Mack Workers Settle Health Benefit Claims

     PHILADELPHIA (CN) – A federal judge granted preliminary approval to a $525 million settlement for retired Mack Truck employees who claimed that the manufacturer was trying to unilaterally change their medical benefits arrangement.

     In September 2007, Mack asked a federal judge in Pennsylvania to confirm its right to make the changes in light of the financial difficulties facing the Greensboro, N.C.-based company.
     United Auto Workers responded in November 2008 by filing a federal class action in Michigan, claiming the retirees’ healthcare benefits were vested and not subject to unilateral modification.
     Under the settlement preliminarily approved by U.S. District Judge R. Barclay Surrick, Mack and its corporate parent, Volvo, will contribute $525 million to a trust in five annual installments.
     A seven-member committee, on which Mack will have no representative, will oversee the trust, according to the opinion.
     The new arrangement entails a reduction in benefits for more than 9,000 Mack retirees and their families, and there may be more cuts in store, according to Surrick’s six-page opinion.
     “Funding under the settlement will cover 85% of the projected cost of benefits under the restructured plan,” Surrick wrote. “Based on this prediction, it is likely that the…committee will have to reduce benefits and shift more costs to participants.”
     A fairness hearing is slated for Sept. 7 in Philadelphia.

%d bloggers like this: