State Gets TRO Against Itself
Hawaii will have to hold off on implementing a law to help Maui hospital workers.
A judge has granted the state pension system’s request for a temporary restraining order to stall the implementation of that offers special retirement benefits to certain state hospital workers.
The sued the and the state in general on Aug. 9 to hold off on moving forward with a law that聽gives cash severance payments or early retirement benefits to unionized public workers at three hospitals in Maui County that are being privatized by Kaiser Permanente.
The ERS has said聽the law is unconstitutional because it impairs the retirement benefits of all state and county employees and retirees. The Internal Revenue Code does not allow the ERS plan to offer employees the choice prescribed in the law, which could result in the ERS losing its status as a tax-qualified defined benefit pension plan.
Pension system officials have said losing that tax status would cause employees to pay federal income taxes on the portion of their benefits funded by the employer at the time that the benefits vest instead of when they actually receive the benefits.
This is one of the biggest reasons that Gov. David Ige vetoed in July. But the Legislature came back in special session later last month to override the veto.
Judge Jeannette Castagnetti of the 1st Circuit Court determined that the ERS would likely prevail in its argument that the law is unconstitutional, an ERS news release said Tuesday.
“Further, Judge Castagnetti ruled that the balance of harm supported the granting of the TRO as the results of such聽a disqualification could cause irreparable harm to the almost 120,000 members of the ERS as all State and county聽employees would lose the benefit of tax deferral that is fundamental to the ERS plan, as well as other benefits聽associated with a qualified plan,” the release says.
The judge聽ruled that the public interest supported the issuance of a TRO as it is in the public聽interest to maintain the ERS鈥檚 tax-qualified status.
The judge temporarily stayed implementation of the law so the ERS can seek guidance from the IRS as to the potential impact of the law.
The TRO聽does not聽have any impact on the ongoing transfer of Maui Memorial Medical Center, Kula Hospital & Clinic聽and Lanai Community Hospital hospitals from HHSC聽to Kaiser, the release says.
