Former Clark County REMC directors weren’t guaranteed health insurance reimbursement in their retirement after a policy change terminated the benefit, the Indiana Supreme Court has ruled. In a Wednesday opinion, the high court reversed the Clark Circuit Court’s grant of summary judgment to the plaintiffs after finding the REMC’s policy was not a binding contract because the policy wasn’t an offer.
From 1972 until 2018, Clark REMC had a series of board policies that allowed former directors who met eligibility requirements to receive health insurance benefits.
Under the 1972 policy, former directors with either 20 years of service or 12 years of service if forced to retire at age 65 could participate in Clark REMC’s group health insurance plan. Under this policy, Clark REMC paid the eligible directors’ health insurance premiums.
The board changed its policy over the years. The changes made in 2014 and 2018 were the basis of the case before the Supreme Court.
The 2014 version eliminated eligibility for the group health insurance plan for former directors; required retired directors to obtain their own health insurance, which Clark REMC then reimbursed subject to certain caps; said that “[t]his policy will be reviewed periodically;” and said that the updated policy “shall take the place of, revoke and render null and void” the previous version.
The 2018 version then terminated the health insurance reimbursement policy for former directors.
After the 2018 revision took effect, the plaintiffs in Clark County REMC v. Glenn Reis, et al., 21S-CT-343, sued Clark REMC, alleging breach of contract.
Clark REMC moved for summary judgment on the breach-of-contract claim and the plaintiffs cross-moved for partial summary judgment on liability. The trial court granted summary judgment on that claim for the plaintiffs and against Clark REMC. The plaintiffs’ other claims, including a promissory-estoppel claim, were later resolved by a court-approved settlement agreement.
The Supreme Court looked at the 2014 version as the purported moment of contract formation when the board established the health care reimbursement plan, which remained unaltered until the board rescinded it in 2018.
The 2014 policy stated:
“If permitted by prevailing law, all eligible active and past directors who were elected to the Board before January 1, 2000 shall, at such time when he or she stops serving on the Board of Directors, have the option to participate in the Cooperative’s family health and hospitalization plan or such substitute health plan acquired through an exchange as dictated by the Affordable Care Act or other prevailing law at the Cooperative’s expense. A Director is not eligible for past director coverage under this subsection unless: (A) the Director has served on the Board no less than twelve (12) full years and has reached the full age of 65 years when s/he leaves the Board, or (B) the Director has served on the Board no less than twenty (20) full years and has not reached the full age of 65 years when s/he leaves the Board. HOWEVER the amount of health insurance premiums payable by the Cooperative for past director coverage shall not exceed the rates established [below].”
In the case of first impression, the Supreme Court found there was never an offer, which meant the policy wasn’t a contract.
“We hold there was no contract as to any plaintiff because the board’s 2014 policy did not manifest Clark REMC’s intention or invitation to contract,” Justice Geoffrey Slaughter opined for the high court. “With no intention to contract, there was no offer; with no offer, there was no binding agreement. Thus, we reverse the trial court’s contrary judgment.
“… The 2014 policy merely formalized the board’s internal operations and did not manifest an intention or invitation by Clark REMC to contract with another,” Slaughter continued. “Thus, it was not an offer that any director could accept to form a binding, enforceable contract.”
The COA concluded there wasn’t any promise the benefits would continue in the future and ordered summary judgment reversed, remanding to the trial court.
“Here, the 2014 policy contained no promise at all, only an expression of the board’s contemporaneous intention to provide health-insurance benefits to its former directors — an intention that could, and did, change over time,” Slaughter wrote. “Nothing in this policy suggested the board was promising to continue this benefit in perpetuity or for a former director’s lifetime.
“The plaintiffs implicitly conceded this point in their summary-judgment motion by acknowledging: ‘In other words, the REMC agreed to provide health insurance benefits that survived any changes to the contrary,’” he continued. “The plaintiffs cannot contend that Clark REMC agreed to continue providing lifetime health benefits without change when they posit that Clark REMC agreed to provide benefits only until it made ‘changes to the contrary.’ Nor did the 2014 policy convey with reasonable certainty the board’s promise to provide former directors with health-insurance benefits for life in exchange for their future board service.”