Appeals court rules Peabody should pay retiree benefits

ST. LOUIS, M.O. — A panel of three federal judges have ruled that Peabody Energy will have to keep paying for health care benefits for 3,100 retirees who were moved to Patriot Coal.

On Wednesday, the U.S. Court of Appeals bankruptcy panel for the 8th circuit made the ruling which overturns a previous ruling by U.S. Bankruptcy Judge Kathy Surratt-States back in May which said Peabody should be absolved from responsibility for the benefits.

Wednesday’s ruling means that Peabody continues to hold responsibility for paying the health care benefits for
miners who worked for Heritage Coal Company, one of eight subsidiaries Peabody transferred to Patriot in 2007.

Most Heritage Coal employees work in mines in the Midwest.

In a statement released Wednesday, UMWA International President Cecil Roberts called the ruling “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.”

“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,” said Roberts in the statement. “This decision foils part of that plan. And it makes us even more determined to keep fighting to make sure the company lives up to its entire obligation to these miners.”

Back in 2007, Patriot Coal was created when Peabody sold its union operations east of the Mississippi to the newly created company. Patriot then bought Magnum Coal in 2008, a company that took over Arch Coal in 2005. Patriot filed for bankruptcy protection on July 9, 2012 mainly because of the extra liabilities it assumed with the Peabody and Arch takeovers.

Patriot and Heritage Coal had sued Peabody earlier in the year in order to prevent Peabody from trying to get out of paying health care benefits for retirees.

The appellate court’s ruling comes after Patriot Coal and the United Mine Workers of America reached a settlement last week regarding health benefits and wages.

UMWA miners in West Virginia and Kentucky approved that contract last Friday. That contract included what the union termed significant improvements in the terms and conditions of employment and benefits from those approved by Surratt-States in her May 29 opinion.

U.S. Senator Jay Rockefeller released his own statement in response to the ruling.

“Peabody’s attempt to shed its obligations to union miners was unjust, unfair and unconscionable,” stated Rockefeller. “I’m incredibly pleased that an appeals panel recognized that and overturned a decision that would have broken a solemn promise Peabody made. It’s another ray of hope for retirees who worked day and night to provide for their families.”