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Michigan District Court Rejects Retirees’ Claim for Lifetime Healthcare Benefits

A federal district court in Michigan dismissed retirees’ claims for lifetime, unalterable healthcare benefits from BorgWarner.  BorgWarner provided healthcare benefits to Plaintiffs through a series of collective bargaining agreements  and health insurance agreements.  After BorgWarner unilaterally modified the available retiree healthcare benefits, Plaintiffs filed suit.  Applying the principles set forth in M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (2015) and the Sixth Circuit’s subsequent decision in Gallo v. Moen, Inc., 813 F.3d 265 (6th Cir. 2016), the district court granted BorgWarner’s motion for summary judgment and held that Plaintiffs’ healthcare benefits did not vest under ordinary principles of contract interpretation.  In so holding, the court first observed that the agreements were for three-year terms and did not expressly state that the healthcare benefits vested, whereas the pension plan documents stated that Plaintiffs’ pension benefits were lifetime benefits.  Next, the court observed that several of the agreements restated and sometimes redefined the healthcare benefits available going forward, which would be unnecessary if the benefits had vested.  Lastly, the court observed that the agreements contained: (i) a reservation of rights provision granting BorgWarner the right to modify, amend, suspend, or terminate the plan, and (ii) a termination of coverage provision that limited the healthcare benefits to the term of the governing agreement.  The case is Sloan v. BorgWarner, Inc., No. 09-cv-10918, 2016 WL 7107228 (E.D. Mich. Dec. 5, 2016).

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