Appellate court overturns Peabody Energy decision to stop paying - WBOY.com: Clarksburg, Morgantown: News, Sports, Weather

Appellate court holds Peabody Energy liable for some Patriot retiree benefits

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The United States Bankruptcy Appellate Panel for the 8th Circuit reversed a decision Aug. 21 by federal bankruptcy judge Kathy Surratt-States, according to information from the United Mine Workers of America.

The decision would have allowed Peabody Energy to stop paying the health care benefits for 3,100 retirees that it had assumed when it spun off Patriot Coal.

The decision from the three-judge panel will require Peabody to take responsibility for paying the health care benefits in the group of retirees.

"This is 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," UMWA International President Cecil E. Roberts said in a news release. "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."

Peabody issued a statement, saying the company was "pleased" with the ruling.

"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," the statement reads.

Peabody pointed out in the statement that the Panel didn't rule on how Peabody's level of funding would be determined with a 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," the statement continued.

Patriot Coal Corp. issued a statement about the decision, calling it "favorable."

The dispute affects the largely Midwestern retirees of Heritage Coal Co. and was linked to the bankruptcy of Patriot Coal Corp., which Peabody also spun off in 2007. Patriot earlier this year sued Peabody, seeking to ensure Peabody didn't try to use the bankruptcy to avoid the debated health-care obligations.

"We are pleased that the Bankruptcy Appellate Panel has found Peabody Energy Corporation responsible for healthcare benefits it assumed at the time of the spin-off of Patriot," the statement reads from Patriot President and Chief Executive Officer Bennett K. Hatfield. "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.

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

Aug. 20, the same judge granted Patriot Coal the official go-ahead to enter into its new labor agreement with the nation's biggest miners' union after a lengthy dispute. The collective bargaining deal was ratified by the United Mine Workers of America after about 1,800 union members approved the deal Aug. 16 with 85 percent approval.

Part of the settlement restores most of the wage cuts Patriot had sought as part of its reorganization, and pension benefits for those retirees were maintained. Active employees there also will continue earning pension credit.

Patriot has said the agreement will save $130 million a year for the next four years.

Peabody issued the following statement:

"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.

The Panel did not rule on how Peabody's level of funding would be determined with this new agreement in place: 'We are not concerned with, and express no opinion on, what effect a new labor agreement would have on Peabody Holding's obligation to the assumed retirees.'

"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."

U.S. Sen. Joe Manchin, D-W.Va., issued a statement about the decision overturning the earlier opinion that Peabody could stop paying retirees their health care benefits.

"Today's decision confirms what I, and most West Virginians, believe is just common sense: that miners are entitled to the benefits they have earned and companies are required to keep the promises they have made," Manchin said in his statement. "Our miners worked extremely hard every day to provide the fuel that powers this country, and I am pleased that the United States Bankruptcy Appellate Panel decision helps ensure they will receive their hard-earned benefits.

"I will continue the fight in Congress to make sure that the promises that have been made to all of our miners are kept."

U.S. Sen. Jay Rockefeller, D-W.Va., also issued a statement. He said Peabody's attempt to shrug 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," Rockefeller said in the statement. "It's another ray of hope for retirees who worked day and night to provide for their families."

Rockefeller said he introduced The Coal Accountability and Retired Employee Act earlier this year to provide more certainty for retirees and their families through several potential regulations.