Ten years ago, the University of California retirees who spent their careers at Lawrence Livermore National Lab sued their former employer over a broken health care promise. After a decade of legal twists and turns, during which thousands of plaintiffs have passed away, the closely-watched case is on the verge of going to trial in Alameda County.
The retirees say the University of California is raking in millions of dollars each year at their expense after offloading them from the UC health plan and accuse the regents of using a strategy of attrition to delay any resolution.
“It really looks like they’re waiting for us all to die off, it really does,” said plaintiff Alan Hindmarsh, who joined the lab in 1968 as a mathematician out of graduate school. “The number of tactics that UC has undertaken to delay this trial, it’s been amazing. It’s been mind-boggling.”
The University of California managed the non-profit lab for decades. But in 2007, the Department of Energy turned over control of Lawrence Livermore to a private, for-profit consortium named “Lawrence Livermore National Security (LLNS),” made up of the global powerhouse Bechtel corporation, the University of California, and several other companies.
In 2008, the regents stopped providing medical benefits to former lab workers through the University of California, but retirees say they were assured LLNS would provide “substantially equivalent” medical benefits. Just one year later, however, the retirees say the quality of their health plan deteriorated, requiring them to pay more money for inferior coverage.
“When the change in insurance happened, it suddenly became clear that there were 9,000 people at risk who’d been cut adrift by a change the University made,” said nuclear physicist Jay Davis, who began his career at the lab in 1971.
The lawsuit, filed shortly after management of the lab changed hands, alleges LLNS stopped providing health benefits “substantially equivalent” to what retirees previously received through the University of California, and instead provided benefits that met “industry standards.”
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Those benefits, the retirees allege, were substantially worse. Hindmarsh, 76, says his monthly premiums have jumped 130% since he was removed from the University of California health plan, costing him an extra $5,000 per year.
And while his rates increase, so do the profits for the University of California. According to annual financial reports, the University of California has received more than $121 million in cash distributions from the now-private lab. Last year alone, UC profited $12.2 million. The plaintiffs in the class action lawsuit say that’s about enough to restore their UC health benefits.
“I’m embarrassed and they should be embarrassed to have this thing on their plate,” said plaintiff Wendell Moen, who served as a mechanical engineer in the weapons division for his entire career.
Moen said he’s angry the University of California would go back on its promise after a career performing critically important work.
“It always felt like we were doing something vital to the country,” Moen said. “Something that could deter a dangerous enemy. And I think by the time the end of the Cold War occurred, that proved to be true. We stood them off and nothing terrible happened.”
The University of California declined to comment on the case, saying in a statement, “Given the ongoing litigation, it would be inappropriate for UC to comment at this time.”
But in court filings, lawyers for the University of California say a contract never existed promising lifetime health benefits through the University of California to its employees.
In the first phase of this trial, however, a judge ruled in 2015 that the Regents of the University of California did, in fact, intend to create contractual benefits, and implied as much in various brochures and other communications with current and prospective employees.
“California courts, for over 75 years, have held that retirement benefits for people who have worked for public agencies give rise to an implied contract,” said Thomas Sinclair, the lead attorney on the case.
Sinclair said his team has found about 150 different instances where the University made statements in various benefit brochures that employees would have health benefits when they retire. Those benefits were used as a major selling point in recruiting and retaining top talent at the University of California, Sinclair said.
“Having used that to bring people into the system who relied upon that promise, we don’t think they should get out of it once the retiree or the employee has performed their part of the bargain,” Sinclair said.
A trial date for the case is expected to be set later this month. Out of 9,000 original class members, about 7,000 are still alive. If the retirees win at trial, they would be reinstated to the UC health care system and paid back damages, possibly worth hundreds-of-millions-of-dollars.
