Fruehauf, retirees put suit on hold


Parties in a court case concerning medical benefits for about 700 retirees of the defunct Maryland Shipbuilding and Drydock Co. have called a time-out in the proceedings to give them a chance to work out a new arrangement.

In the meantime, retirees, many of whom live in the Baltimore area, will continue to be covered by the current system, said John T. Ward, a partner in the law firm representing the retirees.

Fruehauf Trailer Corp. -- a company created from former shipyard owner Fruehauf Corp. -- stopped paying the medical benefits to the retirees on Jan. 9 despite a 9-year-old court order requiring the former owner of the shipyard to provide the benefits.

The Indianapolis-based truck trailer company, which has not been profitable since 1990, said it could not afford to continue to pay the benefits, which cover prescriptions and medical expenses not covered by Medicare.

The benefits were fully restored after Mr. Ward sought injunctive relief in U.S. District Courts in Baltimore and Detroit to enforce the 1986 consent decrees.

A motion by the plaintiffs for summary judgment was to be heard yesterday before U.S. District Judge Alexander Harvey.

But that was canceled after the parties in the case agreed to new negotiations on the benefits.

"From my point of view, it's a great victory," Mr. Ward said.

Mr. Ward said he believes a comparable or better benefit package can be achieved at a lower cost to Fruehauf Trailer by switching to an insurance company from the current self-insurance arrangement.

A lawyer for Fruehauf Trailer refused to comment on the case.

The former Fruehauf Corp. first tried to end medical coverage for retirees in June 1985, about a year after it shut down Maryland Shipbuilding, a ship repair operation in the Fairfield area of Baltimore.

Retirees, contending that the benefits had been promised to them, challenged the action.

The company eventually agreed to three consent decrees, in Baltimore and Detroit, requiring it to continue providing medical and prescription coverage.

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