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8th Circuit panel: Peabody should pay retired Patriot miners' health benefits

CHARLESTON, W.Va. -- Peabody Coal should continue to pay health-care benefits for 3,100 retired miners and dependents who worked for a Peabody subsidiary that was transferred to Patriot Coal, a panel of three federal judges ruled Wednesday.

Thousand of Patriot Coal retirees and their families had faced the prospect of substantial cuts to their benefits after Patriot filed for bankruptcy last year. Patriot and the United Mine Workers of America reached a settlement last week to avoid the worst of those cuts, but they have continued to argue that Peabody should continue to pay some of those benefits for the miners that used to work for the company.

Wednesday's decision by the panel from the U.S. 8th Circuit Court of Appeals overturns a previous ruling by U.S. Bankruptcy Judge Kathy Surratt-States, who said Peabody should be absolved from responsibility for the benefits.

Surratt-States made her decision as part of her larger ruling on May 29 that Patriot could throw out union-negotiated benefit contracts to cut costs and keep the company operating.

"We are pleased that the Bankruptcy Appellate Panel has found Peabody Energy Corp. responsible for healthcare benefits it assumed at the time of the spin-off of Patriot," Bennett K. Hatfield, Patriot's president and CEO, said in a statement issued Wednesday.

"The appellate court adopted the position that Patriot has advocated all along -- Peabody should not be permitted to use Patriot's bankruptcy to escape its healthcare obligations to thousands of retirees," Hatfield stated.

Wednesday's ruling says Peabody continues to hold responsibility for health-care benefits to miners who worked for Heritage Coal Co., one of eight subsidiaries Peabody transferred to Patriot in 2007.

In a statement, Peabody officials said, "Peabody is pleased with today's ruling by the Eighth Circuit Bankruptcy Appellate Panel. The court said that Peabody was obligated to make payments [that have been consistently paid] until such time as a new labor agreement was approved between Patriot and the UMWA."

Peabody officials also noted in the statement that that the panel did not rule on "how Peabody's level of funding would be determined with this new agreement in place.

"Now that a new labor agreement has been approved, the provisions of the contract with Patriot will apply and any future funding levels are yet to be determined," Peabody said in the statement.

Patriot Coal was created in 2007 when Peabody sold its union operations east of the Mississippi to the newly created company. In 2008, Patriot bought Magnum Coal, a company that took over union mines operated by Arch Coal in 2005.

Patriot filed for bankruptcy protection on July 9, 2012, in large part because of the health-care and pension liabilities it assumed in taking over Peabody and Arch coal mines.

"Patriot remains committed to a fair outcome for our stakeholders, while securing the necessary savings to successfully emerge as a long-term coal producer," Hatfield stated. "The decision of the Bankruptcy Appellate Panel is a welcome development that will help Patriot achieve these goals."

Most Heritage Coal employees work in mines in the Midwest. The majority of miners transferred to Patriot from Peabody and Arch work in West Virginia and Kentucky mines.

UMWA International President Cecil E. Roberts called Wednesday's decision "a bright ray of good news in what has been a long, dreary period for the retirees, their dependents and widows who have been desperately worried about what's going to happen to their health care.

"Peabody has spent years trying to get rid of its obligations to the thousands of retirees who made it the richest coal company in the world," Roberts said in a statement. "This decision foils part of that plan. And it makes us even more determined to keep fighting to make sure the company lives up to its entire obligation to these miners."

The UMW supported Patriot and Heritage's appeal of Surratt-States' decision.

Last Friday, UMW miners in West Virginia and Kentucky voted to approve a new contract with Patriot by an 85 percent majority. That contract included what the union termed significant improvements in the terms and conditions of employment and benefits from those approved by Surratt-States in her May 29 opinion.

Sen. Jay Rockefeller, D-W.Va., said, "Peabody's attempt to shed its obligations to union miners was unjust, unfair and unconscionable. I'm incredibly pleased that an appeals panel recognized that and overturned a decision that would have broken a solemn promise Peabody made.

"It's another ray of hope for retirees who worked day and night to provide for their families. Still, protecting the health benefits and pensions of our coal miners is something we all must continue fighting for -- and I pledge to do all I can to make sure it never comes to this again," Rockefeller said.

Reach Paul J. Nyden at pjnyden@wvgazette.com or 304-348-5164.


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