The United States Bankruptcy Appellate Panel for the Eighth Circuit reversed a decision by federal Bankruptcy Judge Kathy Surratt-States that would have allowed Peabody Energy to stop paying health care benefits for some 3,100 retirees that it had assumed in the spinoff of Patriot Coal.
The strongly-worded decision by the three-Judge panel means that Peabody continues to hold responsibility for paying the health care benefits for this group of retirees, who are mostly in the Midwest.
“This is a bright ray of good news in what has been a long, dreary period for the retirees, their dependents and widows who have been desperately worried about what’s going to happen to their health care,” UMWA International President Cecil E. Roberts said.
“Peabody has spent years trying to get rid of its obligations to the thousands of retirees who made it the richest coal company in the world,” Roberts said. “This decision foils part of that plan. And it makes us even more determined to keep fighting to make sure the company lives up to its entire obligation to these miners.”
In preparation for the spinoff of Patriot, Peabody signed a 2007 agreement with Heritage Coal Co., which was at the time a Peabody subsidiary that Peabody included in the Patriot spinoff. That agreement allowed Peabody to reduce its contribution levels for retiree health care benefits to the same level as Heritage (Patriot) would pay if such levels were modified in the future.
Peabody argued that since Heritage (Patriot) was relieved of all its obligation to pay for retiree health care by Judge Surratt-States, that Peabody should be relieved of its obligation as well. Judge Surratt-States agreed, and issued a ruling in Peabody’s favor on May 29. Patriot and Heritage appealed, and their appeal was supported by the UMWA.
U.S. Senator Joe Manchin (D-W.Va.) said the court’s decision was just common sense.
“The decision confirms what I, and most West Virginians, believe is just common sense: that miners are entitled to the benefits they have earned and companies are required to keep the promises they have made,” Manchin said. “Our miners worked extremely hard every day to provide the fuel that powers this country, and I am pleased that the United States Bankruptcy Appellate Panel decision helps ensure they will receive their hard-earned benefits. I will continue the fight in Congress to make sure that the promises that have been made to all of our miners are kept.”
U.S. Senator Jay Rockefeller (D-W.Va.) said Peabody’s attempt to get out of its obligations was unjust.
“Peabody’s attempt to shed its obligations to union miners was unjust, unfair and unconscionable. I’m incredibly pleased that an appeals panel recognized that and overturned a decision that would have broken a solemn promise Peabody made. It’s another ray of hope for retirees who worked day and night to provide for their families. Still, protecting the health benefits and pensions of our coal miners is something we all must continue fighting for—and I pledge to do all I can to make sure it never comes to this again,” Rockefeller said.
Rockefeller earlier this year introduced The Coal Accountability and Retired Employee Act, which seeks to provide certainty and peace of mind to retirees and their families. In addition to holding employers accountable for the commitments they make to their workers, Rockefeller’s bill would:
• Amend the Surface Mining Control and Reclamation Act to transfer funds in excess of the amounts needed to meet existing obligations under the Abandoned Mine Land fund to the UMWA 1974 Pension Plan to prevent its insolvency;
• Make any union retiree who loses benefits following the bankruptcy or insolvency of his or her employer eligible for the 1992 Benefit Plan, which was established under the Coal Act and provides health benefits to retired or disabled miners and their families; and,
• Provide that employer contributions are not unfairly penalized by the tax code and receive the same tax-exempt treatment as contributions to other pension plans, allowing the full value of employer cash contributions to go to the retirees who earned them.