The U.S. Court of Appeals upheld yesterday a decision reached last November by the Office of Personnel Management to delay the time period in which government workers may switch health benefit plans.
"We've been fully justified in what we did," said OPM director Donald Devine, who called the court's ruling a vindication of his office. OPM delayed what is known as "open season" because of confusion about benefit rates, contract terms with insurers and court litigation.
James Peirce, the president of the National Federation of Federal Employees, said the court ruling was "unconscionable."
"It is a travesty of justice when OPM receives court approval to continue steamrollering federal employes in every way imaginable," said Peirce, whose union had challenged the delay of open season.
Meanwhile, OPM plans to hold public hearings next Monday and Tuesday on a tentative proposal to hold open season for a three-week period in May.
The debate about scheduling of open season has been particularly harsh this year because of dramatic rate increases and benefit reductions in health plans mandated by OPM's 1982 budget ceiling for its contribution to the costs of the plans. The delay of that period has left many employes with no way to get out of plans in which costs have risen sharply or benefits have dropped.
The three-judge appeals panel ruled that OPM had good cause to postpone open season as an emergency move since no accurate information was available to employes so that they could make "an informed choice" among the various health benefit plans available to them.
The court, in reversing a decision by U.S. District Judge Aubrey E. Robinson Jr., also agreed with OPM that the financial stability of the federal health benefit program might have been threatened if open season was held as scheduled last November.
In its opinion yesterday, the court noted that Blue Cross/Blue Shield, the government's largest health plan carrier, had suffered $200 million in losses in 1981 and had threatened to withdraw from the government insurance program if open season were held. The insurer feared that with higher rates and reduced coverage in 1982, employes with little risk of health problems would switch to cheaper plans during open season, leaving Blue Cross with the most expensive, high-risk employes.
But Kenneth Blaylock, who heads the American Federation of Government Employees, charged yesterday that the court had been "beguiled into serving as OPM's and Blue Cross/Blue Shields's handmaiden." He accused OPM of yielding to the giant insurance carrier and "putting the company's profit statement above the law and the interests of federal employes health coverage."
"The potential danger to the financial stability of the federal health benefits program" justifies postponement of open season at least until OPM holds public hearings on the issue, the appeals court said. Chief Judge Spottswood W. Robinson III and Judges J. Skelly Wright and George MacKinnon decided the case.
Government employe unions and health benefit carriers had argued that OPM was required under the federal Administrative Procedures Act to hold public hearings before it decided to postpone open season.
That law allows temporary exceptions in emergency situations, however, and the court held that as long as OPM "continues in good faith" with its plans to hold pubic hearings quickly, it would be in compliance with the law.