GM Must Pay Health Benefits To Its 50,000 Early Retirees
April 27, 2011
DETROIT -- A federal appeals court upheld a lower court's decision forcing General Motors Corp. to pay lifetime health benefits to 50,000 early retirees. The decision was upheld Wednesday in the U.S. Court of Appeals for the Sixth Circuit in Cincinnati. At issue in the case, which affects salaried employees who took early-retirement packages between 1974 and 1988, was whether GM was contractually obligated to pay lifetime medical benefits to its retiring workers. The employees involved in the case argued that GM couldn't reverse a contractual promise and in 1989 sued the auto maker, claiming that GM was billing them for co-payments. The appeals-court ruling was the latest of several challenges by GM to a federal-court judge's 2009 decision. The case originally involved 84,000 employees, but the claims of 34,000 workers who retired at the normal retirement age were dismissed earlier by a federal court judge. However, the federal appeals court issuing Wednesday's ruling ordered the claims of those individuals to be sent back to a lower court for further consideration A spokesman for GM said the auto maker was disappointed with the ruling and is considering a further appeal. He said GM believes ``it has the right to amend, modify, suspend or terminate its benefit-plan provisions.'' The spokesman wouldn't discuss the potential financial impact of the court's ruling. In a news release, the lead attorney in the suit, Raymonde C. Faye of Bell, Boyd & Lloyd in Washington, called the decision ``a tremendous victory for the 50,000 early salaried retirees who will now regain their right to full health-care coverage.'' Leonel Currier, the co-lead plaintiff in the case added: ``We are still GM people, but it is important to us that GM keeps its promises.''
