<nobr>Apr 14, 2008</nobr>

ERIC Urges Full Court of Appeals Rehearing of Decision on Retiree Health Coverage Vesting When Tied to Eligibility for Pension Benefits

ERIC on April 11 filed with the Sixth Circuit Court of Appeals an amicus brief urging the court to reconsider en banc its decision that effectively declares that by operation of law employees become vested in retiree health care coverage when eligibility for retiree health coverage is tied to eligibility for pension benefits under a collective bargaining agreement, unless the agreement expressly states that retiree health care coverage terminates at a particular date or does not vest at all.

In March 2008, the Sixth Circuit in a 2-1 panel decision held in Julius Noe, et al v. PolyOne Corporation that collective bargaining agreements that link retirees pension eligibility to their eligibility for retiree health benefits is evidence that the retirees health benefits are vested and cannot be amended by their former employer. The court also noted that the collective bargaining agreements only provided "general durational clauses" and failed to limit the duration of provisions for retiree health benefits.

The Sixth Circuit vacated a lower court's dismissal of the retirees' claim that their former employer violated the Labor Management Relations Act by altering their retiree health benefits, finding that the lower court purportedly erred by overlooking the fact that the retirees' eligibility for health benefits was linked directly to their eligibility for pension benefits.

ERIC argues that the panel's ruling that employees automatically become vested in retiree health coverage in such circumstances conflicts with other circuit court decisions and that the decision is inconsistent with Congress' expressed intent in ERISA of providing uniform nationwide regulation of employee benefit plans. By holding that retiree health care coverage vests by operation of law unless the relevant labor agreement specifically provides to the contrary, the panel decision subverts Congresss intent that retiree health care coverage not vest by operation of law.

The brief also stresses that the panel decision further endangers the employee benefit system by imposing hundreds of billions of dollars of unforeseen and unaffordable liability for retiree health care.

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For more information:
Ted Godbout
Manager, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: (202) 789-1400
Fax: (202) 789-1120
tgodbout@eric.org
www.eric.org


Text Files:

ERIC Amicus Brief

Julius Noe, et al v. PolyOne Corporation

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