Raytheon Co. was wrong in cutting off health benefits for some of its retirees, a federal appeals court ruled Tuesday.
A three-judge panel of the 9th Circuit Court of Appeals said the company and its predecessor, Hughes Missile Systems, made explicit promises to those who agreed to retire early that their health insurance would be paid in full until they reach age 65. The judges rejected arguments by company attorneys that the company was released from that obligation by subsequent collective bargaining agreements.
Tuesday's decision most immediately affects up to 600 retirees who were forced in 2004 to start making payments to their retirement coverage. Those payments continued until a trial judge ruled in favor of the former workers and ordered the company to start picking up the cost again.
This ruling, unless overturned, continues the payments.
But attorney Robert M. Gregory, who filed this lawsuit, said the decision could help a separate group of about 200 retirees who are pursuing their own claims in a separate legal action. That case has been on hold awaiting Tuesday's ruling.
Company officials had no immediate response to the decision.
Court records show that Hughes - and later Raytheon - had agreed through successive labor contracts to pay the health insurance premiums of those who were at least 55 and retired prior to reaching age 65. But a new contract in 2004 ended that practice and the company began billing the retirees for the coverage.
That new contract, according to Raytheon, eliminated the prior obligations.
Appellate Judge David Thompson, writing for the court, said the problem with that argument is that the collective bargaining agreements specifically said that the right of retirees to fully paid premiums would continue after the term of any of those agreements expired.
Thompson also said if there was any doubt about it, that could be resolved by letters the company sent to retirees in 1998 and again in 2002. Those letters specifically said they and their dependents were eligible for company-paid health insurance until they turn 65.
The judge also rejected arguments by Raytheon that the company reserved the right to change the benefits in the 1999 and 2003 collective bargaining agreements. Thompson said that language specifically applied to benefits to employees. And retirees, he said, do not fit within that definition.
Gregory said the retirees represented in this lawsuit are those who could afford to make premium payments until the trial judge ordered the company to once again begin picking up the cost. He said Raytheon owes them at least $2 million for what they spent in the interim.
The second group - those whose case is still pending - are retirees who could not afford the premiums. Gregory said some went out and got other jobs, some purchased alternate insurance and some have paid their medical bills out of pocket.
He said that includes one worker who had a heart attack - something that would have been covered by retiree insurance - and had to come up with $75,000 out of his own pocket.
Gregory said that, with Tuesday's ruling, he hopes the second lawsuit proceeds quicker.
The appellate decision was not a total victory for the retirees. The judges rejected arguments by Gregory that they should receive additional compensation for the emotional distress of being denied the benefits to which they were entitled.