Stockton Retirees Sue in U.S. Bankruptcy Court Over Benefits

Some retirees from the bankrupt City of Stockton, California, filed a lawsuit asking a federal judge for an injunction to stop the city from cutting off their health benefits.

Shelley Green, Patricia Hernandez and other members of the Association of Retired Employees of Stockton claim the city has traditionally paid employees’ health-care premiums and extended benefits to supplement Medicare for those over 65.

“Despite this promise,” Stockton officials plan “to immediately terminate payment of health insurance premiums” for many retirees, lawyers for the group said in a complaint filed July 10 in U.S. Bankruptcy Court in Sacramento, California.

Stockton sought protection from creditors on June 28, listing more than $1 billion in assets and more than $500 million in debt.

Before filing for bankruptcy, the city had announced it would be cutting retiree benefits as part of its plan to balance its budget.

The bankruptcy case is In re Stockton, 12-32118, and the retirees lawsuit is In re Stockton 12-02302, both in U.S. Bankruptcy Court, Eastern District of California (Sacramento).

To contact the reporter on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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