CHARLESTON, W.Va. -- A plan proposed by bankrupt Patriot Coal would provide only half of the money needed to fund health-care benefits for thousands of retired coal miners and their families, according to new court documents filed by the United Mine Workers union.
As part of its financial restructuring, Patriot wants to set up a new, separate trust, called a voluntary employee beneficiary association, or VEBA, to fund health-care benefits for retirees, UMW lawyers say.
Patriot has proposed putting $15 million into the fund on June 1, and then setting up a profit-sharing mechanism equal to 15 percent of the company's annual net income.
But, the UMW says, Patriot proposes to cap its annual contribution at $40 million and its total contribution at $200 million.
By contrast, retiree health-care benefits cost Patriot $71 million in 2012, and the figure is expected to increase to nearly $74 million this year.
The disclosure of the proposal is the first time that details have been made public about Patriot's closed-door discussions with UMW negotiators about how the St. Louis-based coal giant plans to rework its massive pension and health-care liabilities as it tries to emerge from bankruptcy.
Patriot had made the proposal in mid-November during a private meeting with UMW officials in Charleston, according to court records.
UMW lawyers revealed the information Monday in an amended version of their federal court lawsuit against Peabody Energy and Arch Coal, other coal firms that the union alleges helped create Patriot in an effort to get out of their obligation to fund retiree pension and health-care benefits.
The details were first reported in The Wall Street Journal, and discussed very briefly by UMW President Cecil Roberts in a press conference prior to a Tuesday protest at Peabody headquarters in St. Louis.
"Peabody, Arch Coal and Patriot Coal may be proud of the financial con game they're playing on these retirees to get out of decades of promises and obligations," Roberts said. "But the truth is that this is a sickening display of corporate greed that has overstepped the boundaries of decency. In an America where there are few boundaries for corporations, that's saying something.
Patriot's bankruptcy has jeopardized the pension and health-care benefits for about 10,000 retirees and another 10,000 dependents. About half of the retirees live in the Illinois coal basin in Illinois, Indiana and Kentucky. Another nearly 40 percent live in West Virginia, according to court records.