COLUMBIA — The state Supreme Court on Wednesday ordered the South Carolina Budget and Control Board to return state employee health insurance premiums that a court says were collected illegally.
In a unanimous decision, the court sided with state workers, who sued the panel last year after the board voted to raise rates on employees and agencies by 4.6 percent.
Lawmakers had already agreed to fund premium hikes as part of a compromise on worker pay, seeking to provide workers who had gone four years without a raise with a noticeable increase in their paychecks. The final budget increased most state workers’ salaries by 3 percent, but also required them to contribute more toward their retirement. It also distributed the necessary $20.6 million to agencies, school districts and public colleges to fully cover premium hikes.
But Gov. Nikki Haley – who chairs the board and has sought to restructure many of its bureaucratic duties under a Department of Administration, which would be part of her Cabinet – persuaded a majority to disregard the budget and split the cost of the hikes between employers and workers.
The board voted 3-2 to raise rates on both by 4.6 percent starting Jan. 1. On average, agencies would pay an extra $19 monthly, while employees and retirees would pay $7.
State employees sued in August, saying that the panel lacked the authority to raise premiums in spite of lawmakers’ action. During arguments in January, employees’ attorney Allen Nickles told justices that only state legislators have the power to set state spending and that the board violated the constitution when it voted to split the cost of increases in public workers’ health insurance premiums between agencies and employees.
Justices blocked the increase from taking effect until they decided the case. In their opinion Wednesday, they ruled the board improperly overstepped the Legislature’s authority, and they ordered any excess premiums to be returned to employees.
“The Board violated the separation of powers by acting beyond its statutory authority and infringing upon the General Assembly’s power to make policy determinations, when it declined to use the appropriated funds for the premium increases and instead raised enrollee contribution rates,” the court wrote.
Nickles has previously said that, if the board’s vote were deemed invalid, the ruling would automatically apply to the more than 234,000 public workers and retirees who have health insurance through the state health plan, which covers a total of more than 400,000 residents including spouses and children.
“The Supreme Court made the right decision that it was clear that the Budget and Control Board ... did not have the authority to pass this cost on to the teachers and employees in South Carolina,” said South Carolina Education Association executive director Roger Smith, who commended the decision. “It’s a good day for those employees and for all the hard work that they do.”
Government attorney Mitchell Brown didn’t immediately respond to a request for comment Wednesday. He told the court in January that lawmakers could have submitted a proviso directing the money to be spent in a certain way, but didn’t.
A Haley spokesman said the Republican hoped state lawmakers would split the health care costs evenly in this year’s budget.
“It’s a shame that taxpayers will have to foot the entire bill for increases in state employee health care costs,” Rob Godfrey said. “Anywhere other than government, the costs would be shared.”