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Hawaii Supreme Court Upholds Flexible Approach to State and County Retiree Health Plans

Today the Hawaii Supreme Court unanimously held that the State may provide constitutionally protected health benefits to state and county retirees in a flexible manner. Under this decision, the State has the ability to structure retiree health insurance plans in a way that provides strong benefits while simultaneously keeping costs down for the taxpayers and the retirees themselves.

Click to read decision

Click to read decision

This class action lawsuit, initiated in 2006, contended that state and county retirees were entitled to the same health benefits as active employees receive now. The Hawaii Supreme Court rejected this argument. The Court instead concluded that retirees’ health benefits are based on the benefits that were promised when the employees became members of the State’s retirement system. Most importantly, the Court also concluded that a “rigid” understanding of retirees’ protected health benefits “is inconsistent with and inadequate to provide the flexibility that legislatures need to deal with changing economic and social realities.”

“The marketplace for health benefits changes constantly,” said Attorney General Doug Chin. “Today’s decision allows the State to respond to those changes.”

The case is Dannenberg v. State of Hawaii and it was argued before the Hawaii Supreme Court in May 2016. Judge Katherine G. Leonard of the Intermediate Court of Appeals served as Acting Chief Justice for the Hawaii Supreme Court in this case. All five of the regular justices of the Hawaii Supreme Court had recused themselves. A substitute 5-judge panel was appointed by Chief Justice Mark E. Recktenwald in their place.

Today’s decision remands the case to the trial court for the parties to address some material issues of fact.

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