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Fire district board seeks to move lawsuit to U.S. District Court

Aaron Hilmer

Bonnie Stegman
October 19, 2005 - By LAURA UHLMANSIEK

Staff Reporter

The Mehlville Fire Protection District Board of Directors is seeking to move a lawsuit filed against it by union employees to federal court so it can proceed with proposed changes to the district's disability plan.

St. Louis County Circuit Judge Barbara Crancer granted a preliminary injunction in early August prohibiting enactment of the proposed changes to the district's disability plan.

During a closed session on Friday, Chairman Aaron Hilmer and Treasurer Bonnie Stegman voted to authorize the district's legal counsel to file a notice of removal that seeks to move the lawsuit to U.S. District Court, Eastern District of Missouri, from St. Louis County Circuit Court. Secretary Dan Ottoline Sr. was absent.

"Hopefully this will resolve the pending temporary restraining order that is currently in place with regard to the change that the board approved to the disability policy," Mathew Hoffman, the district's legal counsel, told the Call.

Crancer ruled Aug. 2 that the Board of Directors did not follow the proper procedures to change retirement benefits under state law and the federal Employee Re-tirement Income Security Act, or ERISA.

Crancer also ruled that the Board of Directors did not violate the state's Meet and Confer Law or the Open Meetings and Records Law, also called the Sunshine Law.

The lawsuit, filed by Local 1889 of the International Association of Fire Fighters against the district's three board members, asked the court to prohibit the board from implementing a disability benefit contract with Standard Insurance and eliminating current disability benefits from the district's existing pension plan.

"The court, now being fully informed from the hearing testimony, trial briefs of the parties and oral argument of counsel, now grants a preliminary injunction and finds that plaintiffs have adequately shown that they will suffer immediate and ir-reparable injury, loss or damage if the court does not grant the relief requested," Crancer stated in her ruling.

The Board of Directors had unanimously approved a disability plan through Stan-dard Insurance at the June 6 board meeting.

District employees then were covered by two disability plans — the Standard In-surance plan and the original self-funded disability benefits that were part of the district's pension plan.

At the June 20 meeting, the board voted 2-1, with Secretary Dan Ottoline opposed, to approve an amendment to remove the original disability benefits from the pension plan for injuries that occurred after July 1. Employees then would be covered by the Standard Insurance plan, which ex-tended around-the-clock coverage to em-ployees, but reduced the maximum benefit payments by 15 percent.

In his notice of removal, Hoffman stated that the district has satisfied the requirements under state law, which requires that an actuarial study on any "substantial proposed change" must be filed with the state and the proposed change must be made available to the public for 45 days before the board can adopt the change.

Since the temporary restraining order was granted, the district has filed an actuarial study, and the 45-day period ended Sept. 18.

"At this time, it appears that the sate law claims have been addressed, so we are now going to look to the federal court for the pending ERISA issue," Hoffman told the Call.

ERISA is a federal law that sets standards for pension plans and states that a fiduciary "shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries..."

ERISA also states that the provision does not apply to any employee benefit plan that is for "employees by the government of the United States, by the government of any state or political subdivision thereof, of by any agency or instrumentality of any of the foregoing."

Hoffman stated in the notice of removal that the Circuit Court had ordered that ERISA applies to the board and the board has a fiduciary responsibility to act in the sole interest of the pension plan participants. Hoffman told the Call that be-cause the Circuit Court judge raised ERISA, the board now will look to a federal court for its interpretation.

"If the disability plan that is the subject of this dispute is subject to ERISA, as the plaintiffs urge and the state court judge found in issuing the preliminary injunction, then this court has exclusive jurisdiction of the subject matter of this cause of action under section 502 of ERISA ...," the notice of removal stated.

Local 1889 has 30 days to respond to the notice of removal. John Goffstein, the attorney representing Local 1889, told the Call that the case is not removable and does not belong in federal court. He also mentioned that the preliminary injunction is still in place.

"We will file a motion to remand, and it will be sent back," Goffstein said.

At the Sept. 26 meeting of the district's Pension Committee, the Board of Directors selected a financial company that will study the district's pension plan and offer option for change, including switching from a defined benefit plan to a defined contribution plan. However, as long as the preliminary injunction is in place, the district will not be able to make changes to the pension plan.

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