Hampton v. Haley

743 S.E.2d 258, 403 S.C. 395, 2013 WL 1976003, 2013 S.C. LEXIS 109
Supreme Court of South Carolina·Decided January 23, 2013·No. Appellate Case No. 2012-212723; No. 27244·Published·Cited by 24 cases

Opinion

Justice HEARN.

At its most basic level, this case presents a policy dispute: whose policy choice concerning health insurance premiums for State employees controls — the General Assembly’s or the Budget and Control Board’s? While policy decisions are matters left to the political branches, this Court is tasked with maintaining and enforcing the constitutional and statutory framework through which such issues must be resolved. We find that under the South Carolina Constitution, the General Assembly had and exercised the power to determine the contribution rates of enrollees for the State’s health insurance [399] plan in 2013. We hold the Budget and Control Board violated the separation of powers provision by substituting its own policy for that of the General Assembly, enter judgment for the petitioners, and direct the Board to use the appropriated funds for premium increases.

FACTUAL/PROCEDURAL BACKGROUND

I. THE STATE HEALTH PLAN

The State provides its employees and certain other persons with health insurance through a statewide, group health insurance plan (the Plan). The persons eligible for participation in the Plan, as set forth in Section 1-11-720 of the South Carolina Code (2005 & Supp.2012), consist of State employees and retirees, their spouses and dependents, and employees of numerous statutorily specified entities, including for example, counties, municipalities, and private organizations.

Prior to 1992, the Budget and Control Board received authority yearly to administer the Plan through the annual appropriations act. In 1992, the General Assembly enacted Section 1-11-710 of the South Carolina Code, codifying the Board’s authority to administer the plan. As it existed prior to 2012, section 1-11-710 provided in relevant parts:

(A) The State Budget and Control Board shall:
(1) make available to active and retired employees of this State and its public school districts and their eligible dependents group health, dental, life, accidental death and dismemberment, and disability insurance plans and benefits in an equitable manner and of maximum benefit to those covered within the available resources.
(2) approve by August fifteenth of each year a plan of benefits, eligibility, and employer, employee, retiree, and dependent contributions for the next calendar year. The board shall devise a plan for the method and schedule of payment for the employer and employee share of contributions ....
The amounts appropriated in this section shall constitute the State’s pro rata contributions to these programs....
(3) adjust the plan, benefits, or contributions, at any time to insure the fiscal stability of the system.
[400] (4) set aside in separate continuing accounts in the State Treasury, appropriately identified, all funds, state-appropriated and other, received for actual health and dental insurance premiums due. Funds credited to these accounts may be used to pay the costs of administering the health and dental insurance programs and may not be used for purposes of other than providing insurance benefits for employees and retirees. A reserve equal to not less than an average of one and one-half months’ claims must be maintained in the accounts and all funds in excess of the reserve must be used to reduce premium rates or improve or expand benefits and funding permits.

On June 26, 2012, Act No. 278 was enacted, creating the South Carolina Public Employee Benefit Authority (PEBA) as codified at Section 9 — 4—10, et seq. of the South Carolina Code (Supp.2012), and amending section 1-11-710 by transferring the Board’s powers and duties under that statute to PEBA.1 Additionally, the Act made PEBA’s decisions subject to approval by a majority vote of the Board as set forth in Section 9-445 of the South Carolina Code (Supp.2012). The Act took effect July 1, 2012, and thus, as of that date, PEBA exercises the powers formerly exercised by the Board in relation to the Plan, and the Board has a veto power over PEBA’s decisions.

Although nine of PEBA’s eleven members had been appointed on or before the August 15th deadline for setting the yearly terms of the Plan as specified in section 1-11-710, only two members had taken the oath of office and only one member had filed his statement of economic interests on or before that deadline.

II. THE 2012 BUDGET PROCESS AND THE PLAN

The State’s budget and the Plan’s budget operate on different timetables because the State’s fiscal year runs from July 1 [401] to June 30, whereas the Plan’s fiscal year runs from January 1 to December 31. For that reason, in addition to any premium increases the General Assembly decides the State must cover in the upcoming Plan year, the State’s budget each year must also cover the last six months of the insurance premium increases set by the Board on August 15th of the previous year, an amount known as the “annualization.”

Employees covered by the Plan are split into “general fund employees” and “non-general fund employees.” General fund employees consist of State and school district employees, and the premiums borne by the State through general fund appropriations cover these employees. See S.C.Code Ann. § 1-11-710. For fiscal year 2012-2013, general fund employees constituted 51.6% of the Plan’s enrollees. Non-general fund employees work for those entities specified in section 1 — 11— 720, and if an employer entity chooses to provide insurance to its employees through the Plan, the employer is responsible for paying the employer portion of the premiums — the portion borne by the State for general fund employees. S.C.Code Ann. § 1-11-720.

In November 2011, the Board produced a memorandum informing the General Assembly of the Plan’s needs in relation to the State’s budget for fiscal year 2012-2013. The memorandum stated the Plan required an annualization of $14,264 million and $15,767 million to cover new, general fund retirees. Also, the Plan’s insurance premiums had increased over the past year by $79,705,991. Thus, to cover the premium increases for the first six months of the Plan’s fiscal year, the Plan required $39,852,996. Removing the portion attributable to non-general fund employees, the Plan required a premium increase of $20,564,146 for general fund employees.

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Hampton v. Haley, 743 S.E.2d 258, 403 S.C. 395, 2013 WL 1976003, 2013 S.C. LEXIS 109 (S.C. 2013).

743 S.E.2d 258 (Hampton v. Haley) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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