Free Health Insurance Benefit For BELCO Retirees Protected By The Court

Free Health Insurance Benefit For BELCO Retirees Protected By The Court

In January of this year, Alan Dunch and I appeared before Justice Stephen Hellman in the case of Earlston J. Astwood and Others v Bermuda Electric Light Company Limited and Ascendant Group Limited [2017] SC (Bda) 13 Civ (16 February 2017) in a three-day trial in which we acted for 109 Plaintiffs fighting to protect their health insurance benefit.

The 109 Plaintiffs in this case were all retirees of Bermuda Electric Light Company Limited (“BELCO”) and, up until 2015, they all, upon retirement, continued with the same health insurance benefit they had as employees, save for dental and vision care, with the insurance cover being free of charge to them on retirement. Many of the Plaintiffs worked at BELCO for most of their working lives with one of the attractions for working there being the generous health insurance benefit on retirement. This benefit is something which was referred to not only verbally during the course of their employment, but also in employee handbooks and the like.

On 1 January 2015, in response to what it said were rising healthcare costs, BELCO announced that it had moved all employees onto a new health insurance plan. Shortly after this announcement, BELCO announced to retirees that their health insurance benefits would be changing and that they had certain options in terms of plans with certain cost implications for the retirees. The only free option available to retirees was for them to move onto Government HIP or FutureCare with the Moongate Health Gap Insurance Supplement (“Moongate”). BELCO took the position that the offer to retirees of HIP or FutureCare, both with Moongate met its obligations, having ‘promised’ free health care to retirees not only during the course of their employment with BELCO but also in writing by their retirement letters. The Plaintiffs disagreed and we argued on their behalf that the ‘offer’ did not meet the ‘promise’ made to them because HIP or FutureCare, both with Moongate did not provide the retirees a) with the contractual benefit BELCO was required to provide and b) the same level of insurance coverage that they had enjoyed as employees and indeed as retirees up until this time. The essential question the Court had to consider was: did the offer fulfil the promise?

The Court heard from five of the Plaintiffs, several of whom gave consistent and uncontroverted evidence of the contractual promise made by BELCO. Key points of their evidence were summarized in the decision. Justice Hellman said this of the evidence given by the Plaintiffs (paragraph 16):

“…I accept the evidence of the Plaintiffs’ witnesses. They struck me as straightforward and truthful. The exit letters plainly contained only a brief summary of the benefits to be provided to retired employees. A reasonable person reading the letters would conclude that the heads of cover to be provided after retirement were the same as the heads of cover provided before retirement. Absent any indication to the contrary, a reasonable person would further conclude that the level of cover to be provided under each head would remain unchanged. The letters did not need to say this in express terms.”

The Court heard evidence from the Head of Client Management at the Argus Group of Companies (the insurance provider for BELCO), Mr Gary Weller, on the meaning of major medical, something which had been stated in the exit letters and which BELCO argued it was providing by HIP or FutureCare, both with Moongate. In the judgment, Mr Justice Hellman wrote:

“ …Mr Weller explained that ‘major medical’ was a generic term and that major medical cover came in all shapes and sizes, just like a paid of shoes.

19. Mr Weller was asked to comment on the level of cover provided by FutureCare and HIP, as supplemented by Moongate. He stated that it was less than the cover provided under the Lighthouse Plan [the plan employees and retirees were on prior to BELCO’s change].”

The Court therefore concluded that “[t]he terms of the Promise, construed in the context of the exit interviews, is in my judgment clear and unambiguous” and:

“The Offers does not fulfil the Promise. It is very far from doing so.”

This was a victory for the 109 Plaintiffs who worked for many years, often decades, for BELCO and who deserved to have the contractual obligations owed to them in retirement met by their former employer. It serves as a cautionary tale to other employers who provide retirement benefits and may be considering making a change. It would be wise to seek advice prior to implementing such a change or you might just find yourself going to Court!