Indiana Teachers File Second Suit Against Union

Four Indiana teachers covered by the Indiana State Teachers Association insurance trust filed a class action lawsuit in state court for breach of fiduciary duties. The immediate purpose of the suit is to get eight additional trustees appointed to oversee the trust’s finances.

A previous suit had been filed in federal court, but ISTA is disputing whether the feds have proper jurisdiction in the case, so the plaintiffs are covering all bases. The 22-page complaint is worth reading in its entirety, but here are a few choice excerpts:

* “As part of the NEA’s exertion of control over ISTA and the plan, all nine of the Plan’s Trustees resigned or were terminated, and the NEA appointed Edward Sullivan to act as ‘Sole Trustee’ of the Plan. However, the Trust Agreement requires that the Plan be operated by nine Trustees and contains no provision for the appointment of a sole trustee. Edward Sullivan’s complete control over the administration of the Plan is thus in violation of the terms of the Trust Agreement.”

* “Days after notifying schools that [long-term disability] payments would be cut off entirely, the NEA and ISTA announced that they had formed a ‘partnership’ to marshal sufficient funds to ensure that LTD benefits would be paid in full. However, the NEA and ISTA admitted that the details of this partnership had not yet been finalized or reduced to writing, including the source of money to fund tens of millions of dollars in LTD benefits. The NEA and ISTA further stated that the details of their partnership might remain completely confidential. Without any details of where the money is going to come from, or even an assurance that the details would be explained once they were worked out, the promise by the NEA and ISTA that LTD benefits will continue provides cold comfort to disabled teachers who rely on these benefits to pay their monthly living expenses. Plaintiffs’ counsel have repeatedly asked counsel for the NEA, ISTA, and other Defendants to provide details and documentation of their Trust, including requests during a telephonic conference with the court in the Federal Action, but the Defendants have refused to provide any details or documentation.”

* “One detail of the ‘partnership’ between NEA and ISTA that became clear only after persistent questioning by the press was that the NEA’s portion of funding for LTD benefits would not be a gift, but instead would be nothing more than a long-term loan to ISTA. In order to pay back this loan, [ISTA President Nate] Schnellenberger admitted that ISTA would raise dues on Indiana teacher members of ISTA and would have to consider selling its assets and laying off staff. In other words, under the NEA and ISTA ‘partnership,’ Indiana teachers will end up paying millions of dollars for the mismanagement and irresponsible investment of ISTA Insurance Trust funds for many years to come.”

* “The Plaintiffs and their counsel are understandably skeptical that the NEA and ISTA will follow through on their public commitment to pay all LTD benefits over the next 15-20 years. As described above, just over a month ago ISTA principals publicly stated that its LTD policy was among the best administered in the country, that the financial problems it was experiencing were not severe, and that benefits would not go unpaid. Days later, ISTA issued a memo to school (sic) saying LTD benefits would be completely cut off after July 31, 2009.”

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