GM May Appeal Ruling on Retiree Health Care

08/19/96

Reuters has reported that General Motors announced Thursday that it may appeal a federal court ruling that it must pay lifetime health care benefits to approximately 50,000 former employees that opted for early retirement in the 1970s and 1980s.

The Sixth Circuit Court of Appeals in Cincinnati handed down the decision on Wednesday, upholding a lower court ruling in favor of the retirees, who claimed that the company promised them free lifetime health care benefits.

The retirees sued GM in 1989 when the carmaker billed them for health care co-payments. The court has agreed that the company violated a contract that the employees had with the carmaker when they accepted early retirement incentive packages between 1974 and 1988.

The court's ruling also affects previously dismissed health care claims from 34,000 other employees; the court sent them back to a lower court for reconsideration.

GM claims it did not agree to pay lifetime health care benefits at no cost to the retirees. In a statement the company said, "Obviously we are disappointed with the ruling and we're examining our option to appeal."

"GM believes it did not enter into any such 'bilateral agreements,' and it has the right to amend, modify, suspend or terminate its benefit plan provisions," the carmaker continued. "GM provides an outstanding benefits package that is competitive with the best in all of industry, and we intend to maintain a competitive benefits package for our employees and retirees."

Paul Dever -- The Auto Channel