ERISA-Sixth Circuit Rules That Retirees Do Not Have Unalterable, Vested Healthcare Benefits For Life

The case of Gallo v. Moen Incorporated, Nos. 14-3633 and 14-3918 (6th Cir. 2016), involved the question of whether several collective bargaining agreements (the “CBAs”) entitle a class of retirees from Moen Inc. to unalterable, vested healthcare benefits for life. The district court ruled in favor of the class.

However, the Sixth Circuit Court of Appeals (the “Court”) reversed, finding that nothing in the CBAs-read by applying ordinary contract principles- committed or showed the intention of Moen to provide unalterable healthcare benefits to retirees and their spouses for life. This obtains despite use in the CBAs of phrases like “continued” and “will be provided” and “will be covered” when discussing the retiree health care, which could imply lifetime benefits, since the CBAs made commitments only for 3-year terms.

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