May 6, 2009
The Honorable Steven Chu
The Secretary of the Department of Energy
U.S. Department of Energy
1000 Independence Ave., SW
Washington, DC 20585
Dear Mr. Secretary,
The University of California Livermore Retiree Group (UCLRG) represents over three hundred of the 5400 former University of California (UC) employees who retired from UC after working at the Lawrence Livermore National Laboratory (LLNL) during the time when UC was managing LLNL. 327 of those retirees are not Medicare eligible, due in part to past UC policies. UCLRG was formed to ensure consistent treatment of retiree medical benefits for all UC retirees. We signatories are members of UCLRG and are requesting your help.
As a recent Director of
Lawrence Berkeley National Laboratory (LBNL), you are aware of the commitments
that UC has made to its employees at LBNL with respect to retiree medical
benefits. UC made the same commitments to us. UC offered us continued medical
benefits when we retired so long as they were provided to other UC retirees. We
received those benefits from UC until DOE selected the current management,
Lawrence Livermore National Security LLC (LLNS), to replace UC as management
contractor at LLNL.
NNSA asserts that they are free to control the
benefits we receive. UC employed us for work at LLNL so we are UC retirees,
receiving our pensions from UC. We should be getting our medical benefits from
UC as well. Instead NNSA has put LLNS in charge of our benefits, and they have
informed us of an aggressive plan to significantly curtail benefits and
increase retireesÕ share of the costs over the next three years. These changes
are unique to UC retirees from LLNL. Retirees at LANL and LBNL are continuing
to receive UC or UC-equivalent benefits.
We believe that the Department of Energy (DOE) has
illegally transferred responsibility for our medical benefits from UC to LLNS.
UC benefits representatives gave us assurances, during pre-retirement seminars
and in individual benefits counseling sessions, that UC retirees from LLNL
would continue to receive UC medical benefits upon retiring. A primary driver
for most retirees to take the annuity rather than the Òlump sumÓ option is that
continuation of UC medical benefits after retirement was only available if the
annuity was selected. LLNS did not exist until long after most of us retired.
Before the management change UC retirees from LLNL had no relationship with
LLNS. NNSA placed a requirement in
Contract No. DE-AC52-07NA27344 that LLNS
provide retirees comparable medical benefits. We cannot conceive of any legal
basis for allowing LLNS to control retireesÕ medical benefits. A contract
between NNSA and LLNS should have no legal effect on UC or its retirees, since
neither is party to the contract. The contract between NNSA and LLNS should not
void the commitment UC made with regard to medical benefits for UC retirees from LLNL.
DOE Directive N 351.1 directs DOE Contractors to
minimize as many retiree benefit costs as legally possible. It was
approved April 27, 2006, to be applied by March 1, 2007 at the latest. It
exempted selective elements of DOE without providing justification. Its application was deferred one year
for LLNL. That allowed the contract between LLNS
and NNSA to specify employment terms for transferring UC employees and medical
coverage for UC retirees that would not have been allowed without the
suspension. Some of us believe the delay was to allow NNSA to use bait and
switch tactics, aka Total Compensation Package 1 (TCP1), to convince UC
employees and retirees that the transition would be business as usual. UC
employees learned that was not true when layoffs began shortly after the
transition, even though the contract required that every UC employee in good
standing be offered a job. Retirees were not affected until open enrollment for
medical insurance last fall limited our options and increased our costs.
NNSA inserted Modification 42 into the LLNS contract
effective August 25, 2008, long after contract execution. Among other changes,
it modified Section H subsection (i) by adding clause (2) which begins ÒThe
Contractor may change retiree medical benefits after contract executionÓ. That
effectively nullified clause (1), which mandated UC equivalent medical
benefits. It also discredited the claim that DOE transferred UCÕs obligation to
provide UC equivalent retiree medical benefits to LLNS.
Subsequently LLNS changed the retireesÕ medical
insurance pool, from the UC pool to a pool of UC retirees and LLNS TCP1
employees, resulting in a medical cost increase of 30% for LLNS in 2009. That
was the first step in an LLNS three-year plan, presented openly at LLNS medical
benefits open enrollment meetings, to eviscerate retireesÕ medical benefits
while significantly increasing our costs.
We believe that modification 42 is an attempt to implement 351.1 and is driving the changes to the medical benefits
provided by LLNS. We do not believe that the directive is applicable to UC
retirees from LLNL because it was not included in the terms of the UC-DOE
management contract (Contract 48). We also do not believe NNSA should be
allowed to change LLNSÕ responsibility to provide our medical benefits
retroactively after contract execution.
Contract 48 termination Section H (e) says UCRP shall
retain the liabilities associated with pensioners. It also requires DOE to pay
any unfunded UC liabilities that arise from terminating the contract. Our
medical benefits are an unfunded liability resulting from contract termination.
DOE is not conforming to the contract provisions by providing modified benefits
through LLNS. DOE is reimbursing LLNS rather than UC as the contract required
and is paying a liability different than UC had.
We solicit your aid in transferring responsibility
for our medical benefits back to UC where it rightly and legally belongs and
insuring that DOE reimburse UC for its share of the costs. We are aware of your
intent to recuse yourself from some Laboratory issues. If this is one of those
issues, we request that you choose a neutral DOE party outside of NNSA with appropriate
knowledge and legal expertise to review our situation. We believe that NNSA is a major part of the problem and should not be
the reviewer.
We are working to convince UC that Contract Contract
48 doesnÕt allow UC to cede control of retireesÕ medical benefits to
LLNS. We believe a co-operative effort on the issue by UC and DOE will be
needed to correct the problem.
Joe Requa, UCLRG Founder, is acting as spokesman on
our behalf and is our point of contact. He has set up a web site at http://home.comcast.net/~jrequa/retiree.htm
that gives a more detailed description of the problem we perceive, links to
relevant documents, status reports on our activities and related newspaper
articles. He can be contacted by mail, email or telephone if more
information is needed, as shown below:
Joe Requa
UCLRG Founder
563 Brookfield Dr.
Livermore, CA 94550
(925) 443-0120