Compliance

Court Rules for Retirees on Health Benefits

By Fred Schneyer editors@plansponsor.com | July 09, 2010

July 9, 2010 (PLANSPONSOR.com) – Retirees from a Sturgis, Michigan, manufacturing facility are entitled to employer-paid health benefits for the rest of their lives, a federal judge has ruled. 

U.S. District Judge Robert J. Jonker of the U.S. District Court for the Western District of Michigan rebuffed arguments by Newell Window Furnishing Inc. that language in a summary plan description (SPD) gave the employer the right to drop the benefits.  

The SPD stated that the company “hoped” to continue the benefits indefinitely but reserved the right to change the payments at any time. Jonker declared in his ruling: “This language is not an unqualified statement that the employer retained the unilateral right to amend and terminate the plan.” 

Jonker ruled that a series of union labor pacts established that the retirees and their spouses and dependents were entitled to vested lifetime health benefits and full payback of Medicare Part B insurance premiums. 

The Sturgis plant manufactured window furnishings before being closed in 2003. At the time the plant was shut down, it was owned by Newell Window Furnishings Inc.  

The court said Newell and prior owners had agreements mandating that Sturgis employees and retirees be given certain health insurance benefits including full reimbursement of Medicare Part B insurance premiums paid by retirees. 

The lawsuit was brought by a group of Sturgis employees who retired before July 31, 1998.  

“Here, the retirees have met their burden of demonstrating that the collective bargaining agreements unambiguously gave Sturgis plant employees who retired under them a vested right to healthcare benefits, including health insurance and Medicare Part B reimbursement,” the court said. 

The case is Bender v. Newell Window Furnishings Inc., W.D. Mich., No. 1:06-CV-113.