1. A public employer is statutorily authorized to obligate itself in a collective bargaining agreement to pay retiree health insurance premiums beyond the term of the agreement.
2. Where a public employer is statutorily authorized to contract to pay retiree health insurance premiums and includes such premiums in a collective bargaining agreement, the interests of a retired employee in the continued payment of those premiums will be analyzed under conventional contract principles, not promissory estoppel.
The opinion of the court was delivered by: Hanson, Justice.
Concurring, Anderson, G. Barry, J. and Blatz, C.J.
Heard, considered, and decided by the court en banc.
We review the question of whether appellant Chisholm Housing and Redevelopment Authority (CHRA) is obligated to continue to pay health insurance premiums for the benefit of respondent Carolee E. Norman, a retired former employee. Norman bases her claim on a promise from CHRA, contained in a collective bargaining agreement (CBA) in effect when she retired, to pay the health insurance premiums for qualified employees. CHRA argues that Minn. Stat. § 179A.20, subd. 2a (2004), limits the authority of CHRA to obligate itself to pay retiree healthcare costs beyond the term of the CBA, which expired in September 1995, and that Norman thus could not reasonably rely on the promise in the CBA. The district court granted summary judgment for Norman and the court of appeals affirmed. Norman v. Housing and Redev. Auth. of Chisholm, 681 N.W.2d 376 (Minn. App. 2004). Both courts determined that section 179A.20, subdivision 2a, was overridden by the more specific and subsequently-enacted Minn. Stat. § 471.61, subd. 2b (2004), which authorizes public employers to provide health insurance coverage for retirees indefinitely. The courts concluded that Norman's reliance on the CBA was reasonable and established CHRA's obligation under promissory estoppel. We affirm, although on different grounds.
Norman was an employee of CHRA from May 23, 1983, to February 24, 1995. The CBA in effect when she retired provided that all employees with at least 10 years of service who retire "shall continue to be covered under * * * the existing hospital medical, surgical, drug and dental programs covering employees of the CHRA * * *." The CBA further provided that CHRA "shall pay all insurance premiums in full, to include single coverage and disability retirement." In September 1995, about 7 months after Norman's retirement, the union was decertified and the CBA expired.
CHRA continued to pay Norman's health insurance premiums under health and dental plans covering CHRA employees until November 2002, more than 7 years after her retirement. At that time, CHRA notified Norman that it would no longer pay her premiums "due to the continuing rising costs of Health Insurance and Budget constraints." Norman sent letters requesting that CHRA recommence paying her health insurance premiums, but CHRA refused.
Norman brought this action against CHRA, and in a motion for summary judgment requested the court to order CHRA "to fulfill its promise to Norman by making back payments to her equal to the cost of insurance she lost from December 1, 2002, until the CHRA again provides her coverage on the same basis it does for current employees of the CHRA." CHRA brought a cross-motion for summary judgment, asserting that CHRA had no obligation to pay Norman's health insurance premiums upon her retirement, that it had "gratuitously" paid the premiums for 7-1/2 years, and that her reliance on CHRA's promise to continue payment was not reasonable in view of Minn. Stat. § 179A.20, subd. 2a, which said that a CBA may not obligate a public employer "to fund" healthcare benefits beyond the duration of the CBA.
The district court granted summary judgment in favor of Norman, concluding that CHRA was obligated to continue the premium payments. The court of appeals affirmed. Norman, 681 N.W.2d at 379-80. The court held that limitations in section 179A.20, subdivision 2a, were overridden by more specific and subsequently-enacted provisions relating to insurance continuation for public employees, Minn. Stat. § 471.61, subd. 2b. Norman, 681 N.W.2d at 379. The latter provisions require public employers to include retirees in the same insurance group as current employees and authorizes public employers to pay the premiums if a CBA provides that the employer must do so. We granted review of the issue of whether a promise contained in a CBA may bind a public employer to pay retiree health insurance premiums beyond the term of the CBA.
As noted, the parties, district court and court of appeals framed the case in terms of promissory estoppel, undoubtedly in reliance on our decision in Christensen v. Minneapolis Municipal Employees Retirement Board, 331 N.W.2d 740 (Minn. 1983). In Christensen, we rejected a conventional contract analysis of the public employee's claim for a statutorily based pension because it "tends to deprive the analysis of the relationship between the state and its employees of a needed flexibility," whereas the equitable nature of promissory estoppel allows a court to capture and weigh competing interests of the public and the public employee. Id. at 747-49. We also intimated that statutory restrictions on a public employer's authority to bargain and contract to pay pension benefits would preclude a contract analysis, stating, "promissory estoppel precisely applies where, as here, there are no 'contract rights.'" Id. at 748.
After Christensen, a series of legislative amendments supplied authority to public employers to contract to pay retirees' health insurance premiums. We will consider whether these amendments eliminated the premise underlying our use of promissory estoppel--that the retirees had no contract rights. But we begin our analysis by discussing the history of legislation concerning the authority of public employers to contract to pay retirement benefits. In this discussion, we resolve the conflict between section 179A.20, subdivision 2a, which CHRA argues precludes public employers from contracting to pay retirees' health insurance premiums beyond the term of the CBA, and section 471.61, subdivision 2b, which Norman argues requires public employers to pay retirees' premiums if a CBA so provides.
CHRA relies on section 179A.20, subdivision 2a, enacted in 1988 as part of several changes to the Public Employment Labor Relations Act (PELRA), which provides that:
A contract may not obligate an employer to fund all or part of the cost of health care benefits for a former employee beyond the duration of the contract, subject to section 179A.20, subdivision 6. A personnel policy may not obligate an employer to fund all or part of health care benefits for a former employee beyond the duration of the policy. A policy may not extend beyond the termination of the contract of longest duration covering other ...