The Supreme Court will hear a case this fall that holds implications for employers that still offer retiree health benefits.

For its October term, the Supreme Court will adjudicate Tackett, et al. v. M&G Polymers USA, et al., a case involving M&G Polymers and its retirees, retiree dependents and its employee union.

Also see: Retiree health coverage at crossroads for employers

M&G announced in December 2006 that retirees would be required to make contributions to their health care premiums. The following February, retirees filed a class action lawsuit, claiming the payments were in violation of the collective bargaining agreement. At the time, each retiree in the suit was enrolled in the Medical Necessity Plan, the Catastrophic Plan and the Comprehensive Plan. Some retirees refused to pay premiums and were dropped from coverage.    

The district court later found that M&G was “liable for violating both a labor agreement and an employee welfare benefit plan.” It issued a permanent injunction ordering that employee benefit plans be reinstated to levels they were enrolled in until 2007 “to receive health care for life without contributions,” according to court documents.  

Also see: Towers Watson's group annuity cuts retiree medical cost risks

Later, in August 2013, the Sixth Circuit Court of Appeals, in Columbus, Ohio, affirmed the district court’s findings, while modifying its injunction to include current health care plan benefits.

Jamie Fleckner,a partner in Goodwin Procter’s litigation department and head of the firm’s ERISA litigation practice, says that the high court’s decision may be construed to dictate future benefit agreements.

“I think employers who provide retiree health care subject to a collective bargaining agreement that does not specify the time-frame under which such coverage will be provided will – and should – pay close attention to this decision,” Fleckner says.

He adds that these employers are “in a wait-and-see mode.”

“There is a real chance that the Supreme Court will change the playing field with its decision and that will have a meaningful impact on future negotiations,” Fleckner explains to EBN.

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