It was portrayed as a silver lining to the otherwise disastrous news that clouded Sparrows Point last summer.
Steelworkers who had lost their jobs following the bankruptcy of RG Steel would still be able to get health, dental, eyeglass and prescription drug benefits through August 31.
Employees were told that as a result of pressure from the United Steelworkers union (USW), RG Steel would extend these benefits beyond the August 10 date when supplemental unemployment and pension payments would end.
“If you need glasses, get them now. Go to your dentist by August 31,” Joe Rosel, president of Local 9477 at Sparrows Point, advised hundreds of workers who crowded into the union hall at a mass meeting.
Now it turns out that the deal wasn’t as good as advertised.
Confirming anecdotal evidence coming to The Brew, lawyers for the USW acknowledged last Thursday that “the sum of money set aside to pay accrued medical benefits has proved insufficient to cover those claims.”
As a result, not only some steelworkers in Baltimore but other employees at the company’s former mills in Warren, Ohio, and Wheeling, W.V., have been left “with significant unpaid medical bills,” according to a filing by USW attorneys Susan Kaufman, Richard Seltzer and David R. Jury in U.S. Bankruptcy Court in Delaware.
“Potential to Ruin Lives”
“These unpaid bill have the potential to ruin the lives, credit and financial health (to say nothing of the physical health) of RG’s former employees and retirees,” the filing stated. See court docket 1532.
The union called the situation “disastrous” for the employees, retirees and the communities in which RG steel had operated.
The shortfall stems from an agreement made by the USW’s chief negotiator, David McCall, to settle union claims with RG Steel as part of the company’s liquidation.
The agreement called for the company to deposit $6.5 million into an escrow account to pay for medical and other claims “incurred on or before August 31, 2012 and received on or after August 11, 2012.”
How that exact amount of money was determined was never disclosed in the agreement – in an earlier court filing, RG Steel estimated its average monthly employee health care costs at $5.9 million.
Nevertheless, the escrow amount was not enough to cover the allowed benefit claims that were filed in the allotted period, according to the union. And there is next-to-no prospect that additional money will be deposited into the escrow account, since the employee claims are near the bottom of unpaid claims against the RG Steel estate.
Unpaid Pension and Welfare Funds
In addition to leaving an undisclosed number of employees with unanticipated medical bills, the union itself is out of an estimated $8 million in unpaid contributions by RG Steel to its pension trust and health and welfare fund. These funds include contributions that were not paid by RG Steel prior to its May 31, 2012 bankruptcy filing.
The purchaser of the Sparrows Point property – liquidator Hilco Industrial and brownfield redeveloper Environmental Liability Transfer – has set up a bidding procedure for the potential sale of parts or all of the now-closed steel mill at the outer mouth of Baltimore Harbor.
The deadline for initial indications of interest by potential bidders passed last Monday without any comment by Hilco.
Local 9477 President Rosel has vowed to find an operator to return Sparrows Point to production, but there has been little coordination or cooperation between Hilco and the USW, sources tell The Brew.
With no interest in operating the steel mill itself, Hilco is free of any obligations to rehire former RG employees – or to negotiate with the union. Hilco has informally agreed not to begin selling or scrapping any of the major production units at the idled mill until early 2013.