Nuclear Contractor Must Face Retiree Health Lawsuit

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By Jacklyn Wille

May 10 —A lawsuit challenging cuts in health benefits for retirees of the Oak Ridge, Tenn., nuclear security complex can move forward, but not under certain provisions of ERISA, a federal judge ruled.

The proposed class of several thousand retirees and dependents accused Consolidated Nuclear Security LLC of cutting health benefits after leading them to believe that those benefits were secure. A federal judge May 9 allowed the retirees to move forward with their fiduciary breach claim but blocked their bid to seek benefits under the Employee Retirement Income Security Act.

According to the retirees, Consolidated officials repeatedly assured them that they would enjoy employer-provided health benefits throughout their retirement, with the possibility of small premium increases. When the company increased out-of-pocket costs and cut coverage levels in 2015, the retirees filed a proposed class action under ERISA.

Chief Judge Thomas A. Varlan of the U.S. District Court for the Eastern District of Tennessee found that the retirees stated a valid claim for fiduciary breach and partly denied Consolidated's motion to dismiss.

Although Consolidated pointed to a reservation of rights clause in which it retained authority to terminate retiree health benefits, Varlan said that this clause was relevant only to the extent that it showed the company's other reassurances about retiree health coverage to be false.

Varlan therefore allowed the retirees to move forward with their fiduciary breach claim. However, he dismissed their claims for ERISA benefits, plan-wide relief and estoppel.

Greg Coleman Law PC represented the retirees. Greg Coleman told Bloomberg BNA May 10 that he was pleased that the court found a viable claim for breach of fiduciary duty and that he looked forward to pursuing that claim as the case advanced.

Consolidated represented itself, along with Kramer Rayson LLP. Counsel for Consolidated didn't immediately respond to Bloomberg BNA's request for comments.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

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