GM can't cut benefits pending appeal

July 22, 1994|By Knight-Ridder News Service

DETROIT -- General Motors can't cut medical benefits or raise co-payments for more than 50,000 retirees while appealing a federal judge's ruling that it promised them free health care for life.

U.S. District Judge John Feikens last February decided the former salaried workers who retired between 1974 and 1988 relied on the company's legally binding promises of free health ,, care.

Even though GM is appealing to the 6th U.S. Circuit Court of Appeals, Judge Feikens this week ordered the company not to cut benefits or make those retirees pay more during the interim.

GM is appealing that decision, too.

"We feel the terms of the injunction will cause undue hardship for the corporation, and therefore we are appealing it," said GM spokesman Mark Tanner.

GM has been cutting benefits and requiring workers and retirees to contribute more toward their medical coverage to help rein in a corporate health care bill that has skyrocketed from $735 million in 1975 to about $4 billion last year.

In January, GM began requiring salaried workers and retirees to pay a part of their health insurance premium. The amount varied depending on the type of coverage one chose.

If Judge Feikens' initial decision is upheld, GM might have to reimburse the retirees for tens of millions of dollars they've spent on health care since 1988.

But it could be months, if not years, until the retirees see the money.

"That's why this interim relief is important," said Raymond Fay, a Washington attorney representing the retirees. "Their monthly payments were averaging between $30 and $50 per person. At least those won't go up."

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