VEBA gag order irks UAW ranks

GM retirees seek details of health trust

January 6, 2008

By KATIE MERX

FREE PRESS BUSINESS WRITER

Retirees from General Motors Corp.’s UAW ranks are rankled over a judicial order that appears to allow just about anything in the court proceedings to establish a $29.9-billion UAW health-care trust to be deemed confidential.

The health-care trust — known as a voluntary employee beneficiary association, or VEBA — is already a controversial topic among the Detroit automakers’ active UAW members and retirees because the deal allows the automakers to relieve themselves, at a significant discount, of future hourly retiree health costs and because much of the financial justification for the deal has been kept under wraps by the UAW.

Now, as the UAW and GM seek judicial approval to establish that VEBA trust, a Dec. 27 order that potentially allows for more secrecy disturbed several of those retirees who were aware of it.

"I have no idea what the judge’s reasoning was for a gag order," said Jerry Tucker, a former UAW International executive board member, who opposed the UAW’s agreement to a VEBA. "My concern is … that if this VEBA is to be the vehicle for the health and welfare of more than half a million workers and their families over time … that there ought to be a very transparent understanding of all aspects of that."

The court order, from U.S. District Court Judge Robert H. Cleland in Detroit, says that documents, testimony and other materials in the case may be deemed confidential or "highly confidential-eyes only" by any party to the case, at any time, for a wide variety of reasons.

Acceptable reasons listed include the protection of financial information, proprietary business information, personal information or "documents containing information that would cause named plaintiffs, prospective class members, the UAW, GM or any other present or current employees of the UAW or GM ‘annoyance, embarrassment or oppression.’ "

Cleland issued a similar order in the UAW-Chrysler LLC VEBA case on Nov. 15.

The case in which the UAW and Ford Motor Co. are seeking approval of their deal was not filed until Nov. 9 and didn’t appear to be operating under a protective order as of Friday.

GM retirees told the Free Press they were concerned the orders would simply prohibit the workers, retirees and surviving spouses who will depend upon the VEBA trusts from having any oversight.

"The workers are entitled to know how it’s administered, how the decisions are made and why shifts are required with co-pays … all of that should be available to workers in the plan," Tucker said. "These workers have paid for that plan over the years with forfeiture of pay, and cost of living and many other concessions that were made over the year. They are entitled to know … everything about the plan."

A UAW spokesman did not respond to requests for comment Friday evening.

The union negotiated VEBA trust agreements with each of the Detroit automakers as part of its 2007 contract negotiations. Each of the three trusts is seeking court approval.

GM has agreed to pay about $29.9 billion into a VEBA trust to rid itself of an estimated $47-billion obligation.

In total GM, Ford Motor Co. and Chrysler LLC will pay about $52 billion into VEBA trusts to rid themselves of about $88 billion in estimated future health costs, leaving about $36 billion unfunded.

An independent VEBA board will need to manage the $52 billion in cash and other assets to pay for the health benefits of the automakers’ current retirees; active workers as of Sept. 14, 2007, when they retire; and the spouses and dependents of those union members.

UAW President Ron Gettelfinger describes the VEBA as a solid plan to provide benefits and has said the VEBA will last for 80 years.

Several experts say the scant public information gives little confidence that Gettelfinger’s claim is sound, the Free Press reported last week.

The UAW told members that the VEBA was meant to protect retirees’ health benefits from being wiped out if an automakers went bankrupt or successfully sought court approval to cancel benefits.