Schenectady County

Retirees’ lawsuit against GE ‘has merit,’ judge rules

More than seven months after General Electric retirees in Schenectady and Wisconsin sued their forme
Pictured is General Electric Renewable Energy Global Headquarters (Building 53) in downtown Schenectady at the GE main plant.
PHOTOGRAPHER:
Pictured is General Electric Renewable Energy Global Headquarters (Building 53) in downtown Schenectady at the GE main plant.

More than seven months after General Electric retirees in Schenectady and Wisconsin sued their former employer for cutting their health benefits, a federal judge says their suit has enough merit to move forward.

The retirees — Evelyn Kauffman of Schenectady and Dennis Rocheleau of Wisconsin — allege GE’s elimination of health care plans for salaried retirees in January was a violation of federal law. They filed suit in U.S. District Court in Wisconsin last fall, about a month and a half after GE announced it planned to eliminate the post-65 health care plans for about 65,000 former employees and their spouses — many of them based in Schenectady.

The pair had initially sought an injunction from the court to block the changes from taking effect, but the court said the public interest would not be served since tens of thousands of retirees had already started shopping for other coverage through a private exchange.

On Friday, U.S. District Judge Lynn Adelman denied GE’s request to dismiss the case outright, stating the retirees can proceed with their suit, but only on one of their original claims — that GE breached its fiduciary duty by making alleged misrepresentations to the retirees.

Those misrepresentations came in the form of a summary plan description mailed to retirees in July 2012. The plan stated that GE “expects and intends” to continue its health plans for retirees indefinitely, but “reserves the right” to terminate, amend or replace them at any time for any reason. Two months later, GE terminated the plans for anyone who would not turn 65 by Jan. 1, 2015. Two years later, GE terminated the plans for all salaried retirees.

Kauffman and Rocheleau argue that GE knew when it issued the summary plan description in 2012 that it had no intention of continuing the plans, and therefore breached its fiduciary duty to retirees by misrepresenting its intent.

GE argued that its reservation of rights was grounds to dismiss the retirees’ case, but Adelman said the “expects and intends” language could be “regarded as misleading to the average participant.”

Kauffman, who spent more than two decades of her 37-year career with GE counseling workers on the benefits they had earned over their careers, said Monday she was relieved to read the judge’s decision.

“It’s hard to understand how a company such as GE can justify its decision to terminate these plans so soon after publishing a benefits handbook that states the company expects and intends to continue the plans indefinitely,” she said in an email.

“I believe it was wrong for GE to take away a very valuable benefit we earned over our careers, and I look forward to having our case presented in court,” she added.

The judge dismissed the retirees’ claim that GE was obligated to at least try to provide health benefits since it never gave a compelling reason as to why it was terminating them. This claim was based on a section of the 2012 summary plan description that said a decision to terminate, amend or replace a health plan may be due to changes in federal law or state laws governing qualified retirement or welfare benefits, requirements of the Internal Revenue Service, the Employee Retirement Income Security Act, or any other reason.

Rocheleau, a former corporate manager of union relations who settled 11 national contracts during his nearly 40-year tenure with GE, said Monday he is grateful he and Kauffman can move forward with the merits of their suit.

“We believe GE’s action was not justified by the facts, either social or financial, and welcome the opportunity to question GE executives on their motivations for taking an action totally at odds with their oft-stated commitment to the spirit of integrity,” he wrote in an email. “It is utterly absent in their misguided initiative.”

Rocheleau and other retirees predict the company will try to eliminate the same benefits for former hourly workers in contract negotiations currently underway with their union.

GE did not respond to a request for comment Monday, but issued a statement Tuesday morning.

“GE is pleased that the judge agreed GE did not violate its contractual obligations to employees and we plan to defend our one remaining count of the complaint,” GE spokesman Dominic McMullan wrote in an email. “The changes made to the post-65 retiree benefit plan are consistent with national trends and provide a more efficient way for the company to continue to provide Medicare-eligible participants with access to health benefits while striking a balance among our obligations to employees, retirees, and shareowners.”

Categories: Business, News, Schenectady County

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