Retired Miners Sue Over Patriot Coal Medical Benefits

Retired coal miners sued in federal court to affirm medical-benefit coverage in the wake of Patriot Coal Corp. (PCXCQ)’s bankruptcy in July.

Hubert Lowe and other retired workers sued their former employers, Peabody Holding Co. and Arch Coal Inc. (ACI), on behalf of more than 10,000 retirees and active miners whose health and pension benefits were transferred to Patriot Coal, the plaintiffs said in an e-mailed statement.

“These plans were established through collective bargaining with the United Mine Workers of America” and should be maintained, Lowe said in the 32-page complaint made public today in federal court in Charleston, West Virginia.

Patriot, which sells thermal coal to electricity generators and metallurgical coal to steel and coke producers, sought bankruptcy protection in Manhattan in July. The company listed assets of $3.57 billion and debt of $3.07 billion as of May 31 in its Chapter 11 filing. Patriot has 12 active mining complexes in Appalachia and the Illinois Basin and controls an estimated 1.9 billion tons of coal reserves, according to court papers.

Aaron Palash, a spokesman for Patriot, said the company has no comment on the complaint. Kim Link, a spokeswoman for Arch Coal, also declined to comment.

Peabody spokesman Vic Svec wasn’t immediately available to comment on the lawsuit.

Spun Off

Peabody spun off Patriot in 2007 and the following year, Patriot bought Magnum Coal Co., which had acquired three Arch units in 2005.

Patriot said when it filed for bankruptcy that those transactions left it responsible for the benefits of three times as many retirees and dependents as active employees, saddling the company with liabilities estimated at $1.3 billion or more.

The retirees’ case is Lowe v. Peabody Holding and Arch Coal, 12-cv-6925, U.S. District Court, Southern District of West Virginia (Charleston). The bankruptcy case is In re Patriot Coal Corp., 12-bk-12900, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Phil Milford in Wilmington, Delaware at pmilford@bloomberg.net; Dawn McCarty in Wilmington at dmccarty@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.