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Retirees protest GM cuts in health benefits

Automaker says it can't survive without relief from health-care costs

The Associated Press

DETROIT ' General Motors Corp. retirees asked a federal judge Monday to reject a settlement that would require them to pay more for their health care, saying it violates their contracts. But GM and the United Auto Workers said the agreement is critical to the struggling automaker's future.

This is the only hope that there is that GM will be able to continue to survive, said Julia Penny Clark, an attorney for the UAW. GM is at risk of not being able to provide these benefits.

But Leroy McKnight, 56, of Haslett, called the settlement an unprecedented attack on retirees. McKnight retired in 2001 after 30 years at GM.

I have a deal with General Motors that is a contract I signed and they signed on the day of my retirement, McKnight said. McKnight's comments brought cheers from some of the 100 GM retirees who filled overflow space in another courtroom and a hallway.

GM and the UAW, who reached the agreement last fall, said the automaker is in dire financial trouble and must get some relief from its growing health care costs. The company lost &

36;8.6 billion in 2005 and spent more than &

36;5 billion on health care.

— Hourly workers approved the settlement by a 61 percent margin in November, but GM needs the approval of the federal court to go forward with the plan since it involves retirees, who didn't get to vote. GM has asked U.S. District Court Judge Robert Cleland to approve the deal by April 1. Cleland is expected to rule sometime after March 22.

GM and the UAW said that of 476,000 retirees contacted about the proposed settlement, just 1,250 have filed objections. But Mark Baumkel, an attorney for the objectors, said that number is almost certainly higher. McKnight said an 80-page explanation of the change was confusing.

Under the proposed change, GM's hourly retirees would pay up to &

36;752 annually for families and &

36;370 for individuals for their health care. The agreement requires active GM hourly workers to contribute &

36;1 per hour in future pay increases to a new fund to help pay for retirees' coverage. GM would contribute &

36;3 billion to that fund through 2011.

UAW attorney William Payne said the agreement would cost retirees around &

36;1 a day in premiums, deductibles and co-payments that they don't currently pay. He said GM's nonunion salaried retirees currently pay eight times that amount for their health care.

GM attorney Richard Godfrey said the objectors have no better alternative to the agreement, which is designed to cover retirees' costs for the next 20 years.

Where else in the United States do you get comprehensive medical benefits for a dollar a day? Godfrey said. This is the best result in a very difficult and trying circumstance.

But Baumkel said there is no guarantee the fund will pay for health care for 20 years. He also said GM and UAW documents from 1980 to the present have promised retirees their health care benefits will continue once they retire.

These rights were vested. They were unambiguous, Baumkel said.

Cornelius Besteman, 72, said he could have transferred when his plant in Flint closed but decided to retire in 1985 because he knew GM would take care of his health costs.

I gave General Motors sweat, blood and 39 and nine-tenths years of my life, said Besteman, of Sanford. Besteman, who leaned on a cane during his testimony, said he has had four heart attacks and a heart bypass. He also has had one lung removed and is diabetic.

Besteman said he will have a hard time paying for his health care because his GM pension currently totals around &

36;1,000 a month, or &

36;28 per year of service, far less than the &

36;50 per year of service retirees get now. He said the UAW should tackle unnecessary spending in its contracts before coming after retirees.

I'd probably not go to the emergency room if I had to pay money. It would be a choice between the emergency or eating, said Besteman. Under the new plan, emergency room visits would cost &

36;50, but that charge would be waived if the patient was admitted to the hospital.

GM says the agreement would save it &

36;1 billion after taxes each year and would shave &

36;15 billion off its &

36;70 billion in long-term retiree health care liabilities.

If Cleland doesn't agree to uphold the settlement, Godfrey said litigation could go on for years and retirees could get nothing in the end.

If this case goes forward, this would be the highest-stakes corporate game this court would have seen in many a year, he said.

GM shares rose 60 cents, or 3.1 percent, to close at &

36;19.81in trading on the New York Stock Exchange.


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