Older Retirees Win a Round

By Tom Philpott

They seek restoration of in-service medical benefits, reimbursement of monies deducted from Social Security to cover Medicare costs, and relief from future deductions.

Day, who has been gathering financial and moral support from retirees throughout the country, quickly filed a motion to convert the case to a class action potentially affecting up to 1.4 million retirees 65 and older.

Vinson, a Navy retiree himself, ruled the lawsuit can proceed, but he narrowed its scope and limited the pool of plaintiffs to retirees who entered service before 7 June 1956. On that date, then-President Dwight D. Eisenhower signed into law the Dependents' Medical Care Act, which limited the government's responsibility for retiree health care "to the availability of space" and "capabilities" of staff.

Those limitations "override" any promise made by officials, including recruiters, Vinson said, "since any promises in contradiction to the statute would be beyond the authority of government agents to carry out."

But the status of retirees who entered service earlier, said Vinson, "is less clear."

While knocking down a few of Day's arguments, including a claim of age discrimination, Vinson said Day can argue breach of an "implied contract" under the Little Tucker Act, which limits monetary award to less than $10,000 per claim. He also can seek non-monetary relief under the Fifth Amendment by proving an unconstitutional taking of property.

"The heart of the complaint has always been breach of contract," says Day. "So when [Vinson] says we can proceed an the breach of contract claim, that opens the federal government's billfold. What we have to do now is prove the liability and how much."

Day defined the class of plaintiffs to exclude retirees under 65 knowing the 1956 law clouded the issue. That doesn't mean they can't win a similar lawsuit, he said, but "they're going to have some hard climbing." For older retirees, however, Day expects the judge to find the government liable for $2,000 to $3,000 each. That would cover repayment of Medicare-deductions since the start of TRICARE Prime, the military's new managed care program.

Medicare-eligibles can't enroll in TRICARE. As that system is phased in nationwide, space-available care for the elderly at military clinics and hospitals is disappearing.

The government should also be liable, Day says, for the cost of civilian health care to older retirees who have been turned away from military facilities since TRICARE began.

The $10,000 limit per claim is fine, Day says. "That has always been way above what we had in mind per person." More important, Day expects an "equitable relief' ruling that either orders the military to reopen medical facilities to persons 65 and older or provides equivalent free care elsewhere. "There's a very wide range of injunctive relief he could apply," Day says.

Day will ask the court to certify older retirees' dependents and survivors as part of the class too. The government's liability on reimbursements alone could exceed $300 million, Day estimates.

Little Tucker cases are heard by a judge, not a jury. Vinson moves quickly too, maintaining what Day describes as a "rocket docket."

Day says that he will present mounds at evidence showing military officials promised retirees free lifetime health care throughout their careers. Until 1943, for example, sailors' pay was docked 20 cents a month to cover medical costs in retirement. The money was used to build hospitals in places like Charleston and Pensacola.

"In 1945, the Secretary of the Navy sent out a little recruiting thing under his signature to all Naval Reserve officers," Days says. "It basically said, `Come aboard, guys . . . You'll get those all those great retirement benefits. . . .' When I get through providing proof, [the judge] is going to say, `There damn sure was a breach of contract."'

Martha Hirschfield, the Justice Department lawyer presenting the government's case, had no comment. Some lawyers, even a few supportive of Day's case, maintain he can't win; the potential liability is too high.

But Day, a former prisoner of war, already has gone farther than many expected. At a minimum, retirees hope the case focuses national attention on their dwindling benefits, and forces the government to explain in court why decades of promises have not been kept.

Day expects to achieve much more.

"I'm passed being `very hopeful,"' he says. "I've been a constitutional law teacher. I have tried several constitutional cases. . . The first time I considered this case I saw a clear breach of contract and Fifth Amendment taking." So will he win?

"I don't have a doubt. We're going to slam dunk their ass."

 

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