10 November 2004

Wall Street Journal Examines Companies That Use Legal Means To Change Health Benefits for Union Retirees

The Wall Street Journal on Wednesday examined the "aggressive steps" some companies are taking to reduce union retiree benefits, "including going to court." According to the Journal, "companies taking such steps remain a minority," but "the number of employers using the courts to attempt to reduce benefits for union retirees is rising, and some have been successful."

 Companies have argued that contract references to "lifetime" coverage refer to the lifetime of the contract -- not the retiree -- and many contracts have already expired. The Journal reports that companies have "little to lose" by suing unions since they do not face penalties if they lose the case. In addition, companies are not always required to provide benefits for retirees who elect to drop coverage during litigation. As the cases "drag on," some companies save money when retirees forgo high-priced care or drop out of the plans, the Journal reports.

As the cases "drag on," some companies save money when retirees forgo high-priced care, drop out of the plans or die, the Journal reports. Some unions have stepped in to try to protect the benefits of retirees, including the United Auto Workers and the United Steelworkers of America. However, unions are barred from striking or filing unfair labor practice complaints for retirees. Another tactic for companies looking to reduce employee benefits is to sue first to "stand a chance of choosing jurisdiction," rather than change union retirees' benefits and wait for retirees to file suit, according to the Journal. In addition, employers "typically announce reductions in the retirees' benefits" when they sue, which "entitles them to lessen the liabilities carried on their books," the Journal reports (Shultz [1], Wall Street Journal, 11/10).

 Retiree's Face Hardships in Challenging Former Employers
 The Journal on Wednesday also profiled GenCorp retiree John Van Dyke, who is suing the company over its attempts to charge retirees for health insurance. According to the Journal, Van Dyke's lawsuit, which has been in court for almost five years, "shows the daunting challenges faced by the oldest Americans, union and salaried, if they go to court on their own to recover health benefits." When Van Dyke sued GenCorp in October 2000, the company argued that the contested labor contracts that promised lifetime coverage didn't mean "at no cost." The company also pointed to fine print on the bottom of some benefit enrollment cards that they claim releases them from any "obligation under the union contract," the Journal reports. As the case continued, plaintiffs were denied class-action status twice. Now the 294 retirees -- most in their 80s -- who filed the suit must each file individually by 2005 and pay a $150 filing fee. Some of the original plaintiffs have died since the case was first heard. In its latest quarterly filing, GenCorp said it didn't expect a trial until after next summer. The filings also show the company's liabilities for health insurance declined 16% in the five years since the suit began (Shultz [2], Wall Street Journal, 11/10).

 Related Coverage
 In related news, the Boston Globe on Tuesday examined a contract agreement between Lucent Technologies and its unions that would result in 70,000 retirees and 3,250 active workers for the first time paying for a portion of health insurance premiums (Blanton, Boston Globe, 11/10).

Search Our Canadian Drug Prices

close window