Human Capital & Careers

Judge Rules for Halliburton Retirees

The company cannot trim the medical benefits received by retirees of Dresser Industries Inc., which merged with a Halliburton subsidiary in 1998.
Stephen TaubDecember 22, 2004

For a change, score this round for retirees.

As more and more companies try to cut back on the benefits promised to their former employees, a federal judge ruled that Halliburton Co. cannot trim the medical benefits received by retirees of Dresser Industries Inc., which merged with a Halliburton subsidiary in 1998.

“The merger agreement obliged Halliburton to continue Dresser’s benefit programs for its employees and retirees unless the benefits were similarly changed for active employees,” wrote U.S. District Judge Lynn N. Hughes, according to the Associated Press.

Halliburton had wanted to end coverage for 4,000 Dresser retirees who are eligible for Medicare by the end of the year and cap its monthly prescription drug contribution at $22, according to the Houston Chronicle. Last year the paper reported that the company planned to cut the coverage so benefits offered to Dresser employees and retirees were in line with those offered under Halliburton’s other plans.

Noting that the cost of the benefits for Dresser retirees is about $93 million — about one-half of 1 percent of Halliburton’s revenue for 2003 — Hughes reportedly wrote, “This is a lot of money, but if Halliburton now considers it to be somehow too much, the solution is not to change the deal that it made in 1998.” Added Hughes, “Halliburton agreed to this cost as part of its payment for Dresser.”

According to the Chronicle, Halliburton insisted that under its merger agreement, it could change or terminate the plans. It also reportedly claimed that it promised to keep providing health insurance for only three years after the merger, or until 2001.

Attorneys representing former Dresser employees, noted the paper, argued that the three-year cap applied only to Dresser workers who remained employed after the merger and not to retirees. Hughes ruled that Halliburton may alter the benefits for those retirees only if it makes identical adjustments to the benefits of “similarly situated active employees,” according to the Chronicle.