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In a town where several thousand people are one illness or accident away from losing everything they have — their cars, their homes, their life savings, their lives — folks around here knock on wood before talking about how bad the next guy has it.
Newton resident Lonnie White is one of these people.
“I have to say it again: 99.999 percent of retirees are so much worse off than I am,” he said.
A 35-year employee at Maytag who retired in May of 2004 with full benefits and a pension, White, 61, lives in a modest home in Newton with his wife. He hasn’t had full medical coverage for more than a year since Whirlpool, which purchased Maytag in 2006, told him and every other Maytag retiree that their benefits were being reduced.
White spent roughly $2,500 out of pocket last year on medical expenses. A former president of the UAW (United Auto Workers) International Local 997, White has had open-heart surgery, survived kidney cancer twice and takes “a multitude” of different prescription drugs every day. He is quick to note he is better off than most retirees.
And still, he isn’t immune from worrying about how long his money will last the next time he comes down with something more serious than a cold.
“People based their retirement budget based on they wouldn’t have to pay for their health insurance,” White said. “It’s not just myself. Ask any (Maytag) retiree out there. This kind of cost is devastating to them.”
Bob Richardson is one of these people.
An employee at Maytag for exactly 30 years and one day, Richardson, 60, no longer buys medicine for his persistent sinus problems. When the Newton resident’s benefits plan went from Maytag’s “Dollar One” to Whirlpool’s retiree plan, Richardson decided he could afford to put up with sinus pain more than he could the annual $600 in prescription payments.
“I don’t go to the doctor nearly as much as I used to,” Richardson said. “There’s a lot of people I know who — their cholesterol medicine — they’re cutting down on how much their taking. And they’re cutting their lives short.”
He adds that the change in medical benefits — which prior to Whirlpool’s reduction covered all of Richardson’s medical costs and was negotiated by the union in exchange for concessions in costs of living increases to his pension — has placed him and others on the brink of bankruptcy.
“One major stroke or a heart attack, I’m going to be wiped out,” Richardson said. “One major catastrophe and we’re done.”
Todd Hackathorn is one of these people.
A second-generation Maytag employee, Hackathorn, 43, carries one of his father’s company pay-stubs — dated Dec. 31, 1958 — in his wallet. That year his father worked 2,247 hours and earned $5,278.55 in total income. Hackathorn, who retired in 2004 after doctors told him he couldn’t continue working following a third heart attack, two of which occurred on the job, spent more money on family health costs in 2009 than his father made in 1958.
If it weren’t for a recent tax return, Hackathorn said that he wouldn’t have been able to cover his two latest mortgage payments. He doesn’t know if he’ll be so lucky the next time he gets the bill.
“We’ve pretty much gone through all of our funds,” Hackathorn said. “We no longer know what to do.
“But there are a lot of other people who have it worse than I do.”
There are approximately 3,000 of these people, Maytag retirees and their dependents.
Legal Limbo
When Maytag’s influence over the American manufacturing industry started diminishing under the watch of CEO Ralph Hake (2001-2006), jobs left along with the clout. People who already had worked 30 years at Maytag — an automatic qualifier for early retirement — saw the writing on the wall. Many felt lucky, thinking they were in a perfect position to get out while the getting was good.
“I would say 95 percent of people knew they were going to have their medical benefits taken care of, and that’s why they retired early,” White said.
By 2006, Hake completed the sale of Maytag to his former employers, Whirlpool, which not only purchased the company and its facilities in Newton but also all of its assets and liabilities. What few if any Maytag retirees realized at the time was that the sale should have been viewed as a silent alarm clock. Time was ticking.
Whirlpool notified retirees on July 1, 2008, that it intended to bring the benefit packages of retirees and their dependents in line with that of Whirlpool’s own retirees, presenting two company plans or outside options. To many Maytag retirees, the invitation to join Whirlpool’s plan came off about as sincere as a snarling dog. A letter dated Aug. 1, 2008, from Amana Division Vice President Dan Smith of Whirlpool said he was “pleased to advise” retirees that Whirlpool was “at liberty to revise or terminate [retirees’] previous medical plan at its discretion” but opted to compromise. Instead retirees were being offered reduced benefit packages.
Before Local 997 had a chance to proceed with a lawsuit, Whirlpool beat the union to the punch by being first to file in the Southern District of Iowa on July 27, 2008, four days before the 2004 deal was even set to expire. Whirlpool’s reasoning for the lawsuit was the “imminent” prospect of retirees filing a lawsuit of their own. UAW chose to file its lawsuit in the Western District of Michigan, where Whirlpool’s headquarters is based, but U.S. District Judge Gordon J. Quist transferred the case to Iowa. UAW lawyers then asked that its lawsuit be voluntarily dismissed.
“The idea (behind the voluntary dismissal) is Maytag and Whirlpool should be required to prove they have a viable lawsuit,” said Roger McClow, one of several lawyers who worked for UAW in the Michigan lawsuit.
More than a year and half has passed since Whirlpool’s initial lawsuit, which is still ongoing. As the case creeps closer to its two-year anniversary, a sense of hopelessness is settling in amongst some retirees. While lawyers continue to argue who is right, Maytag retirees are paying the cost of medical expenses Whirlpool’s plan does not cover.
“That’s the most disturbing part: the change of benefits before the court makes a decision,” Hackathorn said.
While White said he has no idea why the lawsuit is taking so long, Hackathorn thinks he knows why Whirlpool is more than willing to draw out the lawsuit.
“There are a lot of retirees who have died in the last year,” he said.
Hackathorn said he doesn’t have any firm numbers on how many people have died, but he and fellow retirees hear plenty of horror stories of others on the verge of bankruptcy.
Whirlpool, however, does “not believe that to be the case,” the company said in a statement. “Retirees who stayed on the Whirlpool Plan have very good health care coverage, just like every other Whirlpool retiree.”
In response, Maytag retirees cite what they gave up in prior negotiations, just to go ahead and lose more.
Bargaining
in ‘Good Faith’
Good faith: It’s a term Maytag retirees desperately want to believe in. They also want to continue believing in America and its future. The trouble is they’re finding good faith as difficult to pin down as the pursuit of happiness.
When Local 997 met with Maytag representatives in the summer of 2004 to renegotiate supplemental agreements, which included pension, insurance and supplemental unemployment benefit plans, compromises were made by workers. In exchange for giving away pension money for hours served, an agreement was signed by both parties stating that retirees leaving the company prior to January 1, 2008, would “continue to receive coverage under the Medical and Rx Drug Plans for himself and eligible dependents during his life.”
It was a deal made in good faith. It was a deal set to expire on July 31, 2008, implying to some more negotiations would come four years later. It was a deal littered with escape clauses, not always limited to the fine print.
At the time, Maytag retirees felt safe and secure about the deal because they believed their health coverage would be guaranteed by the last word in the Supplemental Agreements’ Article X, Section 5-3(i). Benefits for “life” appears to leave little wiggle room. But Maytag always reserved the “right to amend or terminate the plans,” as stated in the company’s Summary Plan Description.
“The issue is it was in good faith,” said Iowa State Senator Dennis Black. “That does not mean Whirlpool, by their acquisition of Maytag, was able to sever all of those agreements of the past. If that’s the case, it’s a sad situation for this country.”
Political Pressure
About eight months after Whirlpool closed down all operations in Newton save for a small plant of roughly 30 workers, the company made the announcement in the summer of 2008 that it would be reducing Maytag retirees’ benefits starting in 2009.
“That was bad enough for them to shut down and lose the jobs,” White said, “but then to cut down on retirement was just unconscionable.”
Politicians throughout the state went on record by way of podiums and press releases, voicing their disdain for Whirlpool’s callousness. Other politicians took bolder action — some dropping by Newton for a quick stop, others sending representatives to talk to retirees.
U.S. senators Chuck Grassley and Tom Harkin dispatched spokespeople to Newton, while Gov. Chet Culver set up meetings in August of 2008 between retirees and SHIIP (the Senior Health Insurance Information Program).
“His quick response to the situation in Newton involving the transition from Maytag to Whirlpool plans showed his concern,” Troy Price, Press Secretary for Gov. Culver, recently wrote in an e-mail.
Retirees appreciated the concern but want to see action.
“I think it was good that they done that, but there’s always more that can be done,” White said.
Legislators point to in-progress legislation as a symbol of their commitment. Harkin’s office said the senator has introduced legislation to protect worker’s benefits in the massive health care overhaul bill passed by the Senate, but made no mention of protecting retiree’s benefits. House Representatives Leonard Boswell (D-3rd District), Bruce Braley (D-IA1) and David Loebsack (D-IA2) have co-sponsored legislation that would prevent similar situations from happening to other retirees in the future. The three lent their support to the “Emergency Retiree Health Benefits Protection Act of 2009,” which was introduced in March of last year but is currently in committee. The legislation would prohibit group health plans from reducing retiree health benefits after the retirement of a plan beneficiary.
Meanwhile, retirees in Newton continue to wait. As time has gone on, retirees talk about how the politicians — save for a couple of local legislators, most notably Black — have retreated back to everyday life.
“They turned their ears on initially, but as soon as they left town they forgot about us,” Hackathorn said.
Black recently sent a letter to every politician in the state in an effort to bring the issue back to the forefront. With Whirlpool operating in Michigan, he calls the matter a “federal issue.” Still, even he has been stunned by the lack of follow-through by his fellow politicians in Iowa.
“No one else was doing it,” Black said. “No one!”
Local 997 Retiree Chairperson Larry Shaver — who worked at Maytag for 34 years, the final six as chief plant rep of Plant 2 — appreciates Black’s passion, but he said the issue is out the state senator’s jurisdiction. Shaver also said he isn’t holding his breath for other legislators to take up the issue in earnest.
“We ain’t gonna get nothing done about it but a bunch of mouth,” said Shaver, whose health care costs went up substantially after having a leg amputated in 2004 due to his diabetes. “After the election is over in November, it’s gonna go back to the way it was. And we ain’t gonna get nothing.”
Still Waiting
Maytag retirees admit they had it good before Whirlpool. They also feel like they shouldn’t have to apologize for what they had, or be ostracized for what they’ve lost.
“As far as people who said, ‘It’s about time, you guys had it too good,’ all I can say is they had an opportunity to go work at Maytag, too,” White said.
Shaver takes even greater offense at the suggestion that Maytag retirees are to blame for their current situation.
“I got some people I would call ignorant,” he said. “Everything we had, we negotiated from 1970 until 2004. The active people gave it up as an act of good faith.”
But Maytag retirees aren’t the only people being hit by their unexpected out-of-pocket medical expenses. Having a few thousand people spend hundreds to thousands of dollars on prescriptions and premiums takes away from money that could be spent at Newton businesses.
“Think about the money that is not spent in your community,” Black said. “It is absolutely a snowball.”
At the end of last year, even more local dollars came out of the community pot when Whirlpool, without notice, tacked on approximately a $60 per person premium increase, White said. Shaver called as many retirees as possible so they could prepare for the extra expense, but many received first notification through a higher than expected bill in the mail.
“They could have had the decency to let people know in October,” White said.
For now, Maytag retirees and their families will continue to absorb the cost, consult union officials and wonder how they came to be in such a situation. Taking the lead at Local 997, Shaver spends many of his days at the union hall on the north side of town. He hears the stories all the time.
“I’ve sort of inherited this,” he said. “Everybody, for some reason, wanted me to do it. I’m proud that people trust me, but I did not expect this when I retired.”
Josh Koehn can be contacted at 792-3121 ext. 422 or via e-mail at jkoehn@newtondailynews.com.