Court Rules In Favour Of Retired BELCO Workers

February 18, 2017

Over 100 retired BELCO employees brought legal action over a change to their health insurance policies, with the Court ruling that none of the other options offered by BELCO would satisfy the Promise the company had made to them, adding that the Plaintiffs seek an order that BELCO shall continue to honour the terms of the Promise and “they shall have it.”

In January 2015, they were moved to a new plan, and the retired workers said they were promised they would receive the “existing level of coverage”, and they started the proceedings to obtain declaratory relief to that effect.

“I conclude that the level of cover contained in the Offer is substantially inferior to that contained in the Promise,” Puisne Judge Stephen Hellman said in the judgment. “The Plaintiffs seek an order that BELCO shall continue to honour the terms of the Promise. They shall have it.”

The Case

In explaining the case, the Court judgment said, “Earlston Astwood is the first named Plaintiff in this action but he does not stand alone. With him are 108 others. They are all retired employees of the First Defendant, Bermuda Electric Light Company Limited, generally known as BELCO.

“Many of them spent most of their working lives there. One of the attractions of working at BELCO was the generous benefits package. This included comprehensive health insurance. For many years this was provided under a policy administered by a subsidiary of the Argus Insurance Company [Argus] known as the Lighthouse Plan.

“BELCO paid half the premiums and the employees paid the other half. Retired employees continued to enjoy the same benefits under the same policy, save for certain limited exceptions such as dental and vision care, and BELCO paid their premiums in full. Retired employees were able to include dependents in their cover, although they had to pay the dependents’ premiums.

“But then things changed, no doubt due to the rising cost of healthcare insurance. On 1st January 2015, all BELCO’s employees were moved to a new plan, the Lighthouse Preferred Provider Network [LPPN] Plan. This policy was provided by Argus, but under a contract with the Second Defendant, Ascendant Group Limited [Ascendant], which is BELCO’s parent company.

“The cover was similar to the cover provided under the Lighthouse Plan, except that the range of hospitals available under the Plan was smaller. Ascendant, speaking presumably for BELCO, notified the retired BELCO employees that they could no longer remain on the Lighthouse Plan but that BELCO would contribute towards the cost of alternative cover.

“BELCO gave the retired employees various options. Eg it offered to transfer them to the LPPN Plan or to another policy provided by Argus, the Signal Plan, which provided fewer benefits than the LPPN Plan but at a reduced cost.

“Cost was a factor in that BELCO was only prepared to pay a maximum contribution of $525 per month towards the premiums and not the full amount. But in 2014 – the year of the most recent figures provided to the Court – the monthly premiums were $812.95 for the LPPN Plan and $756.61 for the Signal Plan.

“Moreover, BELCO reserved the right to reduce the amount of its monthly premium contribution, whereas it was common ground that the amount of medical insurance premiums tends to increase.

“Only one of the options which BELCO offered involved the guaranteed provision of free healthcare. This was an offer [the Offer] that the retired employees would receive, free of charge for so long as they remained ordinarily resident in Bermuda, the following medical coverage: Government FutureCare [FutureCare] for those over 65 years of age, or Government HIP [HIP] for those under 65 years of age, and the Moongate Health Gap Insurance Supplement [Bermuda based] “Moongate”].

“BELCO made the Offer in order to satisfy a promise [the Promise] contained in a standard form letter which BELCO provided to all employees upon their retirement [the exit letter]. The precise wording of the letter changed from time to time over the years. But the gist of the Promise was to provide free hospitalization, home and office and major medical coverage for retired employees who were normally resident in Bermuda.

“BELCO accepts that the employees have a contractual right to the healthcare benefits promised in the letters. There is a dispute between BELCO and the Plaintiffs as to whether the Promise forms part of the employees’ contract of employment or alternatively some separate contract, but that is not a dispute which I need resolve.

“The Plaintiffs maintain that what was promised was that they would receive the existing level of coverage under the Lighthouse Plan free of charge for the rest of their and their dependents’ lives. They have issued these proceedings to obtain declaratory relief to that effect.

“The Defendants maintain that their contractual duty is to provide the minimum level of cover necessary to comply with the wording of the exit letter and that the Offer does that.

“The cover provided by the Lighthouse Plan, they submit, goes above and beyond their contractual obligations. However the Defendants have agreed to maintain the Plaintiffs’ existing level of cover pending the resolution of these proceedings.

“Does the Offer fulfil the Promise? That is the nub of the case.”

Summary and Conclusion

In providing a conclusion, the Court’s judgment said, “The Offer does not fulfil the Promise. It is very far from doing so. None of the other health insurance options offered by BELCO would satisfy the Promise as none of them would be provided to the Plaintiffs free of charge.

“The Plaintiffs seek an order that BELCO shall continue to honour the terms of the Promise. They shall have it.”

The 8-page Court’s judgment is below [PDF here]

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