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Appeals court rules for CUNA Mutual on retiree benefits
MADISON, Wis. (8/12/11)--CUNA Mutual Group retirees had no legal right to prevent the company from eliminating the company’s subsidy of health insurance premiums, a federal appeals court ruled Wednesday. The subsidy included accumulated sick pay the retirees believed would be put toward those premiums. Court documents indicated CUNA Mutual’s current and future health insurance premium subsidies were reflected as a $121 million liability on the company's balance sheet. The U.S. Court of Appeals for the Seventh Circuit Court issued the 2-1 opinion, which sustained a decision by U.S. District Judge Barbara Crabb, who dismissed the suit. Roughly 600 retirees would have been affected (The Wisconsin State Journal Aug. 11). CUNA Mutual was sued after it stopped paying any share of employees’ health care in 2008. That move eliminated the $121 million liability from its balance sheet and, in doing so, eliminated managers’ sick pay balances accumulated since 1982. The retirees’ complaint alleged that CUNA Mutual did not fulfill its promise to compensate employees when they retired for coming into work instead of calling in sick. Some retirees had accrued up to $145,000 in sick pay and expected to use it to pay for their share of health insurance premiums, the newspaper said. An employer can put its own and investors’ interests over those of retirees and employees because the retirees didn’t have a vested interest in their sick-pay benefit, the court ruled. “CUNA Mutual has an obligation to protect the company’s financial position and its policyholders,” Rick Uhlmann, CUNA Mutual senior manager media relations, said in a statement. “As such, we made the very difficult decisions to eliminate the company-funded subsidies for retiree health insurance premiums. “We are pleased two courts have upheld CUNA Mutual’s right and authority to make changes to these types of benefit plans,” he added.
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