MA Utility Can Drop Retiree Medicare Repayments

June 9, 2005 (PLANSPONSOR.com) - Because retired steel workers had no vested rights to reimbursement of their Medicare Part B premiums, their former employer was within its rights in halting the reimbursements, a federal judge ruled.

>Senior US District Judge Edward Harrington of the US District Court for the District of Massachusetts cleared NSTAR Electric and Gas Corp of Boston of the plaintiffs’ allegations that their former employer had violated the Employee Retirement Income Security Act (ERISA) by dropping the Medicare repayments, BNA reported.

>In addition, the court found that the retirees had no vested right to dental benefits so the employer did not violate ERISA by canceling its dental benefit plan for retirees.

>According to the court, the suit was filed by a group of retirees who were former members of United Steel Workers of America Local 12004 against NSTAR, alleging the ERISA violation when it ceased the Medicare repayments for retirees from the company between 1973 and 1997. The retirees also charged that NSTAR violated ERISA when it terminated its retiree dental benefit plan.

>Harrington ruled that employees who retired between 1973 and 1980 did not have vested rights to reimbursement of their Medicare Part B premiums because NSTAR’s obligation to reimburse such premiums lasted only during collective bargaining agreements that were in effect between 1973 and 1980.

>Additionally, employees who retired between 1980 and 1997 also lacked a vested right to reimbursement of their Medicare Part B premiums because the plan documents didn’t reflect that such benefits were vested, Harrington found.

>Finally, the court rejected the plaintiffs’ allegations that NSTAR violated ERISA by canceling their dental benefits. Harrington pointed out that it was the summary plan description that governed the retirees’ right to benefits. The SPD specifically stated that NSTAR had the right to amend, modify, or terminate the plan at anytime, the court said.

>The case is Senior v. NSTAR Electric and Gas Corp., D. Mass., No. 04-10160-EFH, 5/31/05.

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