NCR Retirees Sue Over Slashed Healthcare Benefits

April 25, 2000 (PLANSPONSOR.com) - A class action suit starts in Minneapolis Thursday over whether NCR had the right to reduce health subsidies and eliminate Medicare supplementation to 3,370 former workers and spouses who accepted early retirement in 1993.

To help restore benefits, the  Minnesota Senior Federation, an activist group, referred the case to Minneapolis law firm Siegel, Brill, Greupner, Duffy & Foster.

The suit highlights the difficulties a plan sponsor might run into when changing benefits if employees took action based on a reasonable expectation that those benefits would be continued.

Restoration Sought

Benefits were reduced January 1, 1999. The suit seeks “complete restoration of benefits and reimbursement for all out-of-pocket insurance expenses incurred by class members since then,” stated Jordan Lewis, the attorney handling the plaintiffs’ case.

The suit charges:

  • NCR created an enforceable contract to provide benefits when it asked early retirees to waive various legal rights
  • No early retirement documents gave NCR the right to later change the benefit terms
  • If the main NCR ERISA plan document is found to be the controlling document, that plan expressly prohibits retroactive benefit changes.

No Comment

Lewis noted the healthcare plan’s history became complicated when it was acquired and then spun off by AT&T. “This case feels quite different from others because the documents don’t do what NCR says they intended to do,” says Lewis. “I think it just got too complicated. The unique language and plan history in this case favors the plaintiffs.”

NCR spokesman John Hurrigan said, “We do not comment on pending litigation.” NCR has 32,800 active employees worldwide. It was unable to provide information on retiree demographics by press time.

In the past, courts have held that when an employer encourages employees to take early retirement based on a reliance on promised benefits, applicable state laws may override the right of employers to change the plan.

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