People who retired from Aliant and Lincoln Telephone & Telegraph Co. are countersuing Windstream, the successor to those phone companies, to prevent its changing any of their retirement benefits in January, as planned.
About 900 people who retired before 2001 from Aliant and Lincoln Telephone Co., predecessors of Windstream, are going to have to start paying for part of their medical insurance premiums, among other changes in benefits, in January, Windstream said earlier this year. Employees and the union that represented some of them, the Communications Workers of America, disputed the company’s right to make those changes, and Windstream responded by asking the U.S. District Court in Nebraska to declare it can do so legally.
People who retired from Lincoln Telephone or Aliant before 2001 paid nothing for their health insurance while they were working, nor during their retirement, according to Windstream. Windstream estimates that retiree health care benefits represent a $227 million liability for the company, and two-thirds of that figure is associated with benefits for the Nebraska retirees. Because Windstream was made up of a combination of several companies, its retiree health coverage is a patchwork over 16 states.
Windstream, Aliant, Alltel and Lincoln Telephone always retained the right to modify, amend or terminate benefits at any time, as stated in plan documents, said Windstream spokesman David Avery. “We’ve been slow and reluctant to make changes to retiree benefits,” he said. “The excessive cost can no longer be justified.” The planned changes reduce inequities among existing retiree benefit plans, according to Avery. “Simply put, we’re asking Aliant retirees to share a portion of the cost for medical coverage, similar to what other retirees and active employees do,” he said.
Resisting that change in U.S. District Court, an attorney for retirees, Terry A. White, is pursuing a class-action against Windstream for those retirees covered by a promise White says was made in 1999, when Alltel bought Aliant, the former Lincoln Telephone & Telegraph Co. Alltel spun off what became Windstream in 2006. One of the documents White submitted to the court is a letter from Frank Hilsabeck, president and chief executive of Aliant, reassuring retirees in 1999, when the Alltel acquisition of Aliant was pending.
“I wanted to let you know that after the merger is completed, ALLTEL will continue to provide these retiree benefits under the same terms and conditions as they are currently provided,” Hilsabeck wrote.
Another is a 2006 letter from Alltel and Windstream officials reassuring “pensioners” that Windstream’s assumption of their benefits would change nothing. White is asking first for a restraining order to prevent the company from changing any of those benefits in January. A hearing on that question is set for Dec. 15.
“Windstream need not balance its checkbook on its retirees’ backs,” White wrote in a claim that counters Windstream’s. “Through their vigilance and dedication, a successful independent telephone business flourished in Lincoln and other parts of Nebraska.”
Windstream’s amended complaint, filed in September, named individual retirees as defendants in its efforts to win a court declaration that it could legally make the changes to benefits. The union that represented some of them, Local 7470 of the Communications Workers of America, has bowed out of the case. Windstream agreed to dismiss the union as a defendant last week. Jay Boyle, a regional CWA official, and Mike Arnold, president of Local 7470, both said the union is in no position to help the retirees legally.
“We can’t represent them,” Boyle said. “Once they retire they’re no longer our members, therefore, not part of the bargaining unit. We have no ability to represent these people. It’s an unfortunate fact.”
Arnold said the union checked with its legal staff up the ladder and found no recourse. Windstream is not honoring what Arnold described as a “gentleman’s agreement” that the benefits would not change for those who retired before 2001. Windstream believes it doesn’t have to honor that agreement, Arnold said.
“I don’t think it’s right, either, but I’m not a lawyer,” Arnold said. “Maybe the other lawyers found something we don’t have down here.”
In 2001, a contract negotiated between Alltel and Local 7470 of the Communications Workers of America specified those who became eligible to retire that year or as late as 2004 would continue to receive a fully-paid health care and dental benefit, according to a story in the Journal Star archives. Those who became eligible to retire in later years were supposed to pay a greater share of the health premium, according to agreements reported at the time.
White, a partner in the Domina Law Firm, a prominent litigation firm, says the retirees have no money to pay her, so she’s expecting to get paid by Windstream when all is said and done.
Her point is pretty simple:
“The Individual Defendants received communications directly from the Company President which affirmed the Company’s promise to past and future retirees that their benefits would continue after the merger in the same fashion as they did prior to the merger and could not be taken from them by the Company or its successor(s),” White wrote in the counterclaim. “For Company retirees, this meant the benefits for which they had acquired permanent rights would continue in precisely the same fashion with Aliant, then Alltel and now Windstream. Those rights were vested, and represented the post-retirement, deferred fruit of their lives’ labors for the Company. They built the Company; they were entitled to be supported by it in their retirement in exchange for their support of it during its growth.”
Retirees have written scores of letters to the court objecting to Windstream’s intentions. As planned, the company would switch from Blue Cross and Blue Shield to UnitedHealthcare. The retirees would have a $500 deductible, then the plan would pay 80 percent of eligible costs, in combination with Medicare, if applicable. The retirees would pay 20 percent of costs, with an out-of-pocket maximum of $2,500. In addition, the company would terminate its Aliant plan for disability and death benefits, and replace it with a basic life insurance coverage of $5,000.
The retirees’ counterclaim said the Windstream amendments would drastically change the terms of the benefit plans to make retiree life insurance unaffordable, the death benefit insignificant, and health and medical care so expensive it will become essentially unavailable.
“The Individual Defendants are wholly dependent on retirement benefits, including pension benefits, life insurance for their widows and widowers, and health insurance,” White wrote. “Without it, many of them would free fall toward, and hope to be caught by, the safety net of public assistance known in America as ‘welfare’.”
Of the 900 retirees covered by Windstream’s policy, 826 lived in Nebraska; the rest in 25 other states, according to Windstream’s original petition to federal court.
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