Retiree Health Benefits Claims After M&G Polymers USA v. Tackett

Providing retiree medical benefits is a costly endeavor and companies continually seek to shed or contain these legacy costs. Retiree benefit disputes are complicated because an employer’s agreement to provide health benefits is governed by ERISA and in unionized settings, the Labor Management Relations Act (LMRA). The essential question of when retiree health benefits vest is the crux of this litigation and has generated wide splits among circuit courts, making an employer’s elimination of benefits unpredictable.

On Jan. 26, 2015, the Supreme Court weighed in on this complex issue in M&G Polymers USA v. Tackett. The Court’s ruling expressly overruled the longstanding Yard-Man inferences established by the Sixth Circuit in UAW v. Yard-Man Inc. Yard-Man’s series of inferences and rules of construction for determining when retiree benefits vest frequently resulted in rulings in favor of retirees—even where the collective bargaining agreements at issue were silent or ambiguous on the issue of vesting. In Tackett, the Court unanimously held that courts must apply ordinary principles of contract law in determining the vested status of retiree benefits, and that pro-vesting inferences were inconsistent with this standard.

Although Tackett would seem to remove a retiree-friendly approach, questions and uncertainty remain. Since the decision, a number of courts have had the occasion to apply the vesting standard articulated by the Court and reached inconsistent results. For example, in Sept. 2015, the Eastern District of Michigan handed down decisions in separate lawsuits challenging an employer’s attempt to reduce or terminate retiree health benefits, with the retirees prevailing in one case, the employer in the other. And as recently as Feb. 2016, the Sixth Circuit relied on Tackett to find that retiree medical benefits were not vested.

Listen as our authoritative panel of employee benefits experts examines the Supreme Court’s ruling in Tackett and the results reached by federal district courts that have interpreted and applied Tackett over the past year. The panel will explore the sometimes divergent conclusions reached by courts addressing the thorny question of when benefits vest and offer strategies for negotiating and drafting collective bargaining agreements that reduce the risk of plan liability for modifications or terminations of retiree health benefits.

1. Overview of standards for modifying or terminating retiree benefits
2. Discussion of the Supreme Court’s ruling in M&G Polymers USA v. Tackett
3. Review of federal district court cases applying Tackett
4. Practice tips on negotiating and drafting collective bargaining agreements after Tackett

The panel will review these and other key issues:

• What key legal hurdles remain for employers seeking to reduce or eliminate retiree medical benefits after Tackett?
• What are the steps for an employer to properly document its right to amend or terminate the plan?
• How do the circuit courts regard retiree medical benefits that arise from collective bargaining agreements?