MEDICAL BENEFITS

RETIREMENT ‑- PENSIONS ‑- LEOFF ‑- MEDICAL BENEFITS

The provisions of RCW 41.26.150 are subject to the constitutional principles with respect to public employees' pensions in this state which have been enunciated by the Washington supreme court in such cases as Bakenhus v. Seattle, 48 Wn.2d 695, 296 P.2d 536 (1956)

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                                                                 January 13, 1975

Honorable Sid Morrison
State Senator, 15th District
Legislative Building
Olympia, Washington 98504                                                                                                                 Cite as:  AGLO 1975 No. 2

Dear Sir:

            This is written in response to your recent letter requesting our opinion as to the constitutional ability of the legislature to amend RCW 41.26.150, a statute providing for the payment of certain medical benefits to members, or retired former members, of the Washington law enforcement officers' and fire fighters' retirement system.  We paraphrase the issue raised by your request as follows:

            Are the provisions of RCW 41.26.150 subject to the constitutional principles with respect to public employees' pensions in this state which have been enunciated by the Washington supreme court in such cases as Bakenhus v. Seattle, 48 Wn.2d 695, 296 P.2d 536 (1956)?

            For the reasons set forth in our analysis we answer this question in the affirmative.

                                                                     ANALYSIS

            RCW 41.26.150 originated as § 15, chapter 209, Laws of 1969, Ex. Sess., the first twenty-four sections of which established the Washington law enforcement officers' and fire fighters' retirement system ‑ now codified as chapter 41.26 RCW.1/   This particular section, as last amended by § 11, chapter 120, Laws of 1974, 1st Ex. Sess., provides, in material part, as follows:

             [[Orig. Op. Page 2]] "(1) Whenever any active member, or any member hereafter retired, on account of service, sickness or disability, not caused or brought on by dissipation or abuse, of which the disability board shall be judge, is confined in any hospital or in his home, and whether or not so confined, requires medical services, the employer shall pay for such active or retired member the necessary medical services not payable from some other source as provided for in subsection (2). . . ."

            Your question involves the applicability to this statutory provision of certain will-established principles relating to the constitutionality of legislative amendments to public employees' pension statutes in this state.  As indicated in AGLO 1973 No. 79 [[to A. N. Shinpoch, chairman, Legislative Budget Committee an Informal Opinion, AIR-73579 on July 23, 1973]], copy enclosed, the leading case on this subject isBakenhus v. Seattle, supra, in which the court held that a pension granted to a public employee in this state is not a gratuity but is deferred compensation for services rendered on a contractual basis ‑ so as to be subject to Article I, § 23 of the Washington constitution which provides that:

            "No bill of attainder, ex post facto law, or law impairing the obligations of contracts shall ever be passed."  (Emphasis supplied.)

            Under the rule thus adopted the court, accordingly, held that:

            ". . . the employee who accepts a job to which a pension plan is applicable contracts for a substantial pension and is entitled to receive the same when he has fulfilled the prescribed conditions.  His pension rights may be modified prior to retirement, but only for the purpose of keeping the pension system flexible and maintaining its integrity. . . ."  (48 Wn. 2d at 701.)

            In so concluding the Washington court placed principal reliance upon two consolidated cases decided by the California supreme court a year earlier,Allen v. Long Beach andAlger v. Long Beach, 45 Cal.2d 128, 287 P.2d 765 (1955), from which it quoted with approval as follows:

             [[Orig. Op. Page 3]] "`An employee's vested contractual pension rights may be modified prior to retirement for the purpose of keeping a pension system flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system.  [Citing cases].  Such modifications must be reasonable, and it is for the courts to determine upon the facts of each case what constitutes a permissible change.  To be sustained as reasonable, alterations of employees' pension rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantage to employees should be accompanied by comparable new advantages.  [Citing cases.]'"

            Accord, numerous subsequent cases including, most recently, Leonard v. Seattle, 81 Wn.2d 479, 487, 488, 503 P.2d 741 (1972), in which the court said:

            ". . .  InBakenhus v. Seattle, supra, it was established that a pension provided by law for public employees and officers to which contributions have been made or for which services have been performed by the employee or officer is not a gratuity but is deferred compensation for services rendered and contributions made.  As the employee or officer contributes into the fund and performs services, his rights to a pension vest, and he cannot be deprived of such vested rights by intervening legislation which inequitably operates to the detriment of such accrued rights.  Eisenbacher v. Tacoma, 53 Wn.2d 280, 333 P.2d 642 (1958).  Stated another way, a public employee or officer who performs services and contributes to a public pension plan or system contracts in accordance with the legislation in effect governing the plan or system, and the public cannot constitutionally modify the plan or system to the detriment of the employee if such modifications are inequitable.  Letterman v. Tacoma, 53 Wn.2d 294, 333 P.2d 650 (1958).

            ". . .

            "Pension rights, because of their nature  [[Orig. Op. Page 4]] as deffered compensation, vest under then applicable legislation upon the commencement of employment or service and continue to vest with each day of employment or service.  Bowen v. Statewide City Employees Retirement Sys., 72 Wn.2d 397, 433 P.2d 150 (1967);Tembruell v. Seattle, 64 Wn.2d 503, 392 P.2d 453 (1964); DeRevere v. DeRevere, 5 Wn.App. 741, 491 P.2d 249 (1971).  Vesting as they do from day to day and year to year, they constitute property and as property amount to an estate. . . ."

            It has, however, been argued by some persons with whom we have had occasion, informally, to discuss the question in the past that these principles, although clearly applicable to the remainder of chapter 41.26 RCW, are inapplicable to RCW 41.26.150, supra.  For example, we have heard it suggested that since an active member of the LEOFF retirement system does not have to work for any specific amount of time in order to become eligible for medical benefits under the statute, and since mere employment by itself carries the right to obtain those benefits, they are, therefore, not a form of "deferred" compensation and thus are not, in reality, a part of the retirement plan.

            Secondly, it has been suggested that the medical benefits provided for in RCW 41.26.150,supra, are analogous to the health insurance program provided for public employees under such statutes as RCW 41.04.180, et seq.  From this premise the argument then has been made that these kinds of benefits might merely be classified as "fringe benefits" which can be downgraded by the legislature, so long as existing claims are not affected.

            And thirdly, we have heard it argued that the provisions of RCW 41.26.150,supra, are simply not a part of the retirement program established by the original provisions of chapter 209, Laws of 1969, Ex. Sess., supra, at all ‑ even though they are, physically, contained in the same chapter as is the retirement program, proper.

            Because the status of RCW 41.26.150, supra, has not yet been litigated in any decided cases of which we are aware, we most certainly must acknowledge the possibility that one or more of these argumentsmight be accepted by the courts in a proper case.  They are not, however, persuasive to us.

             [[Orig. Op. Page 5]]   First, the fact that an active member of LEOFF does not have to serve for any stipulated period of time in order to be entitled to medical benefits under RCW 41.26.150, does not mean that he does not have a "contractual" right to those benefits under the rule of the pension cases.  Tembruell v. Seattle, 64 Wn.2d 503, 392 P.2d 453 (1964).  It is not the applicability of the label "deferred compensation" to a benefit payable to a public employee under a pension statute that is determinative of the constitutional ability of the legislature to amend that statute to the detriment of the public employee; instead, it is simply whether the benefit is made payable to a qualified employee as a matter of right by a statute that constitutes a part of his pension system that is determinative of this question.

            Secondly, the analogy which has been suggested between medical benefits payable under RCW 41.26.150 and such statutorily authorized public employees' fringe benefits as medical insurance breaks down by virtue of the fact that RCW 41.26.150 is mandatory, thereby creating a correlative right in the covered members of the pension system, whereas medical insurance is provided for public employees under statutes that are merely permissive in both form and substance.  See, e.g., RCW 41.04.180.

            And thirdly, to say that the provisions of RCW 41.26.150 are not a part of the LEOFF pension system is, in our judgment, to ignore the express references in that statute to "members" ‑ meaning, as we view it, only those law enforcement officers and fire fighters who are members of the LEOFF retirement system.  Moreover, it is also to raise a potential constitutional problem under Article II, § 19 of our state constitution which provides that:

            "No bill shall embrace more than one subject, and that shall be expressed in the title."

            This provision prohibits individual legislative acts from dealing with more than one subject and requires that the title give fair notice of the contents of the bill,Fritz v. Gorton, 83 Wn.2d 275, 517 P.2d 911 (1974).  A person must be able to deduce the subject of the act from reading the title as a whole.  Maxwell v. Lancaster, 81 Wash. 602, 143 Pac. 157 (1914).  There must be a rational unity between all of the provisions of the enactment.  Kueckelhan v. Federal Old Line Ins. Co., 69 Wn.2d 392, 418 P.2d 443 (1966).