Peabody ads tell half the truth about Patriot Coal and retiree health care benefits

Fairness_at_Patriot_logo_Compressed_websitePeabody Energy is fighting back against the United Mine Workers of America’s (UMWA) efforts to protect retirees’ health care benefits with commercials touting the benefits of working for Peabody and advertisements in local newspapers claiming to tell the truth about spin-off Patriot Coal’s health care benefits.

The ads claim the issue is between the union and bankrupt Patriot Coal and the threatened benefits are an issue to be dealt with in Patriot’s bankruptcy case.

But UMWA Communications Director Phil Smith says Peabody’s ads are an example of how lies can be spun as the truth.

“It’s an example of how PR people can manipulate facts to support their own agenda,” Smith said. “Everything they say in there has a ring of truth to it, but everything in there is false. It’s like Paul Harvey used say ‘And now for the rest of the story….’ Peabody left out the second part of the story, which is how Patriot came to be in the first place.”

Here’s the rest of the story:

Patriot was spun off from Peabody in 2007 in what the union says was “a long-term scheme” by Peabody and Arch Coal to strip thousands of active and retired coal miners, their dependents and widows – some 10,800 retirees covering 22,000 beneficiaries – of critically-needed health care and other earned benefits.

The union says Patriot, which has identified retiree health care obligations as “unsustainable” in its future plans, was designed to fail because it was saddled with too much debt when it was spun off from Peabody.

Patriot was formed in October 2007 when Peabody Energy spun off all of its union operations east of the Mississippi River, along with a few other operations, as well as many of Peabody’s long-term health care obligations to its retirees.

A year and a half before Patriot was created, Arch Coal spun off its union operations in West Virginia – along with the long-term obligations that went with them – into a company called Magnum Coal.

Less than a week after Patriot was founded, according to the UMWA website Fairness at Patriot ( former Peabody Chairman and Patriot Board Member Irl Engelhardt and then-CEO Richard Whiting, another Peabody alum, sat down with Magnum President Paul Vining, another veteran of Peabody and Arch, to discuss a possible merger.

Patriot acquired Magnum, and with it, health care obligations towards another 1,294 retirees, in July 2008.

Patriot wound up with almost three times as many retirees as active employees. More than 90 percent of them never worked for Patriot at all.

Overburdened with debt, Patriot declared bankruptcy last July.

The case is being heard in St. Louis because this is where Patriot, Peabody and Arch are headquartered.

The UMWA has filed a suit in West Virginia seeking class action status for more than 10,000 workers whose benefits were transferred from Peabody and Arch to Patriot in the 2007 spinoff. The suit claims Peabody and Arch, rather than Patriot, should be responsible for paying the retiree health benefits for the workers.


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