How to construe the duration of retiree health care benefits under collective bargaining agreements is before the U.S. Supreme Court, and Wayne State University Law School Associate Professor Susan Cancelosi is weighing in.
Cancelosi and three others – Seattle University School of Law Assistant Professor Charlotte Garden of the Fred T. Korematsu Center for Law & Equality and David Campbell and Kathleen Phair Barnard of Seattle labor law firm Schwerin Campbell Barnard Iglitzin & Lavitt LLP – filed an amicus brief Sept. 22 on behalf of 33 other labor and benefits law professors in the case of M&G Polymers v Tackett. The case is slated for oral arguments Nov. 10 in the U.S. Supreme Court.
The case began in December 2006, when chemical firm M&G told retirees of one of its plants that they’d have to begin contributing to the cost of their health care benefits. The retirees said the language in prior collective bargaining agreements promised them health insurance coverage for life with the cost paid entirely by the company. The retirees sued the company under the Labor Management Relations Act and the Employee Retirement Income Security Act.
The case ended up before the U.S. Court of Appeals for the Sixth Circuit, which has jurisdiction over federal district courts in Michigan, Ohio, Kentucky and Tennessee. The Sixth Circuit in October 2013 upheld a district court’s permanent injunction ordering the retirees of M&G Polymers to be reinstated in the company’s health care benefits plans without cost to the retirees. The company then appealed to the Supreme Court.
“Our brief, which supports the retirees in the case, provides an overview of the historical and legal context in which retiree health benefits were first negotiated,” said Cancelosi, who teaches elder law and employee benefits at Wayne Law.
M&G Polymers v Tackett involves a long-standing interpretation of collective bargaining agreements by the Sixth Circuit. Known as the “Yard-Man inference” (named after the 1983 case of UAW v Yard-Man Inc.), it’s a judicial inference that union retiree benefits are intended to be vested – guaranteed to continue for life – where the collective bargaining agreement doesn’t explicitly state otherwise or is ambiguous.
“M&G Polymers v Tackett has the potential to have significant negative impact on the continuation of retiree health benefit plans because the Yard-Man inference has served for almost 30 years to deter employers in the Sixth Circuit from unilateral termination of retiree health plans,” Cancelosi said. “Because retiree health benefits tend to be offered by older, unionized manufacturing companies and because many such employers happen to be in the Sixth Circuit, the Yard-Man inference has been particularly important in the preservation of these benefits.”
To complicate the issue, other circuit courts of appeal have required explicit statements in bargaining agreements that retiree health care benefits are intended to be vested before finding such vesting. A Supreme Court decision in M&G Polymers v Tackett likely will resolve the split interpretations.
“If the Supreme Court strikes down the Yard-Man inference, some employers may interpret the decision as a green light for plan terminations,” Cancelosi said.
Cancelosi’s research and writing for the past decade has focused on health insurance for elders, through both employment-based retiree medical plans and Medicare. Before joining Wayne Law, she was a research professor with the Health Law & Policy Institute at the University of Houston Law Center, where she focused primarily on research into various health care finance issues. Before entering academia, she provided guidance to employers on all aspects of employee benefits, serving as a director for Buck Consultants, a manager with Deloitte & Touche, an in-house benefits counsel for The Associates, and an associate attorney with Jones Day in Ohio and Texas and with Taft, Stettinius & Hollister in Ohio.
She graduated from Southern Methodist University with a bachelor’s degree in history and a bachelor of business administration degree in marketing. She earned her law degree from Cornell Law School and holds a master of laws in health law from the University of Houston Law Center.
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