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By Steve Wishnia

A group of nine retired transit workers has filed a class-action suit in New York State Supreme Court, seeking to get their access to traditional Medicare restored after they were switched to a private Medicare Advantage plan on Jan. 1.

Their arguments echo those used by city retirees last year when they won an injunction stopping a similar scheme that would have affected about 250,000 retirees: The change violates a longstanding provision in Transport Workers Union Local 100’s contract that prohibits health coverage from being diminished; and it also breaks a promise that workers would have fully paid health care when they retired.

The about 22,000 transit retirees were taken out of traditional Medicare under a provision in Local 100’s 2023 contract, which went into effect Jan. 1. It eliminated their option for a “CPPO” plan, which paid for Medicare Part B, the private supplemental or “Medigap” coverage that covers the 20% of bills that regular Medicare doesn’t.

The respondents in the suit are the state Metropolitan Transportation Authority, the New York City Transit Authority, and Local 100, along with NYCTA president Richard Davey; MTA labor relations head Anita Miller; and Local 100 President Richard Davis. Aetna, the insurance company administering the Medicare Advantage plan, has asked to be included as a respondent. It says that because it has already developed and started providing the plan, it will suffer substantial financial losses if many retirees can cancel it.

Their responses are due March 11, and Judge Shahabuddeen A. Ally will hear arguments on April 26.

THE CASE AGAINST PRIVATIZATION 

The lawsuit accuses the MTA, Aetna, and Local 100 of “colluding to enrich themselves by drastically diminishing the health-care benefits of the union’s retirees.” The MTA will save about $72 million a year in premiums previously paid to Medicare, it says; the authority agreed to use most of that savings for pay increases; and Aetna is expected to gain about $400 million a year in new revenue.

Medicare Advantage is inferior to traditional Medicare, it continues, because it limits retirees’ access to doctors and hospitals and has an “onerous and arbitrary prior authorization process,” under which people have to obtain approval from the insurance company before they can receive numerous forms of treatment.

Reducing care is built into the system, the suit argues, because the federal government pays insurance companies a fixed fee for each person enrolled in a Medicare Advantage plan. The insurers then make money “based on the spread between what the federal government pays them for a given enrollee and what they spend on that enrollee. The less an insurer spends on a given patient, the higher the insurer’s profit for that patient.”

That means they have “a powerful profit motive to limit a customer’s access to care.”

These arguments are close enough to those used by city retirees last year for the petitioners to reuse some of the same affidavits. In one, Wisconsin nurse Diane Omdahl, author of Medicare for You: A Smart Person’s Guide, cited a 2021 Kaiser Family Foundation study that insurance companies in 2021 denied about 2 million of the more than 35 million prior-authorization requests, and that Aetna denied 12% of requests, one of the two highest rates among insurance companies. Even if the care is approved, she added, it is often delayed or reduced.

In another, former Department for the Aging commissioner Lilliam Barrios-Paoli said that the claim that “every doctor and hospital will accept the new Medicare Advantage plan” was “wishful thinking at best, and at worst conscious misrepresentation.”

Gracelia Amodeo, a retired subway conductor who now lives in the Phoenix area, stated in her affidavit that she had a kidney transplant in July 2021, and that she is receiving care from the Mayo Clinic’s Arizona branch, which “does not accept any Medicare Advantage Plan.”

“Given the care and coordination I require, I simply cannot just change doctors,” she said. The clinic told her she would have to pay for all her care in full and submit the bills to Aetna for reimbursement, and if it denied her claim, “even my medications cost currently over $6,000 a month.”

Eric Josephson, a transit worker who retired in 2013, stated that the highly recommended elder-care clinic that’s convenient to his home in the Bronx’s Allerton neighborhood doesn’t take the Aetna Medicare Advantage plan.

The MTA has “guaranteed” that it would maintain the same level of health benefits for active workers and retirees since its 2002 contract, former Local 100 president Roger Toussaint wrote in his affidavit, filed Feb. 16, and the union won the same guarantee for under-65 retirees in the 2005 strike. That meant “a retiree’s right to Medigap coverage and prescription drug coverage would now be guaranteed and would not be diminished,” he added.

Aetna, the MTA, and the union now “pretend that replacing Medigap with a Medicare Advantage plan constituted the same ‘level of benefits,’” he concluded.

All this, the suit argues, meets the two main legal criteria for winning an injunction to order retirees’ traditional Medicare restored at least temporarily. They have a strong probability of winning their case at trial, as city retirees won a similar lawsuit last year, and retirees will suffer “irreparable damage” if they have to “forgo needed medical procedures.”

That damage, it adds, far outweighs the monetary costs of restoring retirees’ benefits to what they were in December.