Court stays Medicare Advantage transition for state employees

A Delaware Superior Court judge has granted a motion to stay a proposed requirement that would have required state employee retirees to switch to a Medicare Advantage supplement plan.

Judge Calvin Scott has ordered that all retiree plans in effect prior to Oct. 3 shall remain in full force until a trial can be held on the merits in Superior Court in New Castle County. A trial date has not yet been set. 

The case stems from a decision made by the Delaware State Employee Benefits Committee, co-chaired by Department of Human Resources Secretary Claire DeMatteis and Office of Management and Budget Director Cerron Cade, that would have required state retirees holding Medicare supplement plans to switch to Medicare Advantage, which would have been administered by Highmark Blue Cross Blue Shield. 

Under state law, the state must provide its approximately 30,000 state retirees with a Medicare supplemental plan, which the state previously provided through a Highmark BCBS plan known as the Medicfill Medicare Supplement Plan. Under the Medicfill plan, retirees were not limited to a specific network of doctors, and they were not required to obtain prior authorization from the insurance company before receiving treatments ordered by their doctors.

The committee voted in February to have the switch take effect Sunday, Jan. 1. However, at the time of the adoption, no contract had been negotiated with Highmark, so terms of the plan were not known. Letters extolling the benefits of the switch were sent out to Medicare-eligible retirees in June, but a formal contract with Highmark was not executed until Sept. 28, according to court documents. 

On Sept. 25, a lawsuit was filed by RiseDelaware Inc., as well as former state Sen. Karen Peterson and Department of Justice retiree Thomas Penoza. RiseDelaware is a nonprofit established “to act as a sentinel on issues involving state healthcare benefits provided for Medicare-eligible Delaware retirees,” per court documents. 

The lawsuit stated that new rules require doctors and hospitals to abstain from administering tests and treatments unless the insurance company authorizes them. The plaintiffs sought to have Scott rule that the committee violated state law by adopting the new Medicare plan, and to stop the state from implementing it.

Attorneys representing DeMatteis and Cade, the two named defendants in the suit, argued that the court did not have the authority to grant a stay, but Scott disagreed, saying that the committee has no statutory directive to force all retirees from their state-subsidized benefits to a Medicare Advantage plan or lose benefits.

Scott also agreed with RiseDelaware’s argument that state retirees would be irreparably harmed without the stay, as they would be forced to change their health insurance coverage, since the deadline for switching benefits is Monday, Oct. 24.

Scott’s decision was met with support by state legislators. 

In a joint statement, Speaker of the House Rep. Pete Schwartzkopf, D-Rehoboth Beach, and House Majority Leader Rep. Valerie Longhurst, D-Bear, said, “During the past month, many of our members held public town halls with residents in all three counties to hear their concerns and share with them information from the administration about the planned transition to Medicare Advantage for state retirees. We received significant outreach from our constituents, and we share many of their concerns.

“State pensioners deserve the benefits they worked for and were promised. Since learning the details of the planned transition, legislators engaged the administration in negotiations and secured several concessions to the original agreement. The House and Senate also drafted legislation to further protect our retirees and add more oversight, including giving retirees a seat at the table.

“Throughout this process, we have closely followed the court case regarding the move to the new healthcare system. The Superior Court ordering a pause injects uncertainty into this situation for our retirees, but we are committed to supporting them throughout this process. Legislators will reengage the administration and our retirees on next steps and how to ensure that current and future pensioners are protected and receive the best possible care.”

State Senate President Pro Tempore Sen. Dave Sokola, D-Newark, Majority Leader Sen. Bryan Townsend, D-Newark, and Majority Whip Sen. Elizabeth Lockman, D-Wilmington, also issued a statement, saying, “Our No. 1 concern is the health and welfare of state pensioners. After hearing the concerns of state retirees, we requested a pause in the Carney Administration's planned transition to a new, privately managed healthcare system. Now that a pause has been ordered by the Delaware Superior Court, we intend to use this opportunity to continue our efforts to work with state pensioners to ensure any changes to their healthcare benefits live up to our commitments to them, protect their health and welfare, keep the program solvent and are properly communicated.”