US Supreme Court Rejects Long-Standing Presumption Favoring Lifetime Retiree Medical Benefits

    View Authors January 2015

    The US Supreme Court has unanimously rejected a longstanding presumption in the Sixth Circuit that retiree medical benefits in collective bargaining agreements are vested lifetime benefits that cannot be changed.

    In reaching their decision in M&G Polymers USA, LLC v. Tackett, the justices overturned a legal presumption that has stood for more than 30 years in the Sixth Circuit (Michigan, Kentucky, Ohio and Tennessee). The justices said the presumption of vested benefits for life went against fundamental principles of contract law and may have ignored the intent of the parties who negotiated the contract. The decision in M&G Polymers may make it a good time for employers who are providing retiree medical benefits to do a legal review of their obligations.