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SUPREME COURT OF ALABAMA
SPECIAL TERM, 2012
City of Gadsden
Appeal from Etowah Circuit Court
The City of Gadsden ("Gadsden") appeals from an order of
injunctive relief in favor of John Boman, a retired Gadsden
We reverse the judgment and remand this cause
I. Factual and Procedural Background
According to the undisputed facts underlying this appeal,
John Boman worked as a Gadsden police officer from 1965 until
he retired in 1991.
At the time of his retirement, police
Gadsden Employee Handbook: Police Department (ed. 1989-1992)"
In § 26, entitled "employee benefit plan,"
the handbook listed "Major Medical benefits -- 80% UCR [usual,
customary, and reasonable charges] for the first $10,000 with
100% of covered expenses ... each year after $2,000 annual
out-of-pocket per person."
The employee-benefit plan was
issued and administered by
Blue Cross and Blue Shield of
Alabama ("Blue Cross").
In 2000, Gadsden elected to join the "Local Government
Health Insurance Plan" ("the plan"), a "self-insurance health
benefit plan administered by the State Employees' Insurance
Board" ("the Board").
was Blue Cross.
The claims administrator for the plan
The plan stated, in pertinent part:
"Health benefits will be modified when you or your
dependent becomes entitled to Medicare.
under this plan will be reduced by those benefits
payable under Medicare, Parts A and B....
"The [plan] remains primary for retirees until the
retiree is entitled to Medicare.
entitlement, the member's coverage under the [plan]
will complement his/her Medicare Parts A and B
coverages. Medicare will be the primary payer and
the [plan] will be the secondary payer. A Medicare
retiree and/or Medicare dependent should have both
Medicare Parts A and B to have adequate coverage
with the [plan]."
(Some emphasis added; some emphasis omitted.)
When Boman turned 65 in 2011, he was receiving medical
care for "congestive heart failure" and "severe osteoarthritis
of the spine."
After his 65th birthday, Blue Cross began
denying his claims for medical treatment based on the failure
to provide Blue Cross with a "record of the Medicare payment."
had no Medicare credits.
Relying on Internal
Revenue Service Publication 963 (rev. Nov. 2011), FederalState
requirements for state, local and Indian tribal government
employees and public employers, Gadsden explains Boman's lack
of Medicare credits as follows:
considered 'employees under [42 U.S.C. § 418
(codifying Section 218 of the Social Security Act)
(hereinafter referred to as "§ 218"),]' (may or may
not be in a public retirement system, and may be
Coverage, however, can only extend to groups of
employees, and there are two types of coverage
[Boman] was in a 'retirement system
coverage group,' consisting of employees working in
positions covered by a public retirement system.
Such a group can be provided ... Medicare coverage
only after a referendum is held as set forth in the
statute. In Alabama, this would be a majority vote
referendum: a majority of those eligible to vote
(not just those voting) must favor obtaining
"12. ... Before April 1, 1986, the only way for
state and local governmental employees -- regardless
of membership in a retirement system -- to get on
Medicare was through the voluntary § 218 agreement
amendments as discussed above. Following the COBRA
Act of 1985, however, virtually all state and local
employees hired after March 31, 1986, were required
to be covered by Medicare and to pay Medicare taxes
regardless of their membership in a retirement
system. Those hired before March 31, 1986, remained
exempt -- they were not covered by Medicare and
Medicare taxes were not deducted from their wages."
Affidavit of Roger Kirby, city attorney for Gadsden (footnote
omitted) (some emphasis added). 1
Boman was hired before March
31, 1986, and, although Gadsden did begin participation in the
Medicare program in 2006, Boman's employee group had not opted
Consequently, Boman never paid Medicare taxes and does not
claim to have Medicare coverage.
For purposes of this appeal only, we assume that Kirby's
construction and analysis of § 218 is accurate.
When the dispute over coverage arose, Boman sought review
by the Board.
In response, he received a letter dated March
30, 2011, from James J. Bradford, general counsel for the
Board, which stated, in pertinent part:
"The [plan] becomes secondary when a retiree becomes
entitled to Medicare. In order to have no gaps in
coverage a retiree must have both Parts A and B.
This requirement is published in the benefits
handbook that every employee and retiree receives
All employees and retirees are,
therefore, on notice of this requirement.
"Although I can appreciate Mr. Boman's situation,
provisions. If the [Board] granted an exception to
the [plan's] Medicare secondary provisions for
retirees of units, who for their own financial
purposes decided not to participate in Medicare, it
would result in all units who do participate in
Medicare subsidizing the cost of the retirees of
those units who do not participate. As fiduciaries
of the [plan] the [Board] cannot allow such a
practice. Accordingly, your request for the [plan]
to remain Mr. Boman's primary coverage cannot be
"Appeals are limited to exclusions or exceptions to
coverage based on extenuating or extraordinary
addressed or previously contemplated by the [Board].
The Medicare secondary provisions of the [plan] have
been in place since the inception of the plan in
1993 and have been enforced without exception since
that time, regardless of whether the employer unit
participates in Medicare. The fact that the City of
Gadsden did not begin its participation in Medicare
until 2006 does not meet the criteria necessary to
allow an appeal of the application of the [plan's]
Medicare secondary provisions. Mr. Boman's request
for an appeal is, therefore, denied."
Meanwhile, as early as November 3, 2009, Boman and 18
other active and retired Gadsden police officers sued Gadsden,
alleging, among other things, that they had "been deprived of
Social Security and Medicare protection which other police
officers have been provided" and that,
after 20 years of
service, they were being required to pay a higher pension
charge or percentage of base pay than their counterparts who
were hired after April 1, 1986.
On May 2, 2011, Boman filed
a "motion for immediate relief for medical care."
that, when he was hired, Gadsden "provided police and firemen
a 20 year retirement program whereby police and firemen would
receive 50% retirement benefits after 20 years of service and
lifetime medical care."
He averred that Gadsden had "breached
insurance," and he requested "immediate relief by ordering
[Gadsden] to pay for [his] medical care or in the alternative
ordering [Gadsden] to pay for Medicare coverage for ... Boman
so he will have continuing medical insurance as agreed by
On July 8, 2011, Gadsden filed a "motion for
joinder of indispensable parties," pursuant to Rule 19, Ala.
R. Civ. P.
The motion alleged, in pertinent part:
"7. Upon information and belief, [Boman's]
situation was brought on by his turning age 65,
which resulted in the application of [Board] and/or
[plan] policy provisions concerning primary and
secondary coverage vis-à-vis those covered or not
covered by Medicare.
"8. The application of these provisions to
[Boman], and the resulting situation about which
[he] complains, requires that the [Board] and the
[plan] be made parties defendant to this action.
"9. The [Board] and [plan] should be joined
"a. the complete relief sought
[Boman] cannot possibly be accorded
[Gadsden] cannot make someone be covered
a plan, be eligible for a plan,
primary or secondary;
"b. they have an interest related to
the subject matter of this action;
"c. their absence might impair their
"d. their absence subjects [Gadsden]
unwarranted and inconsistent obligations."
Although the basis of Boman's breach-of-contract claim
is not entirely clear, it appears to rest on the theory that
the handbook created an enforceable contract or promise on the
part of Gadsden.
Thus, on August 1, 2011, Boman and the other officers
defendants the Board and the plan.
It also added distinct
claims by Boman "for benefits" and alleged the torts of bad
faith and outrage against Gadsden. Central to this appeal is
the allegation in the complaint that
"the Defendants have interpreted the State's medical
plan as secondary to Medicare even though the City
opportunity to participate in Medicare. Therefore,
Plaintiff Boman is not Medicare eligible. Plaintiff
Boman is not eligible for medical care because the
State medical plan is secondary to Medicare and
Boman does not have Medicare."
Boman alleged that his "rights to medical
care [had] vested and [could not] be modified or reduced."
sought "injunctive emergency relief requiring [Gadsden] and
Defendants to provide continuing medical care and a judgment
for any unpaid medical bills which [were] due and owing."
On September 1, 2011, the Board filed a motion to dismiss
the action as to it and the plan.
As to it, the Board alleged
entitled to absolute immunity from suit.
Also, according to
the Board, the plan is not a legal entity subject to suit, but
It also averred that, "[e]ven if [the plan] were
an entity subject to suit, it would be immune for the same
Board is immune."
Boman's response to the
Board's motion failed to acknowledge or mention the immunity
On December 15, 2011, the trial court, without conducting
an evidentiary hearing, entered an "order granting motion for
emergency relief," which provided, in pertinent part:
"The court grants Plaintiff Boman's motion for
immediate relief of medical care.
The City of
Gadsden shall be responsible for major medical
expenses under the Plan provided by Gadsden without
secondary to Medicare.
The court finds that John
Boman was not provided Medicare coverage with
"The City of Gadsden, at its option, may pay
John Boman's Medicare premium which is estimated to
be $500/month so that Medicare will become the
primary medical provider with the benefits provided
by [Gadsden] through the State system as the
secondary medical provider.
"The court holds that John Boman has an
enforceable agreement with [Gadsden] for continued
medical benefits which cannot be unilaterally
modified by [Gadsden] because John Boman's benefits
vested after 20 years and/or when he retired."
For purposes of this appeal, we regard
characterization of the plan as correct.
On December 28, 2011, the trial court dismissed the claims
Rule 19(a), Ala. R. Civ. P., defines who is a necessary
party to an action:
"(a) Persons to Be Joined if Feasible. A person
who is subject to jurisdiction of the court shall be
joined as a party in the action if (1) in the
person's absence complete relief cannot be accorded
among those already parties, or (2) the person
claims an interest relating to the subject of the
action and is so situated that the disposition of
the action in the person's absence may (i) as a
practical matter impair or impede the person's
ability to protect that interest or (ii) leave any
of the persons already parties subject to a
substantial risk of incurring double, multiple, or
otherwise inconsistent obligations by reason of the
If the person has not been so
joined, the court shall order that the person be
made a party.
If the person should join as a
plaintiff but refuses to do so, the person may be
made a defendant, or, in a proper case, an
If the joined party objects
to venue and joinder of that party would render the
venue of the action improper, that party shall be
dismissed from the action."
promotion of judicial efficiency and the final determination
of litigation by including all parties directly interested in
Byrd Cos. v. Smith, 591 So. 2d 844, 846
Although no one has argued on appeal that a necessary
party was not joined below, "this Court is entitled to raise
the absence of a necessary party ex mero motu."
Ins. Co. v. American Guarantee & Liab. Ins. Co., 892 So. 2d
369, 371 (Ala. 2004).
Rule 19(a) is mandatory, stating that "[a] person who is
subject to jurisdiction of the court shall be joined as a
party in the action if (1) in the person's absence complete
That being said, it is necessary to point
out that the purported joinder of the Board in this action
does not constitute compliance with Rule 19.
This is so
because the Board is a State agency, see, e.g., Ala. Code
1975, § 36-29-19.6(a), and, as such, it is not subject to suit
in any action based on state law. 4
"Under Ala. Const. of 1901, § 14, the State of Alabama
has absolute immunity from lawsuits.
This absolute immunity
The plan is authorized by § 36-29-14, which also charges
the Board with the responsibility to designate the health
insurance "coverage and benefits" to which "[e]mployees,
officers, members, and retirees" are entitled. § 36-29-14(c).
Tuscaloosa Cnty., 796 So. 2d 1100, 1103 (Ala. 2000) (emphasis
Indeed, the trial court never acquired jurisdiction
over the Board, and that agency was never legally present in
immunity for "'suits naming the proper State official in his
or her representative capacity.'"
Alabama Dep't of Transp. v.
Harbert Int'l, Inc., 990 So. 2d 831, 840 (Ala. 2008) (quoting
Ex parte Alabama Dep't of Transp., 978 So. 2d 17, 22 (Ala.
2007) (emphasis in Harbert)).
One such "exception" to § 14
immunity is a claim "'brought to compel State officials to
perform their legal duties.'"
Drummond Co. v. Alabama Dep't
of Transp., 937 So. 2d 56, 58 (Ala. 2006) (quoting Ex parte
Carter, 395 So. 2d 65, 68 (Ala. 1980)).
Gadsden's position is that "Medicare decisions are not
made by the City" and "that the medical coverage determination
Gadsden's brief, at 16.
Boman disagrees with the
Board's construction of the plan, taking the position that he
never had "become entitled to Medicare" and, consequently,
that the plan should not be construed to "be the secondary
Similarly, the Board conceded that it is charged with the
"adoption and administration of the plan."
The plan states
that the Board has "absolute ... authority to interpret [its]
terms and conditions."
In its motion to dismiss the claims
against it, the Board argued, in pertinent part:
"The entitlement to benefits or lack of entitlement
to benefits can only be determined by the language
of the ... plan. [The] plan benefits are established
by the [Board] and published each year in the
summary plan description which every subscriber to
[the plan] receives each year. As acknowledged by
[Boman in his complaint], the plain language of the
plan clearly states that, when a covered retiree
becomes entitled to Medicare, Medicare becomes the
retiree's primary coverage and the [plan] becomes
the retiree's secondary coverage. ... The only
action alleged to have been taken by [the Board or
the plan] is the application of the explicit plan
Because Boman's claim directly challenges
the Board's administration of the plan -- according to its
terms -- his claim is nothing more than one seeking to compel
state officials to perform their legal duties.
As such, it is not barred by § 14 immunity.
Moreover, Boman's theory of relief against Gadsden for
the alleged lack of medical coverage is that Gadsden gave him
no opportunity to acquire Medicare credits, which matters only
if the Board's construction of the plan is correct.
words, if the Board's construction is incorrect, then Boman's
construction of the plan.
Because the Board's construction of the plan is at the
heart of this dispute, that construction must be adjudicated
in this action, and its officials must be bound by any such
See Austin v. Alabama Check Cashers Ass'n, 936
So. 2d 1014, 1040 (Ala. 2005) ("'It is a principle of general
application in Anglo-American jurisprudence that one is not
bound by a judgment in personam in a litigation in which he is
not designated as a party or to which he has not been made a
party by service of process.'" (quoting Hansberry v. Lee, 311
U.S. 32, 40 (1940))).
Although the joinder of the Board itself as a necessary
party was improper and ineffective, there currently appears no
officials of the Board who are charged with administering the
plan in their official and representative capacities to obtain
review of the correctness of their construction of the plan.
Indeed, under the facts of this case, the inclusion of those
officials is, at a minimum, necessary for the rendition of
"complete relief ... among those already parties," Rule 19(a),
and is needed for the just and efficient adjudication of this
Thus, the proper course of action is for Boman to
assert a claim against the officials of the Board in their
official capacities, seeking to resolve the correctness of
their construction of the relevant plan provisions.
In summary, the judgment is reversed based on the failure
capacities, as necessary parties, and the cause is remanded.
officials of the Board who are charged with administering the
plan, in their official capacities.
REVERSED AND REMANDED WITH DIRECTIONS.
Malone, C.J., and Bolin, Murdock, and Main, JJ., concur.
The City of Gadsden appealed an order of injunctive relief in favor of John Boman, a retired Gadsden police officer. Boman and 18 other active and retired Gadsden police officers sued Gadsden alleging, among other things, that they had "been deprived of Social Security and Medicare protection which other police officers have been provided" and that, after 20 years of service, they were being required to pay a higher pension charge or percentage of base pay than their counterparts who were hired after April 1, 1986. Boman filed a "motion for immediate relief for medical care." He alleged that when he was hired, Gadsden "provided police and firemen a 20 year retirement program whereby police and firemen would receive 50% retirement benefits after 20 years of service and lifetime medical care." He averred that Gadsden had "breached its contract with [him] to provide continuing medical insurance," and he requested "immediate relief by ordering [Gadsden] to pay for [his] medical care or in the alternative ordering [Gadsden] to pay for Medicare coverage for ... Boman so he will have continuing medical insurance as agreed by the Board filed a motion to dismiss
the action as to it and the plan. As to it, the Board alleged that it was an agency of the State and, therefore, was entitled to absolute immunity from suit. Also, according to the Board, the plan is not a legal entity subject to suit, but "merely a program administered by the Board to provide insurance." It also averred that, "[e]ven if [the plan] were an entity subject to suit, it would be immune for the same reasons [the] Board is immune." Boman's response to the Board's motion failed to acknowledge or mention the immunity question. The trial court, without conducting an evidentiary hearing, entered an "order granting motion for emergency relief." It ultimately dismissed the claims against the Board and the plan. Gadsden appealed. Upon review, the Supreme Court reversed based on the failure to join the officials of the Board, in their official capacities, as necessary parties. On remand, the trial court was directed to entertain an amendment to the complaint adding claims against those officials of the Board who are charged with administering the plan, in their official capacities.
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