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September 2014

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Area school districts jump into WEA lawsuit

More than $430,000 at stake locally

As many as seven area school districts have indicated they may join Hartland-Lakeside in its lawsuit against WEA Trust. At stake is more than $430,000 in local funds the districts say belong to them.

Pending upcoming local school board decisions, the Richmond, Merton, Stone Bank, Swallow, Pewaukee, Oconomowoc and Arrowhead School Districts could all get involved with a Hartland-Lakeside-led effort to recover from WEA Trust federal money designated through the Early Retiree Reinsurance Program (ERRP).

WEA insured each district until last year, when, after collective bargaining contracts concluded, many school districts left WEA in favor of other health insurance plans for their employees.

Intended to help employers offset the cost of health insurance for early retirees, WEA applied for and received ERRP funding for its plan participants last school year. The nonprofit health insurer sent letters out to each district, informing each that it would receive credits toward its insurance premiums. But after each school district dropped its WEA coverage in favor of other insurers, WEA refused to pay the school districts any of that money, instead redistributing it to those that remained plan participants.

Hartland-Lakeside was originally supposed to receive $46,000 through the program, but the Oconomowoc School District has the most at stake. It would have received more than $193,000 through the ERRP. Arrowhead was told it would receive in excess of $91,000, and Pewaukee was to receive $58,000 through the federal program. The Merton Community School District was told it would receive roughly $23,000, while the Stone Bank and Richmond school districts were to receive between $9,000 and $10,000 each. Combined, the eight area school districts claim WEA owes them more than $430,000.

Each school district contends that it is still entitled to that money because it covers districts that were members during the 2010-11 school year, when WEA applied for and received the funds from the federal government. WEA, meanwhile, argues that it followed federal law and that the money can only be paid out to current plan participants.

Hartland-Lakeside Superintendent Glenn Schilling indicated that as many as 30 school districts statewide have expressed interest in pursuing legal action.

In the case of Hartland-Lakeside, the district asked that the money be paid directly to the district when it informed the carrier it would be leaving for another insurer. WEA instead offered to apply the money to the 2011-12 plan year, but the district already had plans to use other insurers for that year.

Now, WEA Trust hopes to assert the legality of its actions in federal court. The insurer filed a Dec. 30 lawsuit against 14 school districts that had said publicly that they would pursue legal action against them. It asked a federal court to certify that its distribution of the ERRP funds complied with federal law.

WEA spokesman Steve Lyons told The Associated Press that any of the school districts named in the lawsuit could be dropped from the litigation if they chose not to pursue legal action. Hartland-Lakeside countered by hiring Foley and Lardner LLP and organizing other local school districts to continue the legal fight.

"From our standpoint, we feel that those are our funds, and we would like to gain those back. Because whatever happens, we're working on a contingency basis with Foley and Lardner, so there is no risk here from a public dollars standpoint," explained Merton Superintendent Ron Russ. "It's just us trying to get at the dollars, which we feel we put into the trust, that we feel should come back to us."

Several area school boards are expected to convene this week to make a final decision on the pending legal action.

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