A lawsuit against General Electric is being closely watched in boardrooms around America, as the company defends its decision to shut down its retiree health care plan.
In 2012, GE announced to its some of its retirees that they would no longer be part of its GE Medicare Benefits Plan. In 2014, the entire plan was scrapped. Instead, the conglomerate would give them a thousand dollars each year, with which they could purchase coverage through Towers Watson – a private health exchange plan.
But according to Tom Geoghegan, the attorney for the plaintiffs, earlier in 2012, GE had issued a key promise.
“GE in its summary plan description repeatedly said that it both expected and intended to continue the benefits, as described in those handbooks, indefinitely,” Geoghegan told WNPR. His clients are two former GE workers in Milwaukee, Dennis Rocheleau and Evelyn Kaufman.
Geoghegan said that promise in the handbook, that GE would do its best to continue the plan, is the basis of the suit.
“There has long been a rule in commercial contracts that promises that say ‘well, we’ll do the best we can, but we can’t guarantee it,’ are still enforceable. You do have to do the best you can. And GE is still profitable. If the cost per participant hasn’t increased in any significant way, there’s no reason why GE cannot continue the plan and fulfill that promise,” Geoghegan said.
Because the suit asks that the entire plan be reinstated, it’s now seeking class action on behalf of about 65,000 former GE workers and their spouses, including many in Connecticut.
Similar cost saving strategies, outsource retiree health benefits, and other expenses are becoming a commonplace in corporate America. While Geoghegan said the facts of each case are unique, when the lawsuit goes to court sometime next year, it’s likely to give companies and labor relations experts a lot to think about.
