Detroit reaches deal with retirees over health coverage

Jan. 31, 2014 at 4:39 PM

DETROIT, Jan. 31 (UPI) -- Retiree groups and Detroit reached a settlement in a dispute over healthcare cuts affecting thousands of retirees, bankruptcy court mediators said Friday.

In their announcement, Detroit bankruptcy court mediators said the agreement reached late Thursday would provide benefits through the end of the year, the Detroit Free Press reported.

The settlement means a lawsuit retiree groups filed in bankruptcy court against the city's plan to cut benefits will be dismissed, the mediators said in a statement.

"The settlement was reached after intensive bargaining sessions over the past few weeks, sessions in which the interests of all parties were fully and vigorously represented and all issues robustly negotiated," the mediators' statement said.

The coalition representing 24,000 Detroit retirees filed a lawsuit over health benefits earlier in January when the city indicated the cuts would begin March 1, the Free Press said.

Detroit emergency manager Kevyn Orr has said the city must reduce pensioners' benefits, in part, because unfunded retiree healthcare liabilities represent nearly $6 billion of the city's $18 billion in long-term obligations, a report Orr filed to support the city's bankruptcy filing indicated.

The settlement was reached the day after Orr sent Detroit's "plan of adjustment" to creditors. The plan is a document required in Chapter 9 bankruptcy and includes information on the city's initial offers to creditors, including banks, bondholders, retirees, unions and city vendors.

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