Former employees file suit against Invista
Publication Salisbury Post
Date September 16, 2005
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Brief By Scott Jenkins and Mark Wineka

Salisbury Post

Former Invista employees in Salisbury and Shelby are plaintiffs in a federal complaint calling on Koch Industries to reinstate the medical insurance they say they were guaranteed after their early retirement

By Scott Jenkins and Mark Wineka

Salisbury Post

Former Invista employees in Salisbury and Shelby are plaintiffs in a federal complaint calling on Koch Industries to reinstate the medical insurance they say they were guaranteed after their early retirement.

Koch Industries, the parent company of Invista, announced June 17, 2004, that it was terminating the retirees' medical insurance effective Jan. 1.

Since then, many of the early retirees -- some with serious medical conditions -- have faced paying up to five times more for health insurance or are going without any medical benefits at all.

The Salisbury law firm of Wallace and Graham brought the federal civil suit Thursday under the Employee Retirement income Security Act of 1974.

The action was filed in U.S. District Court in Greensboro with 32 former Invista employees listed as plaintiffs, but attorneys say that number could grow into the hundreds.

"I just think it was a raw deal for everyone," says Howard Edwards, one of the Rowan County retirees who initially pursued a legal remedy.

The 32 plaintiffs named in the complaint come from Salisbury, Statesville, Concord, Woodleaf, Cleveland, Kannapolis, Mocksville, China Grove, Rockwell and Gaffney, S.C.

The suit contends that the former employees met requirements of the company's retirement medical plan for "grandfathered employees" and that Koch would pay up to 80 percent of their medical insurance premiums once they retired (at 55 or older), until age 65.

The suit also claims that Koch Industries encouraged older workers to take early retirement and touted the subsidized medical benefits as an incentive for doing so even weeks before the announcement that the insurance would be terminated.

Senior management at the Invista plants repeatedly "represented to and assured" the retirees that because they were part of the special grandfathered group, they had a guaranteed right to company-subsidized medical benefits, according to the complaint.

"Koch Industries has victimized a large number of retirees by wrongfully eliminating their insurance benefits," attorney Mona Lisa Wallace said in a press release. "The conduct is inexcusable.

"The victims are good people, many of whom worked for over 30 years at the Salisbury plant and other plants in North and South Carolina."

With the benefit eliminated, Wallace said, some retirees saw their approximate cost for health insurance increase from $200 to more than $1,000 a month.

Because of their limited or fixed incomes, the effect on the retirees, their families and quality of life has been "devastating," Wallace said.

"To make matters worse," she added, "some of the retirees have cancer and other devastating illnesses that make it impossible to get insurance coverage elsewhere."

With more than $50 billion in revenues, Koch is among the largest privately held companies in the United States.

"The company must be held accountable for its actions," Wallace said. "Companies such as Koch should have to honor promises made to loyal and hard-working employees."

Wallace and Graham also filed a motion Thursday for a preliminary injunction asking the court to reinstate the retirees' medical benefits now, pending further litigation of the matter.

Invista, a wholly owned subsidiary of Koch Industries, operates its Salisbury polyester fiber plant off U.S. 70. The plant started as Fiber Industries in 1966 and also went by Hoechst Celanese for many years.

Koch Industries has had an ownership interest since December 1998, though the plant has never gone by that name. Trivera and KoSa have been other names in its more recent history.

A company spokesman for Koch Industries in Wichita, Kan., did not return a call from the Post Thursday.

In their suit, the plaintiffs want Koch to pay medical benefits withheld from them and/or their spouses since Jan. 1, reinstatement of the benefits until age 65, repayment for losses caused by the lack of the medical insurance, attorney fees, an accounting of the profits Koch made from eliminating the benefits and a payment of those profits and whatever other relief the court deems just.

John Hughes, one of the lead attorneys on this case for Wallace & amp; Graham, said the retirees especially want Koch Industries to live up to its word and help them pay for medical insurance.

"No punitive damages, no junk like that," Hughes said before the suit was officially filed. "We're not even going to mess with that. We're going to keep it by the book. All we're asking is that Koch honor the promise it made to the workers."

At a cost of about $800 a month per worker -- and Hughes guessed there could be hundreds of them laying claim to the benefit -- the costs could soar. But Hughes argues that Koch can afford it.

Former employees say Koch promised to honor a retirement plan established by Hoechst Celanese when it bought the Fiber Industries plant.

Hoechst told employees if they put in 30 years with the company, they could retire at age 55 and collect a pension plus keep their medical insurance until turning 65, when Medicare kicks in.

When Koch joined with the Saba family of Mexico to form KoSa in 1998, workers nearing those magic numbers worried about losing their benefits, but management assured them they would be part of a "grandfather group" subject to the old plan.

In 2001 Koch bought out Saba. In 2003, Koch announced it would buy a DuPont division called Invista and apply that name to the local plant. Hughes says the company pushed workers to take early retirement, telling 49 in the maintenance department they could "leave gracefully" or be victims of downsizing.

Meanwhile, workers nearing 55 filed into the plant manager and human resources offices, some worried about a provision in the federal Employee Retirement Income Security Act that says a company "can cut this plan whenever we want, basically," Hughes said.

All left those offices with assurances they would be covered until age 65.

Jimmie Thomas, who went to work at the plant in 1967 at age 19, was one of them.

Doctors diagnosed Thomas with cancer in September 2003 and told him he could no longer work in April 2004. Still, with his wife in bad health as well, Thomas said he would have kept working but for the promise that the company would pay 80 percent of his monthly health insurance premium until he reached 65, and would cover his wife if he died before then.

"I asked several times" about the benefits before retiring at 56, he said. "They told me that I was in the grandfather group, that since I had reached my age and my years of service, that I could take early retirement, draw my full pension and that my insurance would be paid."

Just months after leaving the company, Thomas got the same letter that scores of other early retirees did, saying their medical insurance benefits would expire at the beginning of this year.

Like others, Thomas looked for an alternative insurance plan, but found "nothing that I could possibly afford ... It makes things very tight for us. It definitely added to my stress level, which I don't need any more of that."

He feels betrayed, he said.

"We were told this up until the last minute," Thomas said. "Why couldn't they tell me in March when I was retiring it was going to happen in June? It's hard to believe the corporation didn't already have that planned."

Hughes contends it did.

"That's not the sort of thing you decide to do the night before," he said. "They were thinking about this for quite some time, in my opinion."

Hughes said he believes local plant officials were not aware of the plan to terminate the early retirement benefits. And he argues that Koch's not telling the employees violates the law.

"You can't do that," he said. "You can't tell them to retire and get these great benefits when you know you're getting ready to cut the benefits."

Other named defendants, besides Koch Industries, include Koch Business Solutions, Invista, Arteva Specialties (an employees benefit plan), the Koch Industries Employee Group Benefit Trust Medical and Dental Plan and the KoSa Grandfathered Retirement Medical Plan

Wallace & amp; Graham is working with Lewis, Feinberg, Renaker & amp; Jackson, an Oakland law firm that won a similar lawsuit, and the Charlotte law firm of Ferguson Stein Chambers Gresham & amp; Sumter.

Contact Mark Wineka at 704-797-4263, or mwineka@salisburypost.com.