Bill Protecting Retiree Health Benefits OKd

The Senate on Friday approved a bill designed to protect the health benefits of retired workers whose companies enter bankruptcy proceedings.

By voice vote, the Senate approved the measure offered by Sen. Howard M. Metzenbaum (D-Ohio) and sent it to the House.

Metzenbaum introduced the legislation in response to a move by the Dallas-based LTV Corp., which suspended medical and life insurance benefits to its retirees last July when it filed for protection from creditors under Chapter 11 of the federal bankruptcy code.

Stopgap Legislation Passed

The payments were reinstated two weeks later after a bankruptcy court in New York authorized their restoration. Since then, Congress has passed stopgap legislation mandating that the payments continue until Sept. 15.

Under the bill, a company in bankruptcy proceedings would be barred from modifying medical and life insurance payments to its retirees unless it negotiated a modification with the retirees or the court ordered a modification.

To receive a court modification, the company must prove to the judge that it made a good-faith effort to the retirees for a change, that the offer was necessary to prevent the company from liquidating and that it was fair both to the retirees and to the company’s creditors.

In addition, the benefits would be classified as an administrative priority, requiring the company to continue to pay them in cash.