Disney Agrees to Settle Suit Brought by Retirees Over Medical Benefits

Sharply reducing its demands on pensioners, Walt Disney Co. has agreed to settle a class-action lawsuit that accused the company of reneging on promised medical benefits for thousands of retired studio and theme-park workers.

The proposed settlement covers 3,800 20-year Disney employees and their families, including 1,600 former and current workers at Disneyland. Lawyers expect to file a joint settlement motion next month in Los Angeles federal court, plaintiffs’ attorney William T. Payne said Friday.

A hearing to allow objections will be scheduled before the motion can be approved.

“We don’t expect there will be any serious objections,” Payne said.

The federal lawsuit said Disney had promised no-premium retirement health care to 20-year employees ages 62 and older.

It accused the company of first changing the age to 65 and then charging premiums for all but health maintenance organization coverage in the mid-1990s.

Disney contended the changes stemmed from skyrocketing medical costs and were allowed under its contracts with workers.

Its outside attorney in the case, Phyllis Kupferstein, referred a call for comment to Disney lawyer Barbara Kellams.

Kellams and Disney spokesman Ken Green did not return phone calls Friday.

Payne said a typical Southern California couple--one of whom retired from Disney in 1994 or earlier, and who declined to join an HMO--wound up paying $1,023 per year in premiums under changes in the medical plans phased in by the company.

Under the settlement proposed this month, that payment would shrink to $102 annually, and all the premiums paid since the plans were changed would be returned.

In a concession to Disney, Payne said the maximum out-of-pocket expense for a family--the yearly cap on total deductibles, premiums and co-payments--was raised from $1,500 to $2,100.

A second large group of employees--those who had worked full time for Disney for 20 years but had yet to retire when the changes were made in 1994 and 1995--will be paid $4,500 each under a partial settlement of their claims.

They also will have company-paid Medicare supplemental insurance for five years after retirement and will retain the right to sue again if a final deal isn’t worked out by that time.

Disney and the retired workers initially settled the suit in 1997, but the deal collapsed as retirees accused the company of secretly making additional changes.

Payne said the latest settlement is similar to the one reached two years ago--with guarantees Disney can’t later raise payments by the retirees.

One of the six workers listed by name in the lawsuit, former Disneyland band member Allen J. Francis of Anaheim, said he still feels betrayed.

“Why do we have to pay any [premiums] at all?” said Francis, whose monthly pension is $410 after 25 years at the theme park. “They said we wouldn’t pay a dime. I want it back the way it was supposed to be. I’m going to object.”