MARQUETTE - The city of Marquette will pay more than $16,500 each year toward retirement health insurance for former City Manager Gerald Peterson, whose lawsuit against the city was finally settled this summer.
Peterson served as Marquette's city manager for nine years, prior to leaving the position in July of 2005. He continued to receive benefits from the city until the next summer, when the city commission voted to cease payments to all non-represented, retired middle managers and department heads. That decision followed the revelation that some retirees could collect fully paid retirement health care benefits for life after only two years of service, regardless of age.
According to deposition testimony from a retired city clerk, a change to include city health care in retirement took place in 1983 or 1984, but was never officially adopted by the city commission.
Following the termination of their benefits in the 2006 decision, Peterson and former city employees Michelle Doucette and Reatha Tweedie sued the city.
As part of a July settlement, Peterson was reinstated to the city health plan and Marquette paid him an additional $82,500 to cover out-of-pocket health care since his benefits had been terminated in July of 2006.
In past settlement agreements similar to the one reached with Peterson, the city paid Doucette and Tweedie a total of almost $64,000 for out-of-pocket expenses.
City records - obtained Friday by The Mining Journal through a freedom of information act request - indicate that the city will pay in excess of $39,000 annually to cover health care costs for the three former employees.
As of Friday, the city is set to pay monthly premiums of $1,103 to cover 100 percent of Tweedie's two-person plan and $1,379 to cover 100 percent of Peterson's family plan, as well as more than $800 to pick up 80 percent of Doucette's plan, which fully covers one person and covers another complimentary to Medicare.
At that rate, those three plans will cost the city $39,384 per year.
According to a 2008 written decision by Marquette County Circuit Court Judge Thomas Solka, when Peterson was hired he was informed the city pension plan was a Municipal Employees Retirement System defined benefit plan, which required a city employee to be 55 with 25 years of employment or 60 with six years of employment to qualify for pension benefits and thereby qualify for retirement health insurance under the plan informally adopted by the city manager in 1984.
In 1998, the city commission adopted a MERS defined contribution plan on recommendation from Peterson. The plan had significant benefits to the city by reducing pension costs and had advantages to employees with a quicker two-year vesting period and portability of benefits should they leave city employment, Solka wrote.
With adoption of the defined contribution plan the "tie bar" between the practice of providing retiree health insurance for city employees drawing pension benefits under a qualified plan, without city commission approval, was extended to allow a city employee eligible to draw their MERS two-year vested defined contribution plan to also receive health insurance benefits regardless of age or years of service, Solka wrote.
After leaving Marquette, Peterson served for more than four years as the city manager and interim city manager in Negaunee, before he resigned due to conflicts with the city council. He is currently the city administrator in Oak Creek, Wis.
Kyle Whitney can be reached at 906-228-2500, ext. 250. His email address is firstname.lastname@example.org.