Bosses deepen attack on coal miners' health fund
(feature article)
BY FRANK FORRESTAL
PITTSBURGH--The financial crisis facing the United Mine Workers health fund, which administers health care to more than 60,000 union retirees and widows, has worsened, according to a new General Accounting Office (GAO) report.
"The GAO report affirms what the UMWA has contended for more than two years now," said UMWA president Cecil Roberts. "If something is not done soon to restore financial stability to the UMWA's Combined Benefit Fund, the beneficiaries of that fund--a majority of whom are more than 70 years old--are facing disastrous consequences with respect to their health care benefits." The union president added that the "report should make it clear to Congress that it needs to expedite finding a solution to this crisis."
In recent years, the union fund has experienced financial hardship due to rising medical costs and a series of court decisions that have allowed coal companies to stop paying into the fund. The fund covers about 60,000 people, the majority of whom live in the Appalachian states of Kentucky, Pennsylvania, and West Virginia. Based on audited reports and "actuary estimates," the union fund will run up a $56 million deficit by the end of 2000 and a $513 million deficit by the end of 2008, according to the GAO report.
The Coal Industry Retiree Health Benefit Act--otherwise known as the Coal Act--established the Combined Benefit Fund (CBF) in 1993 by merging two UMWA retiree health benefit trusts. In the years leading up to 1993, coal company after coal company was "dumping" UMWA retirees by pulling out of the fund. The line was drawn by the union in the 1989-90 strike against the Pittston Co. after the bosses announced they were terminating medical benefits to its retirees and their widows. The 11-month strike by UMWA miners fought off this attack and gained wide support from the labor movement and from coalfield residents.
In the wake of the strike, a Coal Commission, headed by then Secretary of Labor Elizabeth Dole, found that "retired miners are entitled to the health care benefits that were promised and guaranteed them and that such commitments must be honored." According to a union fact sheet, the government commission recommended that "Congress enact federal legislation that would place a statuary obligation on current and former signatories to the National Bituminous Coal Wage Agreement (NBCWA) [of 1978 and successor agreements] to pay for the health care of their former employees."
The CBF is financed by a per miner annual premium paid by coal companies that have retirees in the Fund. In addition, the so-called orphans--miners dumped from the fund--are financed through the use of interest on moneys held in the Abandoned Mine Land Reclamation Fund. The top five companies that pay into the fund include Consolidation Coal Co., Island Creek Coal Co., U.S. Steel Mining Co., LTV Steel Co., and BethEnergy Mines, Inc. Of these, Consol is the largest, paying a premium of $13 million for 5,279 miners and their widows this year.
According to the GAO report, the union fund faces "extensive litigation," which they classify into several major categories. These include legal cases involving constitutional issues, coal company challenges to assessments and premiums, bankruptcy and successorship cases, and enforcement of obligations stemming from the Bituminous Coal Operators Association (BCOA) agreements since 1978.
Eastern Enterprises v. Apfel is the most important case that had a negative impact on the stability of the fund. In 1998 the U.S. Supreme Court ruled that companies that were not signatories to the 1974 or later BCOA agreements with the union did not have to pay into the fund. Following this decision some 132 coal companies used the decision of the highest court in the country to wiggle out of their financial obligations. As a result, 8,000 miners were reduced to "orphan" status. At the time of the ruling the coal bosses hailed the decision as a "tremendous victory" for their side. In making this decision, the U.S. Supreme Court said the Coal Act violated the 5th Amendment's ban on "taking" private property for public use without just compensation.
Another potential blow to the union is in the offing. In the 1999 case Dixie Fuel Company v. Social Security Administration (SSA), the Sixth Circuit Court of Appeals challenged the right of the SSA "to make assignment of beneficiaries to coal companies after September 30, 1993, which was the date given in the Coal Act." The Circuit Court ruled that the assignments were invalid. The court decision is still subject to litigation and has not been implemented. If the ruling stands in its current form, it could potentially affect 247 coal companies with some 10,000 miners and their widows losing health coverage. In addition, the union may have to refund an estimated $57 million in premiums.
The GAO report lists several other court challenges to the Coal Act. After the Eastern decision several coal companies were assigned retroactive premium increases to cover the increase in "orphans." In the case of Apogee Coal Co. v. Holland, several major coal companies have challenged these increases.
Four significant legal cases challenge the "per beneficiary" premium under the Coal Act. The premium is set by the SSA and is escalated each year by the medical component of the Consumer Price Index. In a 1995 decision in National Coal Association v. Chater, an Alabama court overturned the premium set by the SSA and reduced the payment by the employers by 10 percent. In 1999, the same court ordered the union fund to return $40 million in premiums already paid out.
There are also four "successorship" cases stemming from coal companies that have changed ownership. In a recent split decision, the Fourth U.S. Circuit Court of Appeals ruled that the buyer of a unionized coal mine, Jericol Mining, was not responsible for UMWA Combined Funds for miners who retired before the company took over. This would mean that Jericol Mining would be free from paying health benefits to 86 miners who retired before the Kentucky coal company bought out the previous owner in 1973.
Two challenges are to the "evergreen clause," which refers to the enforcement of the continuing contribution obligation requirements that were included in the national BCOA wage agreements since 1978. Altogether the legal challenges add up to more than $11 million in litigation costs. The union must also contend with another 271 individual collection lawsuits and 57 individual proofs of claims of bankruptcy, further depleting union resources.
On September 7, by a vote of 12-1, the Senate Finance Committee approved the transfer of $57 million from the U.S. Treasury to the UMWA's CBF. Taking the form of an amendment, the stopgap measure, if approved by Congress, would maintain health benefits for retired miners and widows for one year. The Senate Finance Committee did not take up long-term solutions, or address overturning court decisions adverse to maintaining the flow of funds.
The UMWA is supporting the Coal Miners and Widows Health Protection Act of 2000. Introduced by Sen. Jay Rockefeller, the bill originally called for transferring $346 million allocated by the Clinton Administration in its 2000 budget. After the release of the GAO report, the union is now proposing that the figure be increased to $455 million.
The union is also supporting the Coal Accountability and Retired Employee Act for the 21st Century--known as CARE-21. The proposed legislation would transfer $96.8 million in Abandoned Mine Lands Reclamation Fund interest money to the UMWA's Combined Benefit Fund.
On May 17, some 8,000 UMWA miners and their families rallied in Washington, in defense of their right to lifelong health coverage. The July-August issue of the United Mine Workers Journal carries an article entitled, "Participants Vow To Rally Again." As one retired UMWA miner, Clyde McGregor from Kittanning, Pennsylvania, said at the May 17 rally, "I think saving our health benefits is the most important thing we can do. I would go back to another rally."
Frank Forrestal is a member of United Mine Workers of America Local 1248.
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