COORDINATION OF DISABILITY PENSION ALLOWED AFTER

AMENDMENT OF COLLECTIVE BARGAINING AGREEMENT

            In a recent unanimous opinion, the Michigan Supreme Court essentially held that an employer and union could negotiate away a retiree’s previously bargained for right not to have his weekly workers’ compensation wage loss benefit reduced by coordination of the employer funded disability pension he had been receiving for several years. Arbuckle v General Motors LLC (Case no. 151277, issued July 15, 2016).

            Plaintiff had worked for General Motors since July of 1969. On June 20, 1991, he sustained a work-related back injury. Effective May 1, 1993, plaintiff began receiving a total and permanent disability pension from General Motors. Following his retirement later that month, plaintiff filed a petition seeking workers’ compensation benefits for his work-related disability. In February 1995, a magistrate found plaintiff partially disabled and granted him an open award of benefits at a weekly compensation rate of $362.78.

            The 1990 Collective Bargaining Agreement (CBA) between General Motors and the United Auto Workers Union (UAW) contained a provision by which General Motors agreed not to coordinate statutory workers’ compensation benefits with contractual disability pension benefits for its employees.

            Between 1990 and 2003, General Motors and UAW negotiated new CBAs at 3 or 4-year intervals. Each CBA replaced its predecessor. Each CBA contained a provision by which General Motors agreed not to coordinate statutory workers’ compensation benefits with contractual disability pension benefits for its employees.

            Things changed in September 2007 when General Motors and the UAW agreed to a formula by which General Motors would use disability pension benefits to reduce workers’ compensation benefits. However, coordination was allowed only “for employees who are injured and retire on or after October 1, 2007 . . ..” Thus, the provision did not apply to plaintiff. In 2009, because of the severe economic downturn and General Motors’ impending bankruptcy, General Motors and the UAW amended the 2009 CBA to provide that “all retirees who retired prior to January 1, 2010, regardless of their date of retirement or injury” would be subject to benefit coordination consistent with the 2007 formula.

            On November 16, 2009, General Motors advised plaintiff by letter that, effective January 1, 2010, his weekly workers’ compensation wage loss benefit would be partially reduced by coordinating plaintiff’s disability retirement pension.

            After a hearing, a Workers’ Compensation Magistrate held that General Motors was prohibited from reducing plaintiff’s workers’ compensation benefits by his disability pension benefits because plaintiff had never agreed to coordination and there was no evidence establishing that the UAW had the authority to bargain on behalf of plaintiff following his retirement.

            The Michigan Compensation Appellate Commission reversed the judgement of the magistrate, holding that regardless of the UAW’s authority to bind retirees, defendant was permitted to coordinate plaintiff’s disability pension benefit under Murphy v City of Pontiac 221 Mich App 639; 561 NW2d 882 (1997). Alternatively, the MCAC held that coordination was proper because any right plaintiff had to uncoordinated benefits as part of the 1990 CBA had expired effective November 15, 1993.

            The Michigan Court of Appeals granted plaintiff’s Application for Leave to Appeal and reversed the decision of the MCAC, and remanded the case for further proceedings. Defendant appealed to the Michigan Supreme Court.

            In lieu of granting General Motors’ Application for Leave to Appeal, the Supreme Court reversed the judgement of the Court of Appeals and reinstated the MCAC’s Order allowing General Motors to coordinate plaintiff’s workers’ compensation benefits with his disability pension benefits. The Supreme Court held that neither the 1990 CBA nor any subsequent agreements created an unalterable right to uncoordinated benefits for life. The Court further reasoned as follows:

They instead evinced the parties’ intent to reserve the power to amend plaintiff’s right to uncoordinated benefits on termination or earlier amendment of the agreements. Under a proper reading of the relevant agreements and the application of federal substantive law, [General Motors’] subsequent coordination of plaintiff’s workers’ compensation benefits with his disability pension benefits did not violate the terms of plaintiff’s disability pension plan, nor did it violate MCL 418.354.

Slip Opinion at 20-21.

The Supreme Court disagreed with plaintiff’s assertion that the UAW was not authorized to negotiate coordination of his disability pension after he had retired from active employment. The Court held that, under Federal law, the specific language of the CBA in effect at the time of plaintiff’s retirement did not create in plaintiff a vested right to uncoordinated workers’ compensation benefits. The Court noted that, under Federal law, a union may represent and bargain for already-retired employees with respect to non-vested benefits. The Court held that, under Federal law, that because the right to uncoordinated benefits established by the 1990 CBA was subject to an express durational limit, the right to uncoordinated benefits had not vested and, therefore, the UAW could subsequently represent plaintiff in negotiating the eventual reversal of the agreement not to coordinate disability retirement pension benefits. Therefore, the change in the 2009 CBA, allowing coordination of the disability pension benefits, allowed coordination of the pension benefits under MCL 418.354.

            The Supreme Court’s unanimous opinion was written by Justice Joan Larsen and issued on July 15, 2016.