Renton Police Guild Sues City Over Health Savings Account Use of Insurance Surplus
The Renton Police Officers Guild has initiated a lawsuit against the City of Renton, contesting the city's refusal to allow the guild to use surplus funds from a self-insurance program to establish a health savings account (HSA) for employees. This legal dispute centers on whether the surplus funds can be allocated for a health savings vehicle, with the guild alleging the city improperly restricted their use of these funds. The city has filed a counterclaim denying the guild's assertions and seeking dismissal of the complaint with prejudice.
The controversy stems from the management of a self-insurance health plan funded primarily by the city with employee contributions constituting a smaller share. The plan currently holds a surplus, which the guild wishes to deploy to create HSAs, a move the city challenges, asserting that HSAs do not qualify as legitimate trust expenditures under the program. The guild argues that health savings vehicles are common in Washington's public sector labor contracts and serve both to expand employee benefits and control insurance costs by promoting prudent healthcare consumption.
The guild's lawsuit also raises concerns about conflict of interest, citing a city attorney's opposition to the use of surplus funds for HSAs and requesting that the trust overseeing these funds have independent legal counsel apart from the city. The trust board includes members from the guild, another union (AFSCME), and the city. Past issues have involved unauthorized transfers of insurance funds to the city's general fund, prompting the formation of this trust to ensure oversight and transparency.
A ruling in favor of the guild could authorize the establishment of HSAs using surplus funds and grant the guild's trustees separate legal representation from the city. Such an outcome might facilitate improvements to employee health benefits while potentially reducing overall insurance program costs. The city, meanwhile, maintains that its position on restricting the use of funds for HSAs is lawful and justified.
This dispute highlights broader themes in public-sector health insurance management, including fund governance, the scope of permissible expenditures under collective bargaining agreements, and the balance between municipal fiscal interests and employee benefit enhancements. The case unfolds amid ongoing oversight efforts to ensure that self-insured health plan surplus funds serve the intended beneficiaries without diversion to other municipal budget areas.