A federal court ruling in Detroit earlier this month that General Motors Corp. cannot make 50,000 retirees pay a portion of their medical coverage could become an example of what companies should and should not do when dealing with retiree health care issues.
U.S. District Court Judge John Feikens agreed with the retirees that GM had promised them lifetime health care benefits at no cost. The retirees filed a class-action suit in 1989 after GM reduced some medical benefits for the retirees and began boosting out-of-pocket costs for the retirees.
The GM dispute involves issues that have been hotly argued in several other similar cases, where retirees claim they have been promised free lifetime medical benefits.
In the GM case, attorney for the retirees Raymond C. Fay, of the Washington law firm of Bell, Boyd & Loyd, produced plan documents that clearly stated GM promised lifetime medical benefits at no cost for salaried employees who accepted early retirement from 1974 to 1988. Judge Feikens said GM, through its early retirement inducements, "entered into contracts with its early retirees" to provide the benefits, which are enforceable under the Employee Retirement Income Security Act.
"Once we got to the point that what was at issue was defining the terms of individual early retirement packages, it became like any other contract law case," said Mr. Fay.
GM officials said an appeal is being considered.