Peabody Energy Retirees Stand To Lose Health Benefits, Some Organize Class-Action Lawsuit
In early October, John Ward was caught off guard by a letter he got in the mail.
It was from Peabody Energy, the company he retired from a decade ago, alerting him that his medical benefits would expire at the end of the year.
At first he couldn’t believe it. He still has more than $200,000 in his account — enough, he thought, to cover the cost of supplemental insurance and other medical expenses for the rest of his life.
“And now they’re trying to take it away, and I just don’t think it’s right at all,” said Ward, who recently turned 69. “And the guys who are 65 and under get to keep it.”
It’s unclear exactly how many former Peabody employees will lose these benefits. Peabody said it’s ending the program as part of a larger cost-cutting strategy to stay in business. In an email, Peabody said it would save $174.5 million by slashing post-retirement medical benefits.
But Ward said that money was already promised to former employees. He’s pursuing a class-action lawsuit against the company with the help of an attorney in St. Louis.
He’s already drummed up support from some former colleagues, and he's hoping more will join his efforts.
“There’s probably 1,000 of us who have since retired across the USA, so you’re talking a bunch of money they’re trying to reclaim,” he said, adding that the lawsuit hasn’t yet been filed.
Ward worked in mines for decades, spending the last eight with Peabody at Willow Lake mine, among others, in a Harrisburg, Illinois, complex about 130 miles from St. Louis. Peabody bought it from a company local to that area, Arclar, in the early 2000s.
He retired as a third-shift mine manager after a work accident left his pelvis crushed in six places, and he still walks with a limp.
Ward has Medicare, but he depended on his Peabody retiree medical account to cover his $300 monthly bill for supplemental insurance, in addition to dental and prescription insurance.
“I’ll just have to pay it out of my Social Security. It’s the only thing I can do. Either that or do without it,” he said. “But if you have to go to the hospital then you’re out big money.”
Earlier this month, Peabody warned in a filing with the U.S. Securities and Exchange Commission that it could face a second bankruptcy within five years if it does not implement cost-cutting measures.
Peabody declined a request for an interview but provided several statements regarding the decision to end the retiree health care program.
“The change in financial support is designed to maintain Peabody’s retiree medical subsidy where it is needed most — for retirees and spouses who are not yet age 65 and Medicare-eligible,” the company said.
‘They deserve better treatment’
But retirees like Robert Hill say it’s the other way around — older people, like him, who are more susceptible to health issues need the money more.
Hill, now 76, retired from Willow Lake, where he worked with Ward, nearly 10 years ago.
“I got fed up with Peabody,” he said. “I just wanted to get away from them.”
Hill, who at one point oversaw a mine, said coal mining is a physically taxing job, and he remembers regularly working 12-hour shifts and weekends to keep things running.
These days, he struggles with heart issues and diabetes. He has nearly $180,000 left in his retiree health account, which he currently uses to cover his $350-a-month supplemental insurance bill, among other medical expenses.
“All they want is someone to make them money, and then when they get to where they’re not useful to them, throw them away."
Hill picked up a job as a janitor at a local school to cover his bills, but he said it will take at least two paychecks to make up for the amount he normally withdraws from his medical account. Hill said he’s angry with the way Peabody is treating retirees after all they’ve done for the company.
“All they want is someone to make them money, and then when they get to where they’re not useful to them, throw them away,” he said. “I feel like they just threw us to the dogs so they could pay the people in St. Louis their millions of dollars a year salaries.”
CEO Glenn Kellow is the eighth-highest-paid CEO in St. Louis, at a salary of $7.6 million a year. That’s 67 times higher than the typical worker is paid, according to the St. Louis Post-Dispatch’s 2020 executive salary guide.
Terry Knies, a 68-year-old Peabody retiree, said ending the medical benefit program is just the latest example of how executives are mismanaging the company.
Knies spent more than two decades working in administrative IT at the St. Louis office.
“The part that makes me angry is this guy who is saving this money, it will probably be considered a smart move in the boardroom, and then he’ll get a bigger bonus this year because he saved the company $175 million,” he said.
Knies stands to lose nearly $100,000 in medical benefits. When he first retired, about eight years ago, he withdrew sparingly — hoping it would last him and his wife until their mid-80s.
But then he got a sinking feeling it wouldn’t last, so he and his wife started scheduling doctor appointments and root canals they might typically have put off.
He said he saw the writing on the wall after Peabody put an $8,000 annual cap on withdrawals a few years ago. Knies said with some financial and lifestyle readjusting he and his wife will be all right, but he worries about former miners like John Ward and Robert Hill.
“They made the company successful because they produced all this coal, and they did all this hard, dirty and dangerous work. And then us administrative people kind of rode on their back as far as benefits and our pay and various other things,” he said.
“To me, the injustices are more at them than somebody like me. They deserve better treatment for what they did for the company.”
This isn’t the first time Peabody is coming under fire for cutting retiree medical benefits. During Patriot Coal's bankruptcy proceedings in 2013, protesters marched in downtown St. Louis to draw attention to lost health benefits for 10,000 retired Patriot Coal miners. Peabody spun off the business in 2007.
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