United States: Supreme Court Grants Certiorari To Review Sixth Circuit’s Pro-Union Inference In Retiree Health Insurance Benefits Cases

The Supreme Court of the United States has agreed to resolve a circuit split about how courts should interpret collective bargaining agreements that provide for health insurance benefits for retired employees in M&G Polymers USA, LLC v. Tackett.  The U.S. Court of Appeals for the Sixth Circuit says that such retiree health insurance benefits carry with them an inference that they are vested, or guaranteed to continue for life, while the majority of the other federal appellate courts require specific durational language to find that benefits are vested. Given the high cost of retiree health insurance on many employers' balance sheets, M&G Polymers USA could represent a game changer for employers' ability to modify retiree benefits going forward.

In a surprising development, the Supreme Court of the United States granted certiorari on May 5, 2014, in M&G Polymers USA, LLC v. Tackett, an appeal that should resolve a split among the federal appellate courts over how to interpret the duration of retiree health insurance benefits provided under collective bargaining agreements. 

Coupled with the recent changes in health insurance markets, the decision in M&G Polymers USA, LLC v. Tackett (expected in the spring of 2015) could be a game changer for companies currently providing retiree health insurance benefits to their union employees and retirees, especially for operations in Michigan, Ohio, Kentucky and Tennessee.

The U.S. Court of Appeals for the Sixth Circuit has held since 1983 that retiree health insurance benefits provided in collective bargaining agreements carry an inference that they are vested or guaranteed to continue for life where the agreement is silent as to their duration.  The majority of the other federal appellate courts have consistently held that retiree health insurance benefits are not vested or lifetime unless there is specific durational language saying that the benefits will continue beyond the term of a collective bargaining agreement. 

The practical effect of the circuit split has been that identical collective bargaining agreements are interpreted in contradictory ways depending on where plan participants, their union and the employer end up in court.  For example, a federal district court sitting in Ohio would more likely find that a collective bargaining agreement stating that retiree benefits "will continue" provides for lifetime health insurance benefits.  However, courts interpreting identical contract language one state to the east in Pennsylvania (in the Third Circuit) or one state to the west in Indiana (in the Seventh Circuit) would more likely find that those retiree health insurance benefits are not vested and could be unilaterally changed by the employer at the end of the collective bargaining agreement if not renewed.  Given the actuarial costs of and accounting requirements for lifetime retiree health insurance benefits, this difference in legal analysis can have a significant effect on a company's balance sheet.

The Supreme Court has repeatedly denied similar petitions for certiorari urging the Supreme Court to address this circuit split about collectively bargained retiree health insurance benefits.  Yesterday's grant of certiorari comes as a surprising (and welcome) development.  While one can only speculate as to why the Supreme Court chose to address this issue at this particular time, recent changes in the legal landscape for health insurance may be a factor.  Courts deciding retiree health insurance cases have often commented on the potential hardship to retirees from a change in employer-provided retiree health insurance benefits.  Recent improvements in Medicare, implementation of the Affordable Care Act and changes in the individual health insurance market in general may alleviate this hardship concern and undercut the "status benefit" logic of the Yard-Man inference.  Regardless of the reason behind the court accepting this appeal, M&G Polymers USA, LLC v. Tackett provides the Supreme Court with a unique opportunity to provide certainty and uniformity on the important topic of the proper interpretation of collectively bargained retiree health insurance benefits.

The legal issue the Supreme Court will decide can be traced back to the enactment of ERISA in 1974.  In passing ERISA, Congress made the conscious decision to provide that pension benefits were vested (i.e. once provided to employees, the benefits were unchangeable by the company), but that health insurance benefits were not.  As a result, retiree health insurance benefits were only vested if provided for in an agreement with the company; in cases involving collective bargaining agreements, the Labor Management Relations Act also applied.  However, federal appellate courts split over how to interpret collective bargaining agreements that provided for retiree health insurance benefits but did not explicitly include language on the duration of those benefits.  The circuit split over how to interpret the provision of retiree health insurance benefits in collective bargaining agreements first arose in UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983).  In Yard-Man, the Sixth Circuit found that retiree benefits were "status benefits" for retired employees that carry an inference that they continue for as long as the beneficiary remains retired.  While the Sixth Circuit has attempted to restrain the language of the Yard-Man inference in recent years, the continuing practical effect of this decision is that, absent language explicitly limiting the benefits to the term of the collective bargaining agreement, district courts within the Sixth Circuit (i.e., Michigan, Ohio, Kentucky and Tennessee) frequently find that retiree health insurance benefits are vested or provided for the life of the retirees.

The Yard-Man approach stands in stark contrast to the decisions of other federal appellate courts, which generally hold that retiree benefits are not vested and can be changed at the expiration of the collective bargaining agreement, absent language explicitly providing for lifetime benefits.  For example, the Third Circuit forcefully disagreed with Yard-Man in UAW v. Skinner Engine Co., 188 F.3d 130 (3d Cir. 1990), a case decided by a panel including now-Justice Samuel Alito, holding that benefits are not vested absent clear and unambiguous language to that effect.  The Second and Seventh Circuits also have required language in collective bargaining agreements that can reasonably support a finding of lifetime health insurance benefits.  The Supreme Court hopefully will resolve which approach the lower courts should follow—a decision that will affect how employers should approach collective bargaining about health benefits and any analysis about eliminating or changing retiree health benefits.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.