Fund to Provide Ongoing Support for Retiree Insurance Benefits
Contact: Joe Stuligross (412) 562-2526, jstuligross@usw.org
Pittsburgh – The U.S. District Court for the Western District of Pennsylvania yesterday approved a settlement reached between the United Steelworkers (USW) and FreightCar America, LLC over the company’s unlawful termination of retiree medical and life insurance benefits.
The company had promised to provide lifetime benefits to its retirees. On the eve of trial scheduled in Johnstown, Pa., the company agreed to contribute more than $31 million to a fund to provide ongoing contributions toward insurance benefits.
The fund will make benefits available for approximately 650 pre-Medicare and Medicare-eligible retirees and their dependents and is estimated to last for approximately 18 years into the future.
The court addressed the request of some retirees that the fund be distributed as a tax free cash payment instead of in the form of health insurance, and found that a lump sum remedy would not be in the best interest of the class as a whole because it would not include the health insurance benefit which is needed by many retirees. The court also found that any cash payment would be significantly reduced by required tax withholding. The court found that the fund would save a pre-Medicare couple approximately $750 per month and that coverage for Medicare-eligible retirees would carry a “very affordable” premium, as low as $43 per month.
FreightCar had previously been forced to settle NLRB charges and federal court litigation in 2005 in connection with its bad faith bargaining and a prior elimination of retiree insurance and pension benefits.
In 2008, it was forced to settle additional ERISA litigation after a federal judge found that the company had unlawfully discriminated against nearly 200 employees by laying them off in order to deprive them of pension benefits.
FreightCar operated a former Bethlehem rail car manufacturing plant in Johnstown until 2008.
The USW is the largest industrial union in North America, representing workers in a range of industries including metals, mining, rubber, paper and forestry, oil refining, health care, security, hotels, and municipal governments and agencies.
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