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Detroit Ends Fight Over Retiree Health Care for 2014

Detroit, the biggest U.S. municipality to file for bankruptcy, settled a lawsuit over health care for retired city workers, the federal court mediating talks with creditors said.

No details of the accord, which covers benefits through the current year, were included in the statement announcing the deal today. Under a draft plan to cut Detroit’s $18 billion in debt, the city would spend $524 million over the next 40 years for retiree health care and other benefits, excluding pensions.

Detroit’s emergency financial manager, Kevyn Orr, put the city into bankruptcy in July, saying it couldn’t afford to pay all its debts and also fund vital services for its 700,000 residents. A committee of retired city workers sued to prevent Orr from cutting their benefits.

A Feb. 3 hearing on the retirees’ request to halt benefit changes while their lawsuit went forward will be canceled, according to the statement.

The case is Official Committee of Retirees of the City of Detroit v. City of Detroit, 13-bk-05244, and the bankruptcy is City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).

To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net

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