Union Retirees Win Health Benefits Cutback Fight

March 20, 2008 (PLANSPONSOR.com) - A federal appellate court has ruled that an employer can't cut retired union members' health benefits because a union contract links the benefits to pension eligibility.

With that decision, the 6 th  U.S. Circuit Court of Appeals threw out a lower court ruling dismissing the lawsuit by a group of retirees which charged that PolyOne Corp. – formerly B.F. Goodrich Co. – violated federal labor law by cutting the retirees’ health benefits despite their union contract. According to the ruling written by Circuit Judge David W. McKeague, 6 th  Circuit case law has mandated that a link between pension eligibility and health benefit eligibility is to be taken as evidence that a labor contract envisioned the health benefits would be vested.

The 6 th  Circuit decision also pointed out the collective bargaining agreements at issue included only “general durational clauses” and had no clause that specifically referred to the duration of the retirees’ health benefits.

According to the appellate ruling, the plaintiffs retired between 1979 and 1990 from B.F. Goodrich Co.’s Geon Vinyl Division in Louisville, Kentucky. Through a series of transactions after that, the division became PolyOne Corp.

While employed by B.F. Goodrich, the retirees were represented by the Distillery, Rectifying, Wine and Allied Workers’ International Union of America, Local 72. Union agreements indicated retirees were not required to contribute to their health insurance premiums, were reimbursed for Medicare Part B, and paid $1 for each prescription medication.

In March 2006, PolyOne stopped reimbursing the retirees for the Medicare Part B premiums, began requiring the retirees to contribute toward their insurance premiums and instituted much higher prescription drug copayments, according to the court. The retirees sued and Chief U.S. District Judge John G. Heyburn II of the U.S. Western District of Kentucky threw out their claims.

The 6th Circuit ruling is here .