The Renton Police Officers Guild has filed a lawsuit against the City of Renton, alleging that the city incorrectly told the guild that it could not establish a health savings account for employees with surplus funds from employees’ self-insurance program.
In Renton’s counterclaim, it denied the central claims that the guild made in its lawsuit, which the guild’s attorney also presented to the Renton Reporter. Additionally, Renton requested that the complaint be dismissed with prejudice, meaning the matter cannot be revisited.
In the King County Superior Court, the guild filed a lawsuit requesting that the court order the city to allow the guild’s board of trustees to establish a health savings account for employees, and rule that the guild’s board of trustees must have its own legal representation separate from the city.
According to the suit, a Renton city attorney allegedly told the guild that it could not use self-insurance program surplus funds for a health savings account — also known as a “health savings vehicle” — because it was not a legitimate trust expenditure, among other issues raised.
The suit stated that the Renton attorney’s judgment that funds could not be used for a health savings account was a product of their conflict of interest under RPC 1.7, and the trust that oversees the funds needs independent counsel.
“Various forms of health savings vehicles have been adopted in Washington public sector labor contracts as a method of supplementing the insurance plan design to cover out of pocket insurance costs,” the suit stated. “These savings plans not only allow for broader and supplemental insurance coverage for employees, but they also provide cost containment measures for insurance expenses by incentivizing prudent consumption of health care services.”
At the May 12 Renton City Council meeting, the council voted to give Mayor Armondo Pavone the authority to file any counterclaims as he may deem appropriate in the case filed by the guild. Renton then filed a counterclaim on May 15. Councilmembers James Alberson, Ryan McIrvin, Valerie O’Halloran and Ed Prince voted yes. Councilmember Carmen Rivera voted no, and Councilmembers Kim-Khanh Van and Ruth Perez abstained from voting on the matter.
Details of the suit
According to the suit, Renton has a self-insurance program in place to provide health insurance to its employees. The terms and operations for the program are defined in the collective bargaining agreement covering employees represented by unions, the guild and the Washington State Council of County and City Employees Local 2170 (“AFSCME”).
According to the suit, under the terms of the agreement, employees contribute 9%, and Renton contributes 91% of the funding toward the health insurance program. The account now has a large surplus, and the guild wants to utilize the money to create a health savings account to benefit employees. The suit stated that in 2024, Renton said that a health savings account was not a proper use of surplus funds.
According to the suit, in the past, there have been issues regarding Renton’s ability to control or redirect funds from the insurance account, so a trust account was created to address those issues. According to the suit, the board of trustees is comprised of the guild, AFSCME, and Renton.
According to the guild’s attorney, Jim Cline, the past issue that arose regarding Renton’s ability to control or redirect funds was that money from the insurance fund, intended for employee benefits, was transferred to Renton’s general fund without the knowledge of the employees or the unions.
Cline said having a board of trustees ensured proper oversight of the fund and union participation in how the funds were spent, but now, Renton wants to utilize the money and not allow the guild to utilize the funds for a health savings account.
“Those savings have built up over time and now some of those savings are available to make other plan improvements,” Cline said. “The city wants to pocket that money again, diverting it to the General Fund. While we understand the city’s interests, the guild and AFSCME had attempted to discuss using some of the funds to improve the insurance plan.”
The Renton Reporter contacted a spokesperson for the city, who said this matter is pending litigation and the city is not able to comment at this time. Additionally, the Reporter sought comment from Renton’s attorneys, who represented the city in filing a counterclaim to the guild’s lawsuit, but they did not respond.
According to the suit, the guild believes the funds can be used for any health insurance purpose in the interest of its beneficiaries, and the unions have determined that the funds can be used to establish a health savings account. However, according to the suit, in contrast, Renton stated that health savings accounts were not a proper application of the fund.
“The opinion of the city attorney is that such arrangements are somehow unlawful,” Cline said. “We believe that this opinion is simply absurd and we’re asking the court to so declare that.”
A court ruling in the guild’s favor would not only open the door to a plan that would better for the members, but it could also improve the plan for the city’s benefit, Cline said: “As I indicated, health savings accounts are known to reduce overall insurance program costs.”
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