Public plan sessions are tomorrow with New Jersey likely to be featured but today I learned of two recent events that might mean in ten years nobody will get retiree health benefits outside of Medicare, Medicaid, or Obamacare and there will probably never be a federal bailout of pensions beyond what the PBGC can afford.
It was also announced that this will be the last EA meeting that will be recorded so in future years I may be the only one memorializing this sort of stuff:
S-HNP: Self-Help Not Bailout
As discussed by former US Representative and current lawyer/lobbyist Earl Pomeroy in the opening general session when in 2009 the Casey-Pomeroy bill was introduced it was decried as a bailout for union pensions and died. Learning from that experience lobbyist Pomeroy worked to get the Multiemployer Pension Reform Act of 2014 passed last December in record time and included a provision allowing for reductions in accrued benefits as necessary. That precedent could conceivably be extended to public plans with the definition of ‘necessary’ stretched to accommodate what taxpayers can pay. It seemed clear to Mr. Pomeroy that any bailout of pensions beyond what is in place now with the PBGC is a non-starter.
No More Yard-Man Presumption
In a session on litigation affecting DB plans a January 26, 2015 decision of the Supreme Court that I don’t recall hearing about anywhere else was summarized:
The Supreme Court, in M& G Polymers USA, LLC v. Tackett, dealt with another “presumption,” – this one created by the Sixth Circuit in a prior case involving Yard-Man, Inc. The presumption is that the parties to a collective bargaining agreement intend for the retiree medical benefits to continue for life, notwithstanding the expiration of a collective bargaining agreement.
Tackett arose after the employer began to require retirees to contribute towards the cost of their retiree medical care. The Tackett plaintiffs argued that the collective bargaining agreements provided for “lifetime” retiree medical benefits and that the implementation of cost-sharing violated ERISA and the LMRA. The district court dismissed the complaint, but the Sixth Circuit reversed. The Sixth Circuit applied the Yard-Man presumption to conclude that, in the absence of extrinsic evidence to the contrary, the provisions of the CBA evidenced an intent to vest retirees with lifetime benefits.
The Supreme Court reversed the Sixth Circuit and remanded Tackett for further consideration. The Supreme Court explained that collective bargaining agreements must be interpreted “according to ordinary principles of contract law,” and held that the Yard-Man presumption violated these principles.
It was noted by one of the panelists that lawyers looking to protect retiree medical benefits in these types of cases would forum shop trying to find some link to get it before the Sixth Circuit. But with this Supreme Court decision making it the law of the land the cutting of retiree medical benefits is in play everywhere.