Lucent Technologies Retirees File Suit Against Company Over Health Benefits
Three Lucent Technologies retirees have filed a lawsuit in U.S. District Court in Newark, N.J., that alleges the company illegally overcharged 120,000 management retirees for health benefits and ended coverage for many spouses and dependents, the Wall Street Journal reports. The lawsuit alleges that Lucent violated Internal Revenue Service rules. According to IRS "maintenance of benefit" rules, when employers transfer assets from employee pension plans to cover the cost of retiree health benefits, the employers cannot subsequently reduce retiree benefits for five years. Between 1999 and 2001, Lucent transferred a total of $881 million from the management pension fund to cover the cost of retiree health benefits, the lawsuit alleges. IRS rules allow employers to make small reductions to retiree health benefits within the five-year period, but the lawsuit alleges that the series of more than 10 benefit reductions Lucent has made in recent years violated the regulations. Since 2001, Lucent has increased health insurance premiums and copayments for retirees and has ended coverage for their spouses and dependents. The lawsuit seeks class-action status and would apply to managers who retired from Lucent and AT&T, from which Lucent spun off in 1996 (Schultz, Wall Street Journal, 10/25).
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