GM Retirees Ask Federal Judge To Reject UAW Agreement On Health Benefits

Main Category: Health Insurance / Medical Insurance
Article Date: 09 Mar 2006 - 11:00 PDT

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Some General Motors retirees requested that a federal judge in Detroit on Monday reject a settlement with the United Auto Workers that would require them to pay more for their health care, the AP/Philadelphia Inquirer reports. (Durbin, AP/Philadelphia Inquirer, 3/7). A federal judge in U.S. District Court is determining if GM's plan to shift some health care costs to retirees is acceptable. In an effort to reduce the company's costs by $1 billion per year, GM last year reached a deal with UAW to cut health care spending. However, UAW cannot bargain on behalf of hourly retirees, so GM and the union are seeking court approval to prevent any legal challenges. Under the agreement, retired hourly workers would start paying monthly contributions, deductibles and copayments for medical services up to a maximum of $370 per year for individuals and $752 for families (Kaiser Daily Health Policy Report, 3/6). On Monday, 20 retired hourly workers testified in court, while more than 100 hourly retirees attended the session, many taking seats in an adjoining courtroom or in the hallway to watch the proceedings on television monitors (Ellis, Detroit Free Press, 3/7). Of the 476,676 retirees and dependents affected by the agreement, at least 1,250 have filed objections (Shepardson, Detroit News, 3/7). GM has asked U.S. District Judge Robert Cleland to approve the deal by April 1. Cleland, who gave preliminary approval to the deal in December 2005, is expected to rule sometime after March 22. If he does not decide to uphold the agreement, GM attorney Richard Godfrey said litigation could continue for years.

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Retirees speaking at the hearing argued that the settlement violates their contracts, while GM and UAW said the agreement is necessary for the company's future. UAW attorney Julia Penny Clark said, "This is the only hope that there is that GM will be able to continue to survive" (AP/Philadelphia Inquirer, 3/7). She added, "GM is at risk of not being able to provide these benefits." GM spokesperson Jerry Dubrowski said that the deal had modest changes and will cost retirees about $1 per day. He said, "While we certainly sympathize with the situation of some of our individual retirees, we believe that the settlement is fair and adequate." However, Mark Baumkel, a lawyer for dissenting retirees, called the plan "diabolical and utterly" unfair. He added that GM does not guarantee funding for a trust that pays for part of the retirees' health care and said that premiums could rise to $50 per month if the trust ran out of money. GM retiree Gerald Sutinen, a former union benefits representative, said the retirement contracts signed with the company "were supposed to be unalterable" (Detroit News, 3/7). Robert Henderson, a GM retiree since last year, said that there have been many cases in which the company has mismanaged its finances and operations, including the failure of a recently launched car. He said, "GM needs to correct those problems rather than take money from the retirees." The Free Press notes that some retirees support the changes. Paul Soulliere, a former union benefits representative, said, "People don't realize what the union did, especially for retirees. We're kind of spoiled because we get so many benefits" (Detroit Free Press, 3/7).

"Reprinted with permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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