Evelyn Kauffman’s job was to talk to people her company had just laid off.
For more than two decades of her 37-year career with General Electric, she traveled to cities where GE plants had just closed or where divisions had just been sold and advised tens of thousands of workers of the benefits they had earned and the options before them.
It was not a wholly unpleasant job. It’s never easy to tell someone who gave decades of their life to a company, especially those close to retirement, that their jobs were no more. But Kauffman was always happy to tabulate what someone had earned over their tenure — pensions, health benefits and other perks — and reassure them it was still theirs.
“It always felt good, during those conversations, to tell people ‘You’ve met the eligibility, you’ve put in your years of service, you’ll be able to keep this medical coverage for the rest of your life,’ ” she recalled. “I went to so many cities, I spent so many years doing this. I always kept telling people, ‘Oh, don’t worry, at least you’ll have your medical coverage when you reach 65.’ ”
And then, one September day in 2012, she opened her mail and realized she’d lied. Two years later, she’d open her mail and realized she’d lied to them all.
The 2012 letter informed salaried retirees and employees that if they would not reach age 65 by Jan. 1, 2015, they and their spouses would no longer be eligible for GE health coverage. Kauffman, who began her career at GE’s Schenectady campus in 1973 as a switchboard operator and retired in 2011 as a benefits counselor, would turn 65 seven months after the cutoff.
Blind with rage, she threw the letter out.
The 2014 letter, mailed in early September, informed salaried retirees the company would no longer provide health coverage at all by year’s end. Instead, it would give them a $1,000 annual subsidy, but only if they shopped for a plan on OneExchange, a private health care exchange administered by New York City firm Towers Watson.
“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,’ ” Kauffman said. “It goes against everything that GE has ever said or done with its benefits. Always, GE said, ‘Once you meet the eligibility, you can’t lose it.’ Any changes were always prospective in nature. We never took something away from people after they had earned it.”
Because of those years of reassurances, Kauffman and Dennis Rocheleau, former corporate manager of union relations for GE, are suing their former employer. The pair filed a lawsuit last week in U.S. District Court in Wisconsin, where Rocheleau now lives, alleging GE’s elimination of post-65 health care plans for salaried retirees violates federal law.
GE officials did not respond to requests for comment on the lawsuit.
The suit alleges 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 this health coverage.
This promise was restated as recently as July 2012 in an updated benefits handbook, the suit says, just two months before GE announced the changes.
In the handbook, a summary plan description of the GE Medicare Plans said the company “expects and intends” to continue its GE Medicare Benefit Plans indefinitely, but added that it “reserves the right to terminate, amend or replace the programs or plans, in whole or in part (subject to applicable contractual requirements), at any time and for any reason, by action of the Board of Directors.”
It further stated that a decision to terminate, amend or replace a plan “may be due to changes in federal law or state laws governing qualified retirement or welfare benefits, the requirements of the Internal Revenue Service, ERISA or any other reason.”
This was legalese no one ever paid much attention, Rocheleau said, given GE’s history of providing these benefits and verbal promises made over the years. Over the years, various GE officials in human resources and labor relations told employees the company took its obligation to continue the plans seriously, the suit says.
The lawsuit alleges GE violated the Employee Retirement Income Security Act by breaching its plan obligation and fiduciary duty not to “exercise or abuse its discretion to terminate the plans except for a serious and good faith reason.” It calls for the case to be heard before an advisory jury and for the court to issue a preliminary and permanent injunction stopping GE from terminating its benefits.
GE never provided a good reason for the changes announced in 2012 and 2014, Rocheleau and Kauffman contend. After the latest change, the company issued a single statement to the media that said the change is “consistent with trends among large companies” and offers greater coverage choices “while striking a balance among our obligations to employees, retirees and shareowners.”
The 2012 change reduced GE’s post-retirement benefit liability by $832 million, Rocheleau said, pointing to GE’s 2012 annual report. Those savings trickle down to improved earnings, he said. It’s still too soon to tell how much GE will save with its latest changes, but it should be reflected in the next annual report.
“GE investors are looking for earnings growth through better operating performance, not from reneging on commitments at the expense of retirees,” he said.
Local retirees and shareholders don’t seem satisfied by the company’s explanation, either, as evidenced by more than a dozen calls and letters to the editor that have trickled into The Daily Gazette over the last month and a half.
“Many of us are also shareholders and have no interest in breaking the backs of fellow retirees for larger dividends,” said Marlene Paul of Ballston Lake in a Sept. 26 letter.
Companies are forced to make cost-cutting decisions all the time, Rocheleau said, but GE historically made decisions that would change benefits going forward, so employees knew what they were getting into when they signed up. In fact, it was his job to negotiate many of these changes with labor unions.
Rocheleau joined GE in 1967 and spent most of his career in Kentucky, Schenectady and New York City, negotiating labor settlements with unions representing GE employees. He settled 11 national contracts during his tenure and retired in 2004.
“We were not always as generous as some people thought we should have been,” he said. “We expected our employees to share in the cost of their health care long before other companies started asking their employees to do that. But I was proud and remain proud of the way we approached our relationships with the employees, because I always lived by the standard that for GE, promises made were promises kept.”
Both Rocheleau and local union representative Brian Sullivan suspect it’s only a matter of time before the company tries to negotiate hourly retirees into the private exchange. Sullivan told The Gazette last month it would be a strikeable issue.
It used to be that the company would try to get the union to accept cost-cutting measures first, Rocheleau said, and then take them to the salaried workers. Over the years, though, as union negotiations intensified, GE learned it could avoid a protracted debate entirely by implementing these measures with non-union, salaried employees first, he said.
“I find that repugnant,” he said. “It’s perfectly legal, but there’s no dialogue; there is dictate. It’s just not the way I believe personally things should be done. This is going to be a huge issue in the upcoming national negotiations next year, and the unions are going to be under enormous pressure to accept this package. They know they’re next.”
Over three consecutive days in October, the parking lot of the Century House in Latham was packed, with cars lining up at the door and passengers lumbering out with walkers and canes. Inside, a mix of retirees ranging in age from their 60s to their 90s took their seats to listen to Towers Watson representatives outline the changes retirees could expect. They would need to make an appointment with an advisor, who would walk them through selecting a new plan on the private exchange before the end of the year.
“It was sad,” GE retiree and Broadalbin resident Joe Meuse said. “There were hundreds of white-haired guys with blank stares out there. A lot of these people just don’t know how to make this transition.”
Kauffman had the same feeling. She went to one of the meetings to support a family member “in her late 80s, early 90s” who spent 59 years at GE.
“Thank God she’s lucid,” Kauffman said. “I saw people there who were clueless. It was just awful. For those of us who are younger, who still have our faculties, we can make changes like this a lot easier. But why would you do this to people who are so helpless?”