Sixth Circuit Affirms Decision Prohibiting Reduction of Retiree Prescription Drug Benefits

December 2012

In a decision affecting more than 30,000 retirees of Navistar International Corporation, the U.S. Court of Appeals for the Sixth Circuit affirmed the decision of the U.S. District Court for the Southern District of Ohio that Navistar improperly shifted the retirees’ prescription drug coverage from the plan provided under a 1993 consent decree to a Medicare Part D Plan that covered fewer drugs at substantially greater cost to the retirees.

The retirees, represented by Bredhoff & Kaiser, successfully argued that Navistar breached its obligations under the consent decree in unilaterally shifting the coverage. The consent decree at issue was approved in settlement of an action in which several unions and the retiree class, represented by the firm, challenged Navistar’s unilateral reductions of insurance benefits. In the recent proceedings, the courts rejected Navistar’s contention that language in the settlement documents about coordinating benefits with Medicare was applicable to the Part D prescription drug program, which did not exist when the consent decree was fashioned.