deal of confusion and anger among state retirees, and we applaud Judge Messitte for putting the brakes on this change,” the lawmakers wrote in a joint statement. “When the General Assembly convenes in January, we will introduce a bill to repeal the law which kicked state retirees off of the State’s prescription drug plan and required them to transition to Medicare Part D.”

Shareese N. Churchill, press secretary for the governor’s office, said the administration was comfortable with the delay.

“The governor deeply sympathizes with retired state employees who have been directly affected by this potential change and the uncertainty that came along with it. Our administration always opposed the January implementation timeline, and we are extremely comfortable with the court’s decision today,” Churchill said in a written statement. “We are hopeful that this will now enable our administration to work with the legislature to achieve a permanent solution for affordable prescription coverage for state retirees.”

The reform of retiree health care was a critical part of overall pension reform, helping to reduce a portion of Maryland’s post-employment benefits liability by half, from $16 billion to roughly $8 billion.

The plaintiffs maintain that the legislature’s action to move them to a different prescription drug plan cannot apply retroactively and did not change their eligibility to participate in the state’s prescription drug plan.

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