Legal fees pile up in battle over Providence retirement benefits

PROVIDENCE, R.I. (WPRI) – When all is said and done, the city of Providence could end up spending more than $2 million to defend its decision to suspend cost-of-living adjustments (COLAs) for retirees and require them to enroll in Medicare after the age of 65.

Since the 2011-12 fiscal year, Providence has paid $1.68 million to outside lawyers to help defend several lawsuits and assist the city in negotiating a settlement with its unionized employees as well as the vast majority of its retirees, according to figures provided through a public records request.

The tab continues to rise with a bench trial involving 68 retirees who opted out of a 2013 settlement with the city now in its third week. No matter what Superior Court Judge Sarah Taft-Carter decides in the case, an appeal to the Rhode Island Supreme Court is expected.

The two sides were back in court Thursday for a cross-examination of former Mayor Angel Taveras, who spent several hours answering timeline questions regarding when his administration started considering altering retiree benefits in order to address the city’s massive budgetary challenges.

Taveras’s testimony showcased why it wasn’t long before the city tapped William Dolan, a well-respected attorney who was still a partner at Brown Rudnick LLP in late 2011, to assist with its legal battle with the retirees. (Taveras worked with Dolan at Brown Rudnick before he became mayor.)

After the Taveras administration convinced the General Assembly to approve legislation that enabled the city to move its retirees to Medicare after the age of 65 – retirees traditionally received a lifetime Blue Cross and Blue Shield of Rhode Island health care plan that was funded by the city – in 2011, the City Council quickly passed an ordinance to make the change.

Taveras testified Thursday that he didn’t recall reading the Medicare ordinance before signing it into law, but said he recalled “all the specifics.” He said he considered the ordinance “common sense.” But a group of former public safety employees filed suit and the city brought in Dolan to handle the challenge.

In January 2012, Taft-Carter dealt the city a major blow when she granted the retirees an injunction that blocked the city from moving them and their spouses to Medicare until a full trial was held. Two months after the decision, Moody’s Investor Service cited the “uncertain outcome” of the litigation as one of the reasons it downgraded Providence’s bond rating.

More than four years and $1.68 million later, Dolan, now a partner at Donoghue, Barrett & Singal, is still on the case. (William Wray and Nicholas Nybo, two other lawyers from Donoghue, Barrett & Singal, are currently working with Dolan.)

Records show the city paid Brown Rudnick $1.5 million between the 2011-12 fiscal year and the 2013-14 fiscal year. Since Dolan moved to Donoghue, Barrett & Singal, the firm has been paid nearly $531,000.

Dolan represented the city as it negotiated a settlement with its public employee unions and retirees over both Medicare and pension benefits. (In 2012, the City Council passed a separate ordinance that froze COLAs for all retirees and eliminated 5% and 6% compounded COLAs forever. Another lawsuit was filed and Taft-Carter ordered the matter to mediation.)

In 2013, Taft-Carter approved a settlement between the city, its union and the majority of its retirees that froze 3% COLAs for 10 years, eliminated 5% and 6% COLAs forever, shifted how pensions are calculated and moved retirees over the age of 65 to Medicare. Taveras said at the time the deal would reduce Providence’s unfunded pension liability by $170 million.

The only outstanding issue left in the matter is the 68 retirees – known as the opt-outs – who are fighting to have a judge restore their COLAs and private healthcare. Thirty plaintiffs in the suit were receiving 5% or 6% compounded annual COLAs. At least 35 receive tax-free disability pensions from the city. The retirees are paying out of pocket for lawyers Stephen Burke, Kevin Bowen and Thomas McAndrew.

Lawyers for the retirees said Thursday they expect to submit written testimony for several plaintiffs who will not take the stand in the trial. Michael D’Amico, the city’s former director of administration, is expected to return to the stand Friday. Councilman David Salvatore, who chaired a committee tasked with studying the city’s pension system in 2012, is also expected to testify.

If the trial wraps up next week, Taft-Carter could take several weeks to render her final decision.

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Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Facebook and Twitter: @danmcgowan

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