Beth Steel asks for early end to retirees' health insurance


Bethlehem Steel Corp. said yesterday that it will seek bankruptcy court approval to end health and life insurance benefits for its 95,000 retirees and eligible dependents - a move that was called a "morally callous act" by the United Steelworkers of America union.

Bethlehem, whose board votes today on whether to sell it to International Steel Group Inc., said it could not afford the roughly $3 billion in health care and insurance obligations, "now or in the future."

The company, which has operated in Chapter 11 bankruptcy since October 2001, wants to terminate the benefits March 31.

"Due to our financial situation and our impending sale of substantially all of our assets to [ISG], we must seek the court's approval to terminate these benefits," Robert S. "Steve" Miller Jr., Bethlehem's chairman and chief executive officer, said in a statement.

In the Baltimore area, about 20,000 retirees from Bethlehem's Sparrows Point plant and their spouses or dependents receive the benefits.

The United Steelworkers of America union, which represents about 80 percent of Bethlehem's 11,000-member work force and supports a sale to ISG, denounced the proposal.

"For a bankrupt company that is doling out millions in golden parachutes to top executives to say that it must cut off the health care benefits of people who worked a lifetime in the mills is a disgrace," USWA International President Leo W. Gerard said in a statement.

Bette Kovach, a Bethlehem spokeswoman, replied, "The union has been well aware of Bethlehem's inability to pay its retirement health care on an indefinite basis. The union also supports the sale to ISG, and ISG doesn't carry health care insurance for retirees."

Wilbur L. Ross Jr., ISG's chairman, could not be reached for comment yesterday, but he has previously indicated that if his company acquires Bethlehem, it will provide unspecified contributions to a union-negotiated benefit trust to help cover retirees' health care costs.

Bethlehem said it is working with retiree representatives to arrange for health and life insurance coverage for current and future retirees, and it has sought proposals from insurers for plans that would be entirely paid for by those covered.

The benefit termination will have the greatest impact on the 22,500 Bethlehem retirees under 65 who aren't eligible for Medicare, Kovach said.

"The people who are retired, if they're not working elsewhere and are less than 65, may very well not have health care coverage after these plans are terminated ... unless they're covered by another spouse," she said.

These people are "perhaps in a more precarious position."

Workers between 55 and 65 could be eligible for a 65 percent tax credit of the cost of replacement health care insurance, under the Trade Adjustment Assistance Act of 2002.

Yesterday's announcement follows December's termination of Bethlehem's pension plan for current and retired workers by the federal Pension Benefit Guaranty Corp.

Steel industry experts have regarded Bethlehem's shedding of health care, life insurance and pension obligations as necessary for it to emerge from Chapter 11 bankruptcy, either as part of another company or as an independent entity.

Last year, Bethlehem paid more than $350 million for health and life insurance for current and retired employees, with more than $225 million of that going toward retiree obligations, said spokeswoman Kovach.

The company averaged more than $19 million a month in retiree health care payments through 2002.

March 31 is a target date for termination, and it will be open to negotiation with retiree group representatives, Kovach said. If all sides can't reach an agreement, Bethlehem will ask the bankruptcy court to make a decision, she said.

Bruce E. Davis, a lawyer for the Retired Employees Benefits Coalition, which represents retired salaried workers, said that March 31 was a "significant shock to us ... because we had been working on an expected termination date of May 31."

He said the company's request for proposals to vendors assumed a June 1 date for starting coverage of retirees.

Now, he said, there could be a two-month gap in coverage.

Kovach said the company had never before publicly released a termination date: "The only date that was ever given was given [yesterday]."

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