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Ruling in ERISA Suit Challenging Capping of Retirees' Health Care Benefits

By FindLaw Staff on June 03, 2010 3:28 PM

In Wood v. Detroit Diesel Corp., No. 09-1252, the Sixth Circuit faced a challenge to the district court's grant of plaintiff-retirees' motion for summary judgment in their suit under the Labor-Management Relations Act and the Employee Retirement Income Security Act (ERISA), claiming that they were entitled to fully funded, lifetime health care benefits.

As satated in the decision: "In the 1993 Cap Agreement, the parties agreed 'to limit [Detroit Diesel]'s contribution toward retiree health benefit premiums' without providing for an expiration date for the limitation.  This indicates the broad shift made by the Cap Agreements, which was from an entitlement of a defined benefit - fully funded, lifetime health care benefits - to a defined contribution - the capped dollar amount."

Thus, in reversing the district court's judgment, the court remanded the matter as defendant is entitled to summary judgment because the only coherent reading of the Cap Agreements establishes that the retirees, who retired between 1993-2004, are entitled to lifetime, capped health care benefits.     

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