The retired printers' temporary injunction against diminished Beacon Journal health care coverage got national attention.
The Bureau of National Affairs, which describes itself as "the largest independent publisher of information and analysis products for professionals in business and government," ran a lengthy article on Federal District Court Judge David Dowd's decision that would provide immediate relief for those printers named in the lawsuit.
BNA says it covers "the full range of legal, legislative, regulatory, and economic developments that impact the business environment around the nation and the world."
The article in BNA:
Court Puts Brakes on Newspaper's Changes To Prescription Benefits Provided to Retirees
Retirees of the Akron Beacon Journal Publishing Co. persuaded the U.S. District Court for the Northern District of Ohio to issue a preliminary injunction May 13 that blocks the newspaper from making changes to the retirees' prescription drug benefits (White v. Beacon Journal Publishing Co., N.D. Ohio, No. 5:09 CV 2193, 5/13/10).
In issuing the injunction, Judge David S. Dowd Jr. said the retirees were likely to succeed on the merits of their claim that their benefits were vested and could not be changed by the Beacon Journal.
The retirees claimed that when the Beacon Journal increased the copayments they made for prescription drugs, the newspaper violated the Employee Retirement Income Security Act and the Labor Management Relations Act.
Reliance on Extrinsic Evidence.
Attorney Donald P. Screen of Cleveland, who was among several attorneys who represented the retirees, told BNA May 14 that the decision is important because the court not only recognized the enforceability of benefits conferred in collective bargaining agreements but also recognized that extrinsic evidence such as early retirement agreements can be used to supplement and interpret CBAs. When there is an ambiguity in a CBA, extrinsic evidence can be examined and it can become the “source of vested benefits,” Screen said.
Another of the plaintiffs' attorneys, Allen G. Anderson of Smith & Johnson, Traverse City, Mich., told BNA May 14 that now that the court has granted a preliminary injunction, the retirees will be proceeding with discovery in hopes of making the injunction permanent.
One of the unique characteristics of the case was that these CBAs, unlike CBAs involved in other retiree benefit cases, provided for the right to lifetime employment, according to Anderson. These retirees gave up the right to lifetime employment in exchange for these retiree benefits that the Beacon Journal later took away, Anderson said.
Screen and Anderson said they expect the Beacon Journal to appeal the judge's decision in hopes that the company will not have to comply with the order until the case has proceeded to trial. “It would be a sad state of affairs if the Journal appeals” and asks the district court to stay the preliminary injunction, Anderson said.
Appeal May Depend on Health Care Reform.
The Beacon Journal's attorney, Brett Bacon of Frantz Ward, Cleveland, told BNA May 14 that his client has not decided whether it will appeal the decision because it is consulting with experts to determine what impact, if any, the new federal health care reform law might have on the case.
“While this case has been pending, Congress has been acting and it might have an impact on this case,” Bacon said. He added that the Beacon Journal's changes to the retirees' benefits only affected a small group of employees who retired under various early retirement programs. These prescription drug benefits were not “negotiated benefits” under the normal circumstances of the bargaining agreement, he said.
“No one here is without coverage. It is a matter of what kind of coverage and whether they are pleased with that coverage,” Bacon said.
CBAs Offered Lifetime Employment.
During their employment with the Beacon Journal, the retirees were represented by Communications Workers of America Local 14514. Through collective bargaining agreements between the newspaper and the CWA, the plaintiffs were granted the right of lifetime employment with the newspaper. Among other things, the CBAs provided that when the plaintiffs retired, they would be entitled to prescription drug benefits and would pay a $5 copayment for all prescriptions.
The retirees alleged that they each entered early retirement agreements with the Beacon Journal in which they gave up their right to lifetime employment in exchange for retiring early and receiving retiree prescription drug benefits.
The retirees claimed that after they retired, the Beacon Journal made unilateral changes to their prescription drug benefits. These changes, which were imposed on retirees once they were eligible for Medicare coverage, caused them to make copayments as high as $40 for brand name drugs, while the copayment for generic drugs remained at $5.
In their lawsuit, the retirees claimed their prescription drug benefits were vested and as such could not be changed or terminated by the Beacon Journal. The retirees asked that the court issue a preliminary injunction that would force the company to return their benefits to the $5 copayment level.
The newspaper argued, on the other hand, that the prescription drug benefits provided to retirees was a gratuitous benefit, not a vested benefit, and thus it had the right to require the retirees to pay higher copayments for their drug benefits.
Court Leans on Extrinsic Evidence.
Coming out on the side of the retirees, the district court said the retirees were likely to succeed on the merits of their claim that their benefits were vested. The court said that while the relevant CBAs were ambiguous as to the vesting of retiree prescription drug benefits, there were several pieces of extrinsic evidence which showed that the parties likely intended the benefits to be vested.
One piece of extrinsic evidence was retirement benefit letters the company issued to the retirees that reflected that their $5 prescription copayment benefit would be for the life of the retiree and his or her spouse. Another piece of evidence cited by the court was the testimony of retirees and Beacon Journal representatives who testified that the retirees were told both in writing and in meetings that their prescription drug copayments would be set for life.
“These representations regarding lifetime prescription copay coverage were provided in advance of plaintiffs' decision to give up their lifetime job security and were material to their decision to retire,” the court said.
The court went on to say that the retirees were likely to suffer irreparable harm in the absence of a preliminary injunction. “In this case, the Court finds that plaintiffs are unable to obtain adequate health care because of the increased cost of prescriptions and/or because of difficulty in security medical care from providers who do not accept plaintiffs' new insurance. Inability to obtain proper medical services constitutes irreparable harm, and the Court finds that this factor weighs in favor of granting plaintiffs' request for preliminary injunction,” the court said.
The retirees were represented by Allen G. Anderson and Kenneth M. Petterson of Smith & Johnson, Traverse City, Mich.; Subodh Chandra of Chandra Law Firm, Cleveland, Ohio; and Donald P. Screen of Cleveland.
The Beacon Journal was represented by Brett K. Bacon, Gregory R. Farkas, Michael J. Frantz, and Joel R. Hlavaty, of Frantz Ward, Cleveland, and David G. Utley of Davis & Young, Akron, Ohio.
Click on the headline to see the BJ's story on the court decision.
