The Sixth Circuit Allows Employer to Modify Retiree Health Benefits

The U.S. Court of Appeals for the Sixth Circuit has long been considered the court of choice for plaintiff retirees seeking health benefits. This trend seems to be changing, however, as the court moves away from its earlier presumption that retiree health benefits cannot be modified. On January 7, 1998, the Sixth Circuit in its first en banc opinion on the subject ruled that General Motors could change retiree health benefit coverage. In doing so, the court reversed a three-judge panel.

The company had informed the retirees in oral communications and written plan summaries that GM would pay coverage for life. However, GM reserved the right to modify or terminate benefits in some of the plan summaries and in the formal plan document. The GM case highlights several things employers can do to reduce the chance that retiree health benefits unintentionally become a permanent obligation.

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