The SAG-AFTRA Health Plan and its trustees have been sued in federal court by Ed Asner and nine other senior participants over the upcoming cuts in benefits and eligibility for the plan.
Asner, a six-time Emmy winner, is the lead plaintiff in the class action complaint, which was filed on Tuesday in Los Angeles. The suit alleges two counts of breach of fiduciary duty, one count of engaging in a prohibited transaction and one count of failing to disclose information material to plan participants.
The suit said the 91-year-old Asner, a former SAG president and current member of the SAG-AFTRA national board, will lose his coverage, even though he had more than $25,950 in yearly covered earnings with residuals and sessional earnings because he will not reach the new qualifying threshold by sessional earnings that goes into effect in 2021.
A rep for the plan said Friday, three days after the suit was filed: “The lawsuit filed against the Board of Trustees of the SAG-AFTRA Health Plan (and the former SAG-Producers Health Plan) is entirely without merit. The Board of Trustees has always taken its responsibilities very seriously, consulting with respected and experienced experts in connection with the Health Plan merger and the ongoing design of the Plan. The complaint misrepresents the facts and omits material information about the diligence that preceded the decision to merge as well as the circumstances leading to the recent benefit changes. We will vigorously contest this lawsuit and demonstrate that our actions were fully consistent with our legal responsibilities.”
The lawsuit was filed three months after the health plan announced in an email to members that it would raise the earnings floor for eligibility from $18,040 a year to $25,950, effective Jan. 1. Trustees said at that point that without restructuring, the plan was projecting a deficit of $141 million this year and $83 million in 2021.
Opponents have estimated that the changes eliminated coverage for about 11,750 of 32,000 participants, including 8,200 senior performers. Participant-only quarterly cost will be $375, increased from $300; participant plus one dependent will cost $531, increased from $348 per quarter; and participant plus two or more dependents will be $747, increased from $375 per quarter.
The changes to the plan also came as many of SAG-AFTRA’s 160,000 members were unable to generate earnings since the COVID-19 pandemic hit in mid-March and caused virtually all productions to halt. The health plan is administered by a board comprised of equal numbers of trustees for the union and for the employers.
The suit alleges that the trustees have mismanaged the plan, which was created in 2017 by merging the SAG Health Plan with the AFTRA Health Plan. It notes that the SAG Health Plan was formed in 1960 to provide health coverage to all SAG members with seed money from SAG performers surrendering the entirety of their television residuals for movies made prior to 1960.
“Now, the same performers who made those tremendous sacrifices have been abandoned by the pension plan and a health plan,” the suit alleged. “They are being eliminated from health coverage by the health plan as a result of the January 1, 2017 merger of the SAG Health Plan with the AFTRA Health Plan, which union leadership touted would position the new health plan ‘to be financially sustainable for all members for years to come’ and would ‘strengthen the overall financial health of the plan while ensuring comprehensive benefits for all participants.'”
The suit alleges that the trustees should have made revisions in how the plan operated prior to announcing the “draconian” changes in August.
“The trustees blame the COVID-19 pandemic for the suddenly urgent need to impose the Benefit Cuts and drop thousands of participants from SAG-AFTRA health coverage,” the suit said. “This blame ignores the facts and readily available measures that could have addressed such a one-time event without dramatically ending SAG-AFTRA health coverage for primarily older participants including many performers who surrendered their right to pre-1960 film residuals to start the SAG pension and health plans for all members.”
The suit noted that the plan is projected to continue to have a fund reserve of more than $250 million at the end of 2020, funded in part by the participants who will be cut from continued SAG-AFTRA coverage. It alleged that the cuts “wrongfully and illegally” discriminate based on age, partly because of the penalty on participants 65 years of age or older who take their vested pension.
“Such participants get zero covered earnings credit for residuals earnings toward the new $25,950 earnings threshold for SAG-AFTRA health care eligibility, yet they continue to have contributions paid into the plan and dues calculated based on the residuals and sessional earnings at the same rate as younger participants,” it asserted.
The suit said that prior to the 2017 Health Plans Merger, the SAG-Producers Pension and Health Plan “unconditionally” promised senior coverage to surviving spouses for life so long as the surviving spouse did not marry.
The suit also asserts that the SAG-AFTRA Health Plan Trustees — who include former SAG presidents Richard Masur and Barry Gordon — knew soon after the plans merged that the health benefit structure was not sustainable. However, the trustees did not disclose that information to members of the union’s bargaining committees on the most recent successor deals for the commercials contract, a new Netflix contract and the feature-primetime TV contract, approved in June with $54 million of the $318 million in gains going to the health plan.
“Far less draconian and equitable adjustments were available for a one-time event like Covid-19, such as increased diversions,” the suit alleges.
“The SAG-AFTRA Health Plan Trustees, several of whom participated in the negotiations and the SAG-AFTRA National Board approvals of the contracts, failed to disclose to the non-health plan trustee members of the union negotiating teams and the SAG-AFTRA National Board, or to the membership, the funding structure necessary to sustain the health benefit structure, the imminence of benefit cuts or the insufficiency of the negotiated contract terms to sustain the health benefit structure,” the suit asserts.
“The non-trustee negotiators lacked information material to the funding terms and relative value of contributions versus wage increases or needed diversions to sustain the benefit structure,” the suit alleges. “The non-health plan trustee union negotiating committee members and SAG-AFTRA National Board members and the membership lacked information that the contracts were insufficient to sustain the benefit structure, and to assess the value of the negotiated terms. The health plan trustee SAG-AFTRA National Board members failed to disclose the information in connection with the SAG-AFTRA National Board approval votes, failed recuse or to abstain from voting and voted to approve the contracts.”
The suit is seeking “equitable or remedial relief as the Court may deem appropriate including restoration of SAG-AFTRA health coverage benefits to participants affected by the wrongful Benefit Cuts.”
Besides Asner, other plaintiffs are senior performers Michael Bell, Raymond Harry Johnson, Sondra James Weil, David Jolliffe, Robert Clotworthy, Thomas Cook, Deborah White and Donna Lynn Leavy, along with Audrey Loggia, the widow of actor Robert Loggia. Jolliffe is the vice president of the SAG-AFTRA Los Angeles local and a longtime leader for the union’s progressive-leaning Membership First wing.
The defendants named in the suit are the SAG-AFTRA Health Plan, the board of trustees and individual trustees, including Gordon, Masur, SAG-AFTRA National Executive Director David White, SAG-AFTRA General Counsel Duncan Crabtree-Ireland, SAG Contracts Director Ray Rodriguez and Carol Lombardini, president of the Alliance of Motion Picture and Television Producers — which serves as the bargaining arm for studios and networks in negotiations with the industry’s unions.
Others trustees named are Daryl Anderson, Helayne Antler, Timothy Blake, Jim Bracchitta, Ann Calfas, John Carter Brown, Eryn M. Doherty, Gary M. Elliott, Mandy Fabian, Leigh French, J. Keith Gorham, Nicole Gustafson, James Harrington, David Hartley-Margolin, Harry Isaacs, Marla Johnson, Robert W. Johnson, Bob Kaliban, Sheldon Kasdan, Matthew Kimbrough, Lynn Lambert, Shelley Landgraf, Allan Linderman, Stacy K. Marcus, John T. McGuire, Dian P. Mirowski, D.W. Moffett, Paul Muratore, Tracy Owen, Michael Pniewski, Alan H. Raphael, John E. Rhone, Marc Sandman, Shelby Scott, David Silberman, Sally Stevens, John H. Sucke, Kim Sykes, Gabriela Teissier, Lara Unger, Ned Vaughn, David Weissman, Russell Wetanson and Samuel P. Wolfson.
Nearly 20,000 people have signed a change.org petition titled “Overturn the changes made to the SAG-AFTRA Health Plan” since August. In September, the health plan announced an 80% reduction in COBRA premiums for participants who no longer qualified for coverage starting Oct. 1.
The suit was filed by Neville L. Johnson, who represented plaintiffs in litigation over how unions handled foreign royalties, including the late Ken Osmond’s class-action lawsuit in 2007 against the Screen Actors Guild, asserting that SAG had over-stepped its authority in collecting foreign royalties without disclosing the collection agreements. The action was settled in 2010.