METHUEN — Local 175 of the Laborers International Union has filed a lawsuit challenging the city's decision to change the health insurance plan offered to its employees.
The union — which represents about 70 Department of Public Works employees — claimed the change will cause a 27 percent increase in members' costs in addition to $1,000 out-of-pocket expense per person. Families could be burdened with a $2,000 deductible, the union alleged in a complaint filed last week in Salem Superior Court.
Named as defendants are the City of Methuen and Donna Gogas, chairwoman of The Public Employees Insurance Coalition. The coalition is made up of union leaders who negotiate with the mayor for health plans covering city employees.
The lawsuit claimed the coalition during a meeting with Mayor William Manzi on June 22 voted to change the health insurance plan offered to the union workers to Methuen's insurance plan in apparent violation of state law.
Although the law requires a written agreement between the city and coalition before a change could be made, the union contended that no such agreement exists.
"Said change will result in immediate financial hardship to members of Local 175 and possibly result in the loss of health coverage for certain members," the lawsuit claimed. The union seeks a court order to stop the transfer of health insurance coverage that went into effect on July 1, the beginning of the 2011 fiscal year.
A hearing on the motion for a preliminary injunction has been set for 2 p.m. July 13 in Salem Superior Court.
Gogas, who is also president of the Methuen Education Association, did not return a call seeking comment.
Mayor Manzi said he received the lawsuit and referred it to City Solicitor Peter McQuillan, who will handle the city's response.
The mayor said he hasn't been able to find a written agreement between the city and the public employee coalition "up to this point." The agreement was supposed to be signed when the coalition was formed in 2002, four years before Manzi was mayor, he said.
"I have personal knowledge that a written agreement between Methuen and the Committee does not exist," Local 175 Business Manager Michael P. Gagliardi said in affidavit filed with the lawsuit.
Gagliardi also said the city "failed to consider other options that would not have such an adverse financial impact on the employees/members," including an option available under state law that allows transfers to the state's Group Insurance Commission.
"If the Committee and Methuen considered the rates and costs of obtaining insurance through the Group Insurance Commission of the Commonwealth of Massachusetts, the projected savings to Methuen will be approximately one million dollars without the rate increase and out of pocket burdens to the employee/members," Gagliardi said in the court document.
Gagliardi gave Gogas a written request to present GIC rates to the coalition for consideration before any votes were taken. But the coalition voted without considering the GIC rates.
In his interview last week, Manzi said he would prefer to see all city workers join the state GIC because it would save money for both taxpayers and city employees.
"(Manzi) supports the underlying theory of the lawsuit," Gagliardi said in an interview last week.
"But the city council decided not to address the issue, and isn't even interested in saving the city a million dollars. If they were truly concerned with the citizens in the city, they would look at this and consider insurance rates like all state employees have," Gagliardi said.
"We haven't given up on getting an agreement with the city and making sure employees have adequate health care at a reasonable cost," he said.
Reporter J.J. Huggins contributed to this story.
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