UAW to Pay $355M in Health Plan Class Action Settlement

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On Jan. 30, United Auto Workers (UAW) agreed to pay $355 million in a retiree health plan class action settlement, resolving claims that the labor union made unauthorized changes to the employees’ health plan, thus allegedly violating collective bargaining agreements.

The labor union and the group of retiree plaintiffs jointly filed a proposed settlement agreement, and asked the presiding federal judge to approve the retiree health plan class action settlement. This UAW settlement will require the labor union to fund a new voluntary employees’ beneficiary association trust, also known as VEBA. UAW’s contribution to the VEBA, according to the retiree health plan class action settlement, will total $355 million.

The UAW retiree health plan class action lawsuit was filed by a group of retirees after a 2013 health plan modification changed the prescription drugs, dental work, and medical service benefits available to retired employees and their surviving spouses. These health plan changes included prescription drug utilization tools, incentives to use generic drug brands, and higher costs to Class Members for out-of-network dentists.

According to the UAW class action lawsuit, the labor union allegedly refused to settle grievances by retired employees protesting the health plan changes during arbitration proceedings, violating mandates set in place by two collective bargaining agreements between the labor union and the Office and Professional Employees International Union and the Staff Council of International Representatives.

The retiree health plan class action settlement states that the proposed UAW settlement agreement will provide major benefits for the plaintiffs and other Class Members. UAW claims that the union decided to settle the retiree health plan class action lawsuit to avoid the risk of continued litigation, “as well as the financial risks inherent in the present arrangement, and represents the product of arm’s-length negotiations,” according to the UAW class action lawsuit.

Additionally, per the terms of the retiree health plan class action settlement, retirees’ health benefits will be administered by VEBA as a legally separate entity from UAW.

The UAW class action settlement states:

“Upon the establishment of the VEBA (with the court’s approval), the UAW will have no further obligation to provide health care benefits to its current or future retirees. The UAW will contribute approximately $346 million to the VEBA to fund retiree health care benefits and an additional $8.5 million to offset the cost of administering those benefits.”

This UAW retiree health plan class action settlement came about after months of negotiations, tentative agreements, and legal motions from both the union and the retirees.

The plaintiffs are represented by David M. Fusco of Schwarzwald McNair & Fusco LLP, Andrew W. Stumpff of Stevenson Keppelman Associates, and Claire W. Bushorn, David M. Cook and Jennie G. Arnold of Cook & Logothetis LLC.

The UAW Retiree Health Plan Class Action Lawsuit is Office and Professional Employees International Union, Local Union 494, et al. v. United Automobile Aerospace and Agricultural Implement Workers of America, International Union, Case No. 2:14-cv-14868, in the U.S. District Court for the Eastern District of Michigan.