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International Brotherhood of Electrical Workers, Local 111 v. Public Service Company of Colorado

United States District Court, D. Colorado

March 31, 2016

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL #111, DOMINGO N. MORENO, DAVID L. WILLIAMS, GUY E. FORTI, GERALD E. KING, and VICKI WILLIAMS, Plaintiffs,
v.
PUBLIC SERVICE COMPANY OF COLORADO and XCEL ENERGY INC. EMPLOYEE WELFARE BENEFIT PLAN, Defendants.

ORDER

PHILIP A. BRIMMER, District Judge.

This matter is before the Court on the Partial Motion to Dismiss Plaintiffs' First Amended Class Action Complaint [Docket No. 83] pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) filed by defendants Public Service Company of Colorado ("PSCo") and Xcel Energy Inc. Employee Welfare Benefit Plan. The Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 29 U.S.C. §§ 185(a), 1132(e)-(f).

I. BACKGROUND[1]

This case concerns changes to the prescription drug benefits provided by the Xcel Energy Inc. Employee Welfare Benefit Plan (the "Plan"), which is governed by the provisions of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. See Docket No. 73 at 4, ¶ 14. Plaintiffs allege that defendants made certain changes to retirees' prescription drug benefits in violation of the Plan and the governing collective bargaining agreement ("CBA") between plaintiff International Brotherhood of Electrical Workers, Local # 111 ("IBEW") and PSCo. See generally Docket No. 73. Plaintiffs Moreno, Forti, King, David Williams, and Vicki Williams (the "Class Representatives") are former PSCo employees and participants in the Public Service Company and Participating Subsidiary Companies Retirees' Medical Managed Care/Medicare Coordinated Plan (the "M/M plan"), a component of the Plan. Docket No. 73 at 3-4, ¶¶ 8-12. The Class Representatives assert claims under ERISA to "preserve and recover" health benefits due and to "clarify and enforce rights" under the Plan. Id. at 2, ¶ 4.

A. Historical Medical Benefits for PSCo Employees and Retirees

1. The PSCo Collective Bargaining Agreement

Before June 1987, PSCo paid all of the premium costs for medical benefits for both retirees and active employees. Id. at 4, ¶ 16. In a CBA effective December 1, 1986, IBEW and PSCo agreed to implement a premium cost sharing formula for active bargaining unit employees beginning June 1987. Id. The 1986 CBA did not address premium costs or plans available to PSCo's then-current or future retirees. Id. at 4-5, ¶ 17. Individuals who were retired as of December 1, 1986 participated in the same plan that was available to active employees. Id. Before June 1989, medical benefits were provided to retirees and active employees through a number of plans including Blue Cross/Blue Shield, various Health Maintenance Organization Plans, and a plan called Mutual Aid that operated in conjunction with Blue Cross/Blue Shield coverage. Id. at 4, ¶ 15.

In 1989, PSCo proposed a self-funded managed care medical plan that would cover both bargaining unit and non-bargaining unit active employees ("the 1989 plan"). Docket No. 73 at 5, ¶ 18. The 1989 plan provided that "[n]etwork pharmacies will dispense prescription drugs for $5/up to 90 day supply." Id. ¶ 21; see also Docket No. 73-4 at 11. In connection with the 1989 plan, PSCo and IBEW agreed to defer negotiations over a new managed care plan for retirees. Docket No. 73 at 5-6, ¶ 22. Pursuant to this agreement, PSCo and IBEW entered into a Letter of Agreement that offered employees who retired between January 1 and December 31, 1990 the option of retiring either with the Mutual Aid, Blue Cross/Blue Shield benefits or with retiree health care benefits that would be negotiated as part of the 1989 general negotiations. Id. Under the letter of agreement, PSCo remained responsible for 100% of the premium cost of retiree medical benefits. Id. at 6, ¶ 23.

Between September 1989 and July 1990, PSCo and IBEW negotiated a successor to the 1986 CBA. See Docket No. 73 at 6-7, ¶¶ 25, 27. The result of this negotiation was reflected in the 1989-1992 CBA and a Letter of Understanding, which states: "Future retirees under age 65 and eligible dependents under age 65 will, upon retirement, have the same medical plan as active employees.... Future plan changes in the Managed Care plan for active employees will also be reflected in the retiree plan for individuals under age 65." Id. at 7, ¶ 27; Docket No. 73-10 at 1-2. Under the 1989-1992 CBA, retirees and active employees were entitled to receive prescription medication at a cost of $5 for a 90-day supply. Docket No. 73 at 7-8, ¶ 28; Docket No. 73-12 at 8. Since the 1989-1992 CBA, the premium cost to retirees and their dependents, including the cost of prescription drug copayments, has been fixed in terms of dollar amount on the date of retirement. Docket No. 73 at 8, ¶ 29.

During negotiations over a successor to the 1989-1992 CBA, PSCo proposed an increase in premium cost-sharing for active employees. Id. at 8, ¶ 32. With respect to retiree healthcare benefits, the 1992-1995 CBA states: "[f]or the term of this Agreement.... Retirees and future retirees and their dependents [sic] monthly premium amount will be based on the same percentage and in the same manner as was agreed to in the 1989 negotiations." Id. at 9, ¶ 35; Docket No. 73-17 at 3, Art. 11, § 3(a). The CBA established a new premium cost-sharing schedule for active employees that would gradually increase the employee contribution for health benefits up to 20% by 1998, but did not alter the benefits contribution paid by then-current or then-future retirees. Docket No. 73 at 9, ¶ 35. There were no relevant changes in retiree health benefits between 1995 and 2003. Id. at 10, ¶¶ 39-41.

The 2003-2006 CBA implemented a new premium cost-sharing schedule for future retirees. Id. ¶ 41; Docket No. 73-21 at 3, Art. 11, § 3(d). The 2003-2006 CBA also added the following language to the section on medical insurance: "[f]uture plan changes in the Managed Health Care Plan will also be reflected in the retiree plan for individuals under age 65. These changes do not affect the medical coverage of retirees with Medical plans other than [the M/M plan]." Docket No. 73 at 10, ¶ 41; Docket No. 73-21 at 2-3 Art. 11, § 3(a).

The 2006-2009 CBA, finalized pursuant to an arbitration award, authorized an increase in prescription drug copayments for active employees that, pursuant to the CBA, was then echoed in the M/M plan for new retirees. Docket No. 73 at 11-12, ¶ 46. As of the effective date of the 2006-2009 CBA, the prescription drug copayment remained at $5 per prescription for active employees and non-Medicare eligible participants who retired before 2007, and increased to $10 per prescription for non-Medicare eligible participants who retired in 2007, and to $15 per prescription for non-Medicare eligible participants who retired in or after 2008. Id. Subsequent CBAs were executed for the periods 2006-2009 and 2009-2014, which made no material changes to retiree health benefits. Id. at 11, ¶ 45; see Docket Nos. 73-22 at 3-4, 73-23 at 4-5.

2. The M/M Plan

The plan document for the M/M plan was executed on January 4, 1993 and was subsequently amended six times between October 8, 1993 and September 27, 1996. Docket No. 73 at 8, ¶ 31. In 1995, the M/M plan released a Summary Plan Description, which provided for the same prescription drug coverage as the then-active employees' managed care plan. Id. at 9-10, ¶¶ 37-38.

In 2000, the M/M plan was incorporated into a "wrap" plan by New Century Energies, Inc., PSCo's former parent company. Id. at 10, ¶ 42. After the formation of Xcel Energy, the Plan replaced this wrap plan. Id. at 10-11, ¶ 42. Coverage under the M/M plan component of the Plan remained as set forth in the 1993 M/M plan document, the 1995 Summary Plan Description, and the relevant CBAs. Id. at 11, ¶ 43. All relevant versions of the Plan documents provided that defendants reserved the right, in their sole discretion, to "amend or terminate any such benefit program at any time, in any manner, and for any reason, " subject to "any limitations imposed by an applicable collective bargaining agreement[.]" Id. at 11, ¶ 44.

B. Alleged Increases in Prescription Drug Benefits

1. 2011 Increase in Retiree Co-Payments

In October 2011, PSCo announced changes in prescription drug co-payments that would apply to current and future retirees, but not to active employees. Docket No. 73 at 13, ¶ 52. The October 2011 changes to prescription drug copayments increased retirees' prescription drug copayments by between $5 and $25 per prescription, depending on whether the prescription was for a ...


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