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EMPLOYEES' HEALTH CARE FUND SUES STATE FOR ALMOST $26 MILLION OF OVERDUE PAYMENTS

 EMPLOYEES' HEALTH CARE FUND SUES STATE
 FOR ALMOST $26 MILLION OF OVERDUE PAYMENTS
 HARRISBURG, Pa., Dec. 23 /PRNewswire/ -- The Pennsylvania Employees' Benefit Trust Fund (PEBTF), which administers medical and hospitalization coverage to more than 314,000 active, and retired state workers and their dependents, has sued for a preliminary injunction to have the Commonwealth immediately pay it almost $26 million in overdue contributions, it was announced today.
 The suit was filed Dec. 20, 1991, in Commonwealth Court, said Edward J. Keller, chairman of PEBTF's board of trustees.
 "Our suit asks the court to immediately enforce the payments the Commonwealth is legally bound to make for medical and hospitalization coverage administered by PEBTF," Keller said. "The Commonwealth since June of this year, has not been properly making its payments. The resulting shortfall threatens the health care of PEBTF members. Those of us trustees who are the unions' representatives to PEBTF, including myself, are doing everything we can to prevent that injustice from happening, including filing this suit."
 Keller also is state leader of AFSCME, the union representing the overwhelming majority of PEBTF members; and the union that initiated the 1988 establishment of PEBTF.
 Collective bargaining agreements between AFSCME and other unions which represent state employees establish an amount per employee which the Commonwealth contributes to PEBTF.
 The Commonwealth has failed starting in June, 1991, to remit its payments to PEBTF which have grown to a total of $47,320,496 as of Dec. 19, 1991.
 However, PEBTF's suit seeks the immediate payment of only $25,839,350 because, Keller said, "That's all it will take for the time being to continue all medical and hospitalization coverage for all PEBTF members until all the payments which the Commonwealth owes are collected."
 The motion for preliminary injunction follows.
 COMMONWEALTH COURT OF PENNSYLVANIA
 EDWARD J. KELLER, CHAIRMAN, Pennsylvania Employees Benefit Trust Fund (PEBTF), Individually and on Behalf of the PEBTF, Trustees and Beneficiaries of the PEBTF, JOHN DOE, Individually and in his Capacity as Representative of Active Employees of the Commonwealth of Pennsylvania, and JANE DOE, Individually and in her Capacity as Representative of Retired Employees of the Commonwealth of Pennsylvania,
 Plaintiffs,
 vs.
 COMMONWEALTH OF PENNSYLVANIA, OFFICE OF THE BUDGET, Commonwealth of Pennsylvania, ROBERT P. CASEY, GOVERNOR, Commonwealth of Pennsylvania, and MICHAEL A. HERSHOCK, SECRETARY, Office of the Budget, Commonwealth of Pennsylvania,
 Defendants.
 MOTION FOR PRELIMINARY INJUNCTION
 TO THE HONORABLE PRESIDENT JUDGE AND JUDGES OF THE COMMONWEALTH COURT:
 Come now the Plaintiffs, by and through their attorneys Richard Kirschner and M. Kay Gartrell, and move this Honorable Court, pursuant to Rule 1531 of the Pennsylvania Rules of Civil Procedure, for a preliminary injunction without hearing in that immediate and irreparable harm will be sustained by Plaintiffs before a hearing can be held, and Plaintiffs set forth in support thereof as follows:
 1. The Pennsylvania Employees' Benefit Trust Fund ("PEBTF") provides medical and hospitalization coverage for over 86,000 employees of the Commonwealth of Pennsylvania, and their dependents, and for over 46,000 retirees of the Commonwealth of Pennsylvania, and their dependents. In total, over 300,000 citizens of the Commonwealth receive medical and hospitalization coverage through the PEBTF.
 2. The PEBTF receives its funding pursuant to the provisions of various collective bargaining agreements which the Commonwealth enjoys with unions representing unionized Commonwealth employees and pursuant to a contract with the Commonwealth whereby the Commonwealth submits contributions on behalf of managerial employees and Commonwealth retirees. See Exhibit A to the Complaint.
 3. Since June 26, 1991, the Commonwealth has admitted it owed the PEBTF the sum of $25,839,350 as payments due on behalf of retirees in accordance with the provisions of the October 1, 1988 agreement. See Exhibit A to the Complaint. The Commonwealth admits, in its letter of June 26, 1991, that the money is due and owing but requested a delay until it had gone "to the bond market to borrow sufficient cash to meet payment obligations including sufficient cash to make a payment of $25,839,350 ..." to the PEBTF. See Secretary Hershock's letter of June 26, 1991 attached as Exhibit B to the complaint.
 4. Although the money became available to the Commonwealth in September 1991 to remit the payments which were due and owing, it has, despite repeated and urgent requests by the Trustees of the Fund, including the Secretary of Administration of the Commonwealth, failed and refused to pay the money which is lawfully due and owing. Copies of these demand letters, including those of Secretary of Administration Joseph L. Zazyczny, are attached to the Complaints as exhibits B, C, D, E, F, H, I and J.
 5. The delinquency which amounted to $25,839,350 in June of 1991 has since grown to $46,659,144, plus interest of $661,352, amounting to a total of $47,320,496 due as of December 19, 1991.
 6. The failure of the Commonwealth to remit the money which is lawfully due and owing has caused the PEBTF to virtually deplete its reserves and the Escrow Account which it maintains pursuant to its contract with Capital Blue Cross. A failure to replenish this Escrow Account by Thursday, December 19, 1991, places the PEBTF in default of its contract with Capital Blue Cross.
 7. Capital Blue Cross, by virtue of its contract with the PEBTF, guarantees payment of hospitalization expense reimbursement to virtually every hospital in the Commonwealth of Pennsylvania. A breach of the contract voids the Blue Cross guarantee. The 300,000 individuals who presently enjoy hospitalization coverage through the PEBTF will lose that coverage upon termination of the PEBTF contract with Capital Blue Cross, which termination will occur if the Fund cannot replenish that Escrow Account, due to be replenished on December 19, 1991, under the terms of the contract.
 8. Moreover, the failure of the Commonwealth to remit to the PEBTF the money which is due and owing makes it impossible for the PEBTF to pay the premiums to the Health Maintenance Organizations, which provide health care to approximately 14,000 Commonwealth employees and their dependents. These employees will immediately loose their health care coverage upon non-payment of those premiums.
 9. In addition to the foregoing, the failure of the Commonwealth to remit


the money which is due and owing makes it impossible for the PEBTF to pay Pennsylvania Blue Shield for those benefits it has paid for on behalf of Fund beneficiaries. Non-payment of the Blue Shield invoice is cause for termination of the Blue Shield contract which benefits the 300,000 beneficiaries of the PEBTF who retain the services of the thousands of participating Blue Shield doctors.
 10. All of the other facts set forth in the attached Complaint are incorporated herein by reference.
 11. Attached hereto, and in support of this motion and the Complaint seeking preliminary injunctive relief without hearing, is the affidavit of J. Edward Burleigh, III, the Administrator of the PEBTF.
 Wherefore, plaintiffs pray that a preliminary injunction issue without hearing directing that the Commonwealth immediately remit to the PEBTF the sum of $25,839,350 and continue thereafter to continue to remit the sums of money which are properly due and owing in accordance with the October 1, 1988 agreement.
 Such order to remain in full force and effect unless and until modified by further order of this Court.
 Respectfully submitted,
 /s/
 Richard Kirschner, ID No. 04029
 M. Kay Gartrell, ID No. 20217
 Richard Kirschner & Associates
 2550 M St., N.W.
 Suite 350
 Washington, D.C. 20037
 (202) 775-0087
 (301) 320-5345 Fax
 /delval/
 -0- 12/23/91
 /CONTACT: Russell Keating of AFSCME, 717-564-9312/ CO: The Pennsylvania Employees' Benefit Trust Fund; AFSCME ST: Pennsylvania IN: SU:


CC-JS -- PH012 -- 4856 12/23/91 13:14 EST
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Date:Dec 23, 1991
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