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Pre-1993 pensioners launch class action against the university

Some Memorial University pensioners have initiated a class action suit against the university claiming the institution should be paying 100 per cent of their group insurance premiums. The pensioners in question are former employees of Memorial University who retired or terminated employment prior to Jan. 1, 1993, as well as survivors and the estates of those pre-1993 Memorial University pensioners who died after November 1996. The pensioners ‘application to certify the case as a class action was granted earlier this year.

Memorial University has appealed the court’s decision to allow the case to proceed as a class action. A lack of “common issues” between the claimants is the primary ground of appeal. To be certifiable as a class action, the law requires that the basis of the claims being raised by the class of claimants be essentially the same. If they are not, a class action is not appropriate and claims can only be brought on an individual basis.

In this case, different pensioners received different messages from Memorial University regarding their obligation to pay insurance premiums. Therefore, Memorial University maintains that it is inappropriate to certify the claims as a class action. To do so will cause significant evidentiary problems and will result in the court not being able to take into account the substantially different circumstances which exist between the hundreds of plaintiffs in this case.

The division of responsibility for the cost of insurance benefits for pensioners has varied over the years and full payment of insurance premiums by Memorial has never been a negotiated benefit with Memorial employees. However, in the early 1970s, Memorial University received a significant refund of premiums from one of its insurers. It decided on a voluntary basis to pay this money into a trust fund and use the trust money to contribute to the cost of the insurance premiums that the pensioners in question would otherwise have had to pay. This eventually resulted in the cost of the pensioners’ insurance premiums being fully funded by Memorial.

When the trust fund was close to depletion in the early 1990s, the university communicated to the pensioners that the policy on group insurance premiums would change when the money ran out. Over a six-year period, the pensioners in question were required to gradually increase their contribution to the cost of their insurance premiums. By the sixth year, the pensioners were required to pay half the cost of their insurance premiums, as was the arrangement for all existing employees. That group insurance arrangement continues today for all of Memorial’s employees and pensioners.

The university maintains it had a right to reduce its contribution towards the cost of the pensioners’ insurance premiums and, as was explained to the pensioners at the time, the change was necessitated because the trust fund monies which had been used to fund the payment of the pensioners’ insurance premiums had been exhausted. The pensioners are claiming that the benefit was not contingent on the availability of a special trust fund but instead was a promise to pay the full cost of the insurance premiums for the pensioners (and their surviving spouses, where applicable) for the rest of their lives.

“We have a difference of opinion on this matter both in terms of whether the pensioners are entitled to the monies they are claiming and in terms of the suitability of this matter as a class action,” said Mike Fowler, Memorial’s acting director of human resources. “This disagreement does not diminish the fact that all of our pensioners, pre-1993 and subsequent, remain valuable members of the Memorial University community, and this dispute is being handled with the utmost of respect from both sides.”

For further information, please contact Curtis Dawe law firm, 722-5181.