Clock ticking on GE benefits lawsuit

PHOTOGRAPHER: Peter R. Barber

The General Electric sign that over shadows Erie Boulevard in Schenectady is pictured.

The plaintiffs in a lawsuit recently filed against General Electric are hoping a federal court in Milwaukee grants a preliminary injunction soon — by Jan. 1, in fact — to prevent changes to GE retiree health benefits from taking effect.

The plaintiffs, former GE employees Evelyn Kauffman of Schenectady and Dennis Rocheleau of Wisconsin, filed a suit in October in U.S. District Court in Wisconsin alleging GE’s elimination of post-65 health care plans for salaried retirees violates federal law. They asked the court to issue a preliminary and permanent injunction that would stop the multinational corporation from terminating the benefits at the end of this month.

Both sides appeared in court last week before Judge Lynn Adelman to argue their cases for and against the injunction during a two-hour hearing, and are awaiting a ruling Rocheleau said he hopes will come before the benefits are terminated next week.

His attorney, Thomas Geoghegan, of the Chicago firm Despres, Schwartz & Geoghegan, Ltd., said there’s no way to know when the ruling will come, though.

“Judges rule when they rule,” he said. “That’s what they do, and there’s no way to know exactly when.”

Without an injunction, about 65,000 retirees, spouses and domestic partners will see their health care plans change come Jan. 1. GE informed retirees in September that their current, company-sponsored health coverage would expire by year’s end and they must shop for new plans on a private health exchange called OneExchange. The change affects only Medicare-eligible, former salaried employees, though some are predicting the company will try to negotiate hourly retirees and their unions into the exchange next year.

The announcement came two years after GE told salaried retirees and employees that if they did not turn 65 by Jan. 1, 2015, they would no longer be eligible for GE post-65 health coverage. Turns out, no one would.

GE hired New York City firm Towers Watson, which administers the private exchange, to enroll retirees for insurance through OneExchange, which offers more than 1,000 plans from 90 different insurers, including AARP, Aetna, Blue Cross Blue Shield, Humana and UnitedHealthcare. GE has offered a $1,000 subsidy to enrollees who use the exchange. Many have lamented the short time frame they had to process the news and sign up for a new plan.

The plaintiffs, through their attorneys, plan to argue that by terminating the plans, GE is in breach of a promise it gave for decades to salaried employees and retirees that once they reached age 65, they would have their company-sponsored health coverage. Kauffman, who began her career at the company’s Schenectady campus in 1973, spent more than two decades of her 37-year career with GE as a benefits counselor, telling workers who had just been laid off that if they were eligible, they would still have their health insurance by age 65.

“Nobody at GE ever said to me, you probably ought to tell these people that we can take this away at any time for any reason,” she told The Daily Gazette in October. “It goes against everything that GE has ever said or done with its benefits.”

The suit alleges GE intentionally misled retirees in a summary plan description of its Medicare plans mailed to retirees just two months before the first round of changes would be announced, by stating it “expects and intends” to continue the GE Medicare Plans indefinitely.

Not so, says GE in a Dec. 1 memorandum to the court asking for a motion to dismiss the case.

The same description goes on to say that GE “reserves the right to terminate, amend or replace the programs or plans … at any time and for any reason.” That, GE argues, is one of several reasons the court should dismiss the complaint. Retirees and employees never had any vested rights to health benefits, the company says.

Both sides will get a chance to argue their case at a later date. The injunction is of more immediate concern to them both, according to legal filings obtained by The Daily Gazette.

GE has argued the injunction should be dismissed because the plaintiffs haven’t shown they’ll be irreparably harmed without it or that they lack an adequate remedy at law. GE also argues that the plaintiffs haven’t established “any likelihood of success on the merits” of their case.

In addition, GE says, the “balance of hardships” and public interest “weigh strongly against the issuance of an injunction” because more than 41,000 individuals had already enrolled in new coverage through OneExchange by the date of their memo to the court (Dec. 1) and thousands were expected to continue enrolling each week.

“An injunction would require GE to undo the individual healthcare choices of tens of thousands of retirees,” GE’s attorneys argued in the memo. “Plaintiffs would have the court believe it would be easy for GE to revert to its prior post-65 health plans, but in reality it would be a monumental task. … Retirees will be forced to cancel their new coverage, request premium refunds from the insurance companies they enrolled with, and navigate the practical and legal ramifications of reenrolling in the GE plans.”

The plaintiffs argue that is the exact reason the court should grant the injunction.

“If restoring the Medicare Plans has become too difficult as of December 1, 2014, when GE filed its response to this motion, it will be far more difficult later,” the plaintiffs argue. “The very passage of time will make it harder to reconstitute the medical history of each participant, to calculate the out of pocket losses, and to make each of them whole.”

Reach Gazette reporter Bethany Bump at 395-3107, [email protected] or @BethanyBump on Twitter.