Retirees challenged changes in Caterpillar’s health benefits, but an appeals court found their claims were barred by the statute of limitations.
In 1992, following the expiration of the controlling collective bargaining agreement with the UAW, Caterpillar announced its unilateral decision to cap retiree medical costs. The company declared that beginning January 1, 2000, it would pay no more for retiree health benefits than it had paid in 1999. Caterpillar stated that it would assess monthly premiums to the affected retirees to make up the shortfall.
In 1998 after a strike of long duration Caterpillar and the UAW negotiated a new collective bargaining agreement in which the company and the UAW agreed to create a tax favored trust, known as a Voluntary Employee Benefit Association (VEBA) to temporarily cover the retiree health premiums in excess of the cap announced by Caterpillar for as long as the VEBA fund lasted. The VEBA trust funded the retiree health benefit costs until October 2004, when the fund was exhausted. Caterpillar then began charging the post-1992 retirees a monthly retiree healthcare premium and increased deductibles and co-pays.
Retirees sued, claiming the premiums, co-pays, and higher deductibles violated the collective bargaining agreements and invoking the Employee Retirement Income Security Act (ERISA), the main federal law governing employee benefits. Plaintiffs asked the court to order Caterpillar to reinstate full coverage for the class members, prohibit Caterpillar from reducing coverage in the future, and reinstate health benefit coverage for those who stopped participating in the plan upon Caterpillar’s implementation of charges for benefits.
In 2008, a trial court enjoined Caterpillar from reducing health benefits for some of those class members who retired during the pendency of the case. An appeals court, however, overturned that injunction on the ground that the workers waited too long to sue -- a particularly bitter pill because the concurring opinion of one of the appellate judges noted that had the workers filed a lawsuit earlier, they likely would have prevailed on the merits.
In the remaining dispute that survived that decision, a subclass consisting of approximately 700 spouses of retirees unsuccessfully claimed that they did not face the same statute of limitations because the notification of changes in their health coverage was not distributed until a later date, and thus their filing came within the statute of limitations. AARP Foundation Litigation attorneys represented the plaintiffs, in conjunction with private law firms of Meites, Mulder & Glink; Lieff, Cabraser, Heimann & Bernstein; and Stember, Feinstein, Doyle & Payne.
An appeals court ruled in 2012 that all of the claims were time-barred.
What’s at Stake
If companies can unilaterally change their policies, then labor contracts have no teeth and retirees are at the mercy of changing business climates and the bottom-line driven decisions of corporations. It is critical that retirees and employees who believe that they have been deprived of earned rights make a timely challenge of employer actions believed to be unlawful. This means that after having invested a lifetime of work, workers who fail to initiate a timely legal challenge may find that their opportunity to get legal recourse may be lost.
Winnett v. Caterpillar was decided by the U.S. Court of Appeals for the 6th Circuit.