Court says judge had no authority to halt Medicare Advantage plan for Delaware government retirees

DOVER, Del. (AP) — Delaware’s Supreme Court has overturned a lower court ruling that prevented officials from moving state government retirees from a Medicare supplement plan to a Medicare Advantage plan.

The justices ruled Friday that a Superior Court judge had no jurisdiction to enter the stay because he wrongly determined that the state panel that approved the Medicare Advantage plan had violated the state’s Administrative Procedures Act. The selection of a particular Medicare plan is not a regulation subject to APA notice and public hearing requirements, and the judge therefore had no jurisdiction under the APA to halt the plan, the court said.

Justice Abigail LeGrow, writing for a three-judge panel, said a regulation under the APA is a statement of law, procedure or policy that is used as a rule or standard to guide, regulate, or act as a model for future action. The choice of a Medicare plan does not fall within the plain meaning of those terms, she said.

“Accordingly, the Superior Court did not have jurisdiction to enter the challenged stay, and we reverse the decision on appeal,” LeGrow wrote. “The important policy considerations that attend the selection of healthcare coverage for state retirees are questions appropriately addressed to the legislative and executive branches.”

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The court rejected an appeal by plan opponents seeking to force the state to pay their attorney fees because of the state’s “reprehensible conduct.” Fee shifting, available only against a losing party, was mooted by the reversal of the lower court decision, LeGrow noted.

In February 2022, the State Employee Benefits Committee unanimously agreed to replace a Medicare part A and B supplemental plan with a new Part C Medicare Advantage plan, effective Jan. 1, 2023. The move set off a firestorm of opposition from state retirees and, in turn, prompted lawmakers to introduce legislation eliminating the option of providing state pensioners with a Medicare Advantage plan.

Opponents, including former Democratic state Sen. Karen Peterson, were particularly unhappy with the prospect of having fewer medical providers to choose from and needing prior authorization for many medical procedures.

In October 2022, Superior Court Judge Calvin Scott Jr. halted implementation of the Medicare Advantage plan, saying it amounted to a new regulation under the APA. He rejected the administration’s argument that the State Employee Benefits Committee was authorized by law to change retiree healthcare plans without following formal APA requirements.

In the wake of the lawsuit, the State Employee Benefits Committee and Highmark Blue Cross Blue Shield agreed last year to terminate the Medicare Advantage contract. The State Employee Benefits Committee also voted to solicit bids for a new Medicare supplement plan.

Meanwhile, lawmakers introduced a bill to add a state retiree and an additional representative of organized labor to the State Employee Benefits Committee, and to establish a Retiree Healthcare Benefits Advisory Subcommittee. Democratic Gov. John Carney signed the bill into law last year just two weeks after it was introduced.

A separate bill eliminating the option of providing state pensioners with a Medicare Advantage plan was introduced this year. It was amended last month to allow a Medicare Advantage plan as an option for eligible pensioners hired on or after Jan. 1, 2025, but only if the plan is adopted by the State Employee Benefits Committee as a regulation under the APA. The bill passed the House unanimously last month and is awaiting consideration by a Senate committee.