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OPINION OF TRUSTEES
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In Re
Complainant: Pensioner
Respondent: Employer
ROD Case No: 84-202 – October 5, 1987
Board of Trustees: Joseph P. Connors, Sr., Chairman; Paul R. Dean, Trustee; William B. Jordan,
Trustee; William Miller, Trustee; Donald E. Pierce, Jr., Trustee.
Pursuant to Article IX of the United Mine Workers of America (“UMWA”) 1950 Benefit Plan
and Trust, and under the authority of an exemption granted by the United States Department of
Labor, the Trustees have reviewed the facts and circumstances of this dispute concerning the
provision of health benefits coverage under the terms of the Employer Benefit Plan.
Background Facts
The Complainant was employed in a classified position by Metco Mining Corporation, the
Respondent, from November 1977 until September 30, 1985. The Complainant was awarded an
Age 55 retirement pension under the 1974 Pension Plan, effective October 1, 1985. The
Respondent is signatory to the National Bituminous Coal Wage Agreement (“Wage Agreement”)
of 1984.
The Complainant has indicated that the Respondent contracted with an Employer association to
provide health benefits coverage to its Employees, the Complainant included, from March 1985
through October 1985. The Complainant has stated that the Respondent provided his health
benefits coverage as a Pensioner through a different insurance carrier from October 1, 1985 until
January 1985, when the Respondent ceased operations. On March 17, 1986, the Employer
association filed a Petition for Relief under Chapter 11 of the Bankruptcy Code and ceased
paying health benefits claims. The Complainant has unpaid bills for medical services incurred
between March and October 1985, and after January 1986.
On May 5, 1986, Benafuels Processing, Inc., a newly formed corporation, was appointed by the
Bankruptcy Administrator for Metco Mining to operate the mine and generate funds needed to
honor Metco’s liabilities. The representative for the Complainant has indicated that at that time
Benafuels took the position that it was not responsible for the health benefits obligations due or
owing the Employees and Pensioners of Metco. The representative contends that Benafuels is
operating for Metco and is therefore essentially under the same obligations. The representative
has stated that Benafuels has hired the same Employees and uses the same equipment and
management personnel formerly used by Metco Mining. The representative does not know
whether Benafuels and Metco are owned by the same individuals and he is unaware of any court
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Resolution of Dispute
Case No. 84-202
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order stipulating that Benafuels is obligated to assume the liabilities of Metco Mining under the
Wage Agreement.
Following negotiations with the UMWA, Benafuels signed the National Bituminous Coal Wage
Agreement (“Wage Agreement”) of 1984 on October 16, 1986. At that time, a Memorandum of
Understanding was executed wherein Benafuels agreed to provide health benefits coverage for
Employees of Metco Mining during their individual periods of eligibility, and for Pensioners of
Metco during the six-month period from November 1, 1986 until May 1, 1987. The
representative for the Complainant has stated that Benafuels did not provide health benefits
coverage for the Complainant as agreed until January 1, 1987. The Complainant has unpaid bills
for medical services incurred between November 1, 1986 and January 1, 1987. Benafuels
terminated the Complainant s health benefits coverage on May 1, 1987.
The Memorandum of Understanding between the UMWA and Benafuels also provides that the
successorship issue shall be submitted to arbitration for final determination. The representative
for the Complainant has stated that the issue has not been arbitrated because Benafuels
Processing has refused to comply with the arbitration process.
Dispute
Whether the Respondent is responsible for payment of the medical charges incurred by the
Complainant as an Employee during the period from March 1985 to October 1985, and whether
the Respondent, or Benafuels Processing, or the 1974 Benefit Plan and Trust is responsible for
providing the Complainant’s health benefits coverage as a Pensioner.
Positions of the Parties
Position of the Complainant: The Complainant asks whether the Respondent is responsible for
the payment of medical charges incurred by him during his employment and whether Metco
Mining, Benafuels Processing or the 1974 Benefit Plan and Trust is responsible for providing his
health benefits as a Pensioner.
Position of the Respondent: The Respondent has not responded to repeated correspondence from
funds staff regarding its position in this dispute.
Pertinent Provisions
Article XX (c)(3)(i) of the 1984 Wage Agreement provides in pertinent part:
Article XX – Health and Retirement Benefits
Section (c) 1974 Plans and Trusts
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Resolution of Dispute
Case No. 84-202
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(3)(i) Each signatory Employer shall establish and maintain an Employee
benefit plan to provide, implemented through an insurance carrier(s), health and
other non-pension benefits for its Employees covered by this Agreement as well
as pensioners, under the 1974 Pension Plan and Trust, whose last signatory
classified employment was with such Employer. The benefits provided by the
Employer to its eligible Participants pursuant to such plans shall be guaranteed
during the term of this Agreement by that Employer at levels set forth in such
plans.
Article I (1), (2), (4) and (5) of the Employer Benefit Plan provide:
Article I – Definitions
The following terms shall have the meanings herein set forth:
(1) “Employer” means (Employer’s Name).
(2) “Wage Agreement” means the National Bituminous Coal Wage Agreement of
1984, as amended from time to time and any successor agreement.
(4) “Employee’ shall mean a person working in a classified job for the Employer,
eligible to receive benefits hereunder.
(5) “Pensioner” shall mean any person who is receiving a pension, other than (i) a
deferred vested pension based on less than 20 years of credited service, or (ii) a
pension based in whole or in part on years of service credited under the terms of
Article II 0 of the 1974 Pension Plan, or any corresponding paragraph of any
successor thereto, under the 1974 Pension Plan (or any successor thereto), whose
last classified signatory employment was with the Employer, subject to the
provisions of Article II B of this Plan.
Article II A. (1) and B. (1) of the Employer Benefit Plan provide:
Article II – Eligibility
The persons eligible to receive the health benefits pursuant to Article III are as follows:
A. Active Employees
Benefits under Article Ill shall be provided to any Employee who:
(1) is actively at work* for the Employer on the effective date of the Wage
Agreement; …
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Resolution of Dispute
Case No. 84-202
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* Actively at work includes an Employee of the Employer who was actively at work on
September 30, 1984, and who returns to active work with the Employer two weeks after the
effective date of the Wage Agreement.
B. Pensioners
Health benefits and life insurance under Article III hereof shall be provided to Pensioners
as follows:
(1) Any Pensioner who is not again employed in classified signatory employment
subsequent to
(a) such Pensioner’s initial date of retirement under the 1974 Pension Plan,
and
(b) October 1, 1984, shall be eligible for coverage as a Pensioner under, and
subject to all other provisions of this Plan. Notwithstanding (i) and (ii) of
the definition of Pensioner in Article I (5) of this Plan, any such Pensioner
who was eligible for benefits under the 1974 Benefit Plan as a Pensioner
on December 5, 1977, shall be eligible for such benefits, subject to all
other provisions of this Plan.
Discussion
Article XX Section (c)(3)(i) of the 1984 Wage Agreement requires each signatory Employer to
establish and maintain an Employer Benefit Plan to provide health and other non-pension
benefits for its Employees, as well as Pensioners whose last classified employment was with
such Employer. The Wage Agreement stipulates that benefits provided by the Employer pursuant
to such Plan shall be guaranteed during the term of the Agreement by that Employer at levels set
forth in such Plan.
Article II A. of the Employer Benefit Plan provides health benefits for an Employee working in a
classified job for a signatory Employer. Inasmuch as the Complainant was an active Employee
until October 1, 1985, the Respondent is responsible for providing health benefits coverage for
the Complainant throughout his period of active employment. Although the Respondent had
implemented its Employer Benefit Plan through an Employer association which subsequently
filed bankruptcy, such event does not relieve the Respondent of its primary obligation to provide
benefits pursuant to the Wage Agreement.
Article II B. of the Employer Benefit Plan provides health benefits coverage for a Pensioner
receiving a 1974 Pension Plan pension, other than a deferred vested pension based on less than
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Resolution of Dispute
Case No. 84-202
Page 5
20 years of credited service or a pension based in whole or in part on years of service credited
under the terms of Article II C. of the 1974 Pension Plan. Inasmuch as the Complainant last
worked in classified employment for the Respondent and is receiving a 1974 Pension Plan Age
55 retirement pension, the Respondent is responsible for providing health benefits coverage for
the Complainant as a Pensioner, effective October 1, 1985.
Because the Respondent terminated the Complainant’s coverage and has filed bankruptcy, the
representative for the Complainant has asked whether Benafuels Processing, Inc. might be
responsible for providing the Complainant’s health benefits coverage as a successor to Metco.
Under corporate and labor law principles, a successor employer is not necessarily responsible for
the provision of health benefits to a retiree who last worked for its predecessor, unless the new
employer expressly assumes the liabilities of the predecessor or a labor arbitrator or a federal
court has determined that the health benefits provisions of the predecessor’s contract are binding
upon the successor. Although the parties to the Memorandum of Understanding agreed to
arbitrate the successorship issue, information provided to the Funds indicates they have not done
so. Absent evidence of any arbitration or court decision that Benafuels is bound by the terms of
Metco Mining’s contract with the UMWA, Benafuels’ responsibility for providing the
Complainant’s coverage is limited to the period November 1, 1986 until May 1, 1987, pursuant
to the express provisions of the October 16, 1986 Memorandum of Understanding.
The Complainant has also asked in the alternative whether coverage might be provided under the
1974 Benefit Plan and Trust. Under that Plan, a beneficiary is entitled to coverage only if it is
determined that the beneficiary’s last Employer is “no longer in business.” Such determination is
made by the Trustees under established procedures separate from the ROD procedure.
Opinion of the Trustees
The Respondent is responsible for the payment of covered medical expenses incurred by the
Complainant during his period of eligibility as an Employee under the terms of the Employer
Benefit Plan. The Respondent is responsible for providing health benefits coverage for the
Complainant as a Pensioner effective October 1, 1985, excluding the period from November 1,
1986 until May 1, 1987, when Benafuels Processing, Inc. expressly assumed responsibility for
such coverage. Benafuels Processing, Inc. is responsible for payment of covered medical
expenses incurred by the Complainant from November 1, 1986 until May 1, 1987.
