Deere & Co. Wins Suit over Retiree Health Benefits
Reduction
October 21, 2009 (PLANSPONSOR.com) - The U.S.
District Court for the Southern District of Iowa has ruled
that Deere & Co. did not violate the Employee Retirement
Income Security Act (ERISA) when it changed its health
benefit offering to retirees.
Judge Charles R. Wolle said in his opinion that Deere
was unambiguous when it reserved its right to amend the
retirees' health benefits.
Wolle rejected the retirees' argument that their
benefits were vested and could not be altered by Deere
because summary plan descriptions said their health
benefits "will continue" during retirement.
"Instead, Deere repeatedly and plainly stated in plan
documents, including SPDs, that it retained the right to
amend, modify or terminate the benefit plans," the
opinion said.
In addition, Wolle said "language that medical
benefit coverage 'continues' in retirement is not
synonymous with being 'vested.' Where language
stating that retiree medical benefits 'will
continue' is accompanied by a reservation-of-rights
provision, the plan sponsor retains the unqualified right
to change the plans as a matter of law."
The suit filed in September 2008 alleged that Deere
broke longtime promises to its employees when the company
on January 1 "eliminated, reduced and dramatically
altered" benefits pledged under retiree health plans
(see
Deere Retirees File Lawsuit over Reduced
Benefits
). The changes are described in court papers as
"significantly higher deductibles," the
elimination of a maximum on the amount of out-of-pocket
expenses, increased co-payments for prescription drugs, and
the elimination of any coverage for chiropractors.
The case is
Brubaker v. Deere & Co.,
S.D. Iowa, No. 3:08-CV-00113-CRW-TJS,
10/16/09.
Rebecca Moore
editors@plansponsor.com