Judge: Coal company can drop retirement benefits for 13,000 workers

AP Photo/St. Louis Post-Dispatch, Stephanie S. Cordle
AP Photo/St. Louis Post-Dispatch, Stephanie S. Cordle
Stephanie S. Cordle

Bankrupt coal mining company Patriot Coal will be able to void its agreement with the United Mine Workers union (UMWA) and stop funding pensions for retired miners, thanks to a ruling from the U.S. Bankruptcy Court in the Eastern District of Missouri. In a decision [PDF] dated May 29, Judge Kathy A. Surratt-States said that the failing company was authorized to rip up its union collective bargaining agreements as part of a plan to trim $150 million in annual labor costs during Chapter 11 restructuring.

“This ruling represents a major step forward for Patriot, allowing our company to achieve savings that are critical to our reorganization and the preservation of more than 4,000 jobs,” said Bennett K. Hatfield, the company’s CEO, in a statement. ”The savings contemplated by this ruling, together with other cost reductions implemented across our company, will put Patriot on course to becoming a viable business.”

But for the company’s current and former employees, the future looks much less rosy. Thanks to the ruling, Patriot Coal will now be able to move forward with a plan that could slash retirement and health benefits for up to 13,000 retirees. That includes many who are suffering from the ailments typical of long-time miners, such as black lung disease.

“A lot of people have malignant tumors and black lung or cancer,” former mine worker Alana Green told Huffington Post earlier this month. “These people can’t go out and get someone to pick them up for insurance.”

Patriot Coal is actually the child of a much larger corporation: Peabody Energy. When Peabody Energy created Patriot in 2007, it transferred many of its pension and health care obligations to the smaller coal company, even though many of the workers covered by those benefits “retired before the spinoff and never worked for Patriot,” according to Reuters.

UMWA claims that Peabody did this because Patriot was “designed to fail,” in the words of a paper [PDF] on their website written by Temple University finance professor Bruce Rader. Patriot Coal, he writes, “seems to have been created to fail in the long run,” so that it could use bankruptcy to get out paying health and retirement benefits.

Such a move would not be unprecedented. When American Airlines’s parent company AMR filed for bankruptcy in 2012, Transport Workers Union president James Little claimed that the company was in part attempting “to get out of bankruptcy what [they] couldn’t get at the table,” and use the process to extract further concessions from unions.