AP: Pa. union officials sue over health fund deal

2013-05-30T13:55:00Z AP: Pa. union officials sue over health fund dealThe Associated Press The Associated Press
May 30, 2013 1:55 pm  • 

HARRISBURG, Pa. (AP) — Leaders of the union for Pennsylvania's state prison guards filed a lawsuit Thursday that challenges a 2009 deal struck by then-Gov. Ed Rendell to divert a large surplus from the trust fund that pays health benefits for state employees.

Four executive committee members of the Pennsylvania State Corrections Officers Association sued in county court in Harrisburg, seeking to recover $226 million and remove several trustees from the Pennsylvania Employee Benefits Trust Fund.

Their claim involves a 2009 deal that allowed the state reduce payments into the fund in order to avoid threatened furloughs of state workers. But the prison guards say their union never went along, and that a promise to repay the money was not kept.

The lawsuit alleges breach of trust and fiduciary duty, saying the deal was "a patently imprudent decision that violated the express terms of the trust agreement and Pennsylvania law."

The defendants include state-appointed trustees and officials with other unions, including Wendell Young with the United Food and Commercial Workers Union.

"Everybody needs to remember where our country and our state was in 2009," Young said Thursday. "The worst recession, the Great Recession of all time was hitting us hard. Companies and states were looking at ways to deal with huge losses."

"When I look at what we did there, I'm pretty proud of what we did as union leaders and trustees of that trust fund," Young said.

At the time the deal was announced, the parties said the money would be repaid, but that did not happen, said Todd Eagen, the guards' lawyer.

"Once funds come into the trust, they become assets of the trust and they can only be used to provide benefits for the participants," Eagen said. "They can't go back to the commonwealth."

The lawsuit asks for a surcharge against the defendants, both individually and collectively. Eagen said that if his clients prevail, payments could come out of any "errors and omissions" insurance coverage maintained by the trustees.

The trust fund administers health care benefits to about 77,000 state workers as well as some 63,000 retirees, and their respective dependents.

Among the other defendants are Office of Administration Secretary Kelly Powell Logan and several people who work for her department, the governor's office or the budget office. Office of Administration spokesman Dan Egan declined comment because the litigation is pending.

Other defendants also declined comment, did not respond to messages or could not be reached for comment. A spokeswoman at the Pennsylvania Employee Benefits Trust Fund headquarters in Harrisburg took a message.

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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