Kraft Heinz Sued Again Over Retiree Health Benefits Cuts

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Carmen Castro-Pagan

Dec. 12 — Kraft Heinz Food Co. Inc. violated federal law by reducing lifetime health and prescription drug insurance benefits to its retirees, a new lawsuit alleges ( Beale v. Kraft Heinz Food Co. Inc. , S.D. Iowa, No. 3:16-cv-00119, complaint filed 12/9/16 ).

The lawsuit, filed Dec. 9 in the U.S. District Court for the Southern District of Iowa, seeks class treatment for more than 500 union-represented retirees of a meat processing plant in Iowa. Kraft unilaterally reduced their health benefits by terminating their coverage, increasing their premiums and changing their benefits in violation of the Employee Retirement Income Security Act and the collective bargaining agreement between the union and the company, the lawsuit claims.

This isn’t the first lawsuit Kraft faces for reducing health-care coverage to its retirees. A year ago, retirees of an Oscar Mayer Foods Inc. subsidiary in Wisconsin accused Kraft of forcing them into less generous health arrangements without the consent of their union.

Retirees across the nation have sued a number of companies for allegedly breaking their promise to offer lifetime health-care benefits. Courts this year have ruled against retirees, and in favor of companies, including BorgWarner Inc., Moen Inc., Weyerhaeuser Co. and Johnson Controls Inc.

“Kraft Heinz believes this lawsuit is groundless,” Michael Mullen, senior vice president of Corporate & Government Affairs at Kraft, told Bloomberg BNA Dec. 12 via e-mail.

The retirees were promised they would pay the same premiums they paid when they were active employees until their death and the death of their spouses, the lawsuit said. However, in 2015 Kraft announced some changes to the benefits.

Once the changes became effective, some retirees were required to pay up to $2,000 per year for copays and coinsurance and their spouses and dependents were no longer covered, the lawsuit said. In addition, other members were required to pay out-of-pocket all premiums and other costs of supplemental Medicare health and prescription drug insurance.

These changes weren’t negotiated with the union, the retirees alleged. As such, they seek to restore those benefits in effect before January 2016.

Arellano & Phebus S.C. and McCarthy Callas Church & Feeney P.C. represent the proposed class.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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