GM Faces another Retiree Benefits Suit

June 22, 2011 ( - A group of 45 General Motors Co. salaried retirees have filed a lawsuit claiming the auto giant and Metropolitan Life Insurance Co. breached its contract when it slashed life insurance benefits.

When GM filed for bankruptcy it cut the amount of basic life insurance it offered retirees who joined GM before 1993 to $10,000. GM said retirees could buy additional insurance by enrolling in a voluntary life insurance program through MetLife, but they would have to pay for the extra coverage, the Detroit News reports. But during the first two years of participation in the program, the death benefits are equal to the amount of the premiums paid.   

The retirees claim that MetLife told them that their “continuing life insurance” coverage would “remain in effect for the rest of your life.” 

Some retirees lost $500,000 to $1 million in insurance policies when the value was reduced, said Andrew Rogers, a lawyer for the retirees, according to the news report. The suit says the reduced benefits are insufficient to cover even funeral and burial expenses and are “extreme and outrageous.”   

The retirees are seeking to reinstate the full value of their policies.   

The Detroit News said GM spokesman Jim Cain defended the company’s actions, saying “the right to modify or terminate employee benefits has always been an integral component of the plans themselves, as was frequently communicated to participants.”   

Last month, more than 100 former General Motors Corp. executives filed a lawsuit in federal court to recoup millions of dollars in pension benefits lost following GM’s bankruptcy (see Former GM Execs Suing over Retirement Benefits). Former GM Execs Suing over Retirement Benefits).