GNP health care crisis grows Loss of benefits shocks retirees at ex-subsidiary Pinkham Lumber

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Great Northern Paper Inc. retirees aren’t the only ones facing a health care crisis.

Dozens of Aroostook County residents who retired from Pinkham Lumber Co. between 1992 and 1999 are learning that they are among the 677 retirees who are likely to be left with no health insurance as the result of Great Northern’s bankruptcy.

Pinkham retirees want to know how their health benefits became the responsibility of Inexcon Maine, which purchased Great Northern from Bowater Inc. five months after the South Carolina-based paper giant sold about 1 million acres and the lumber company, located in Nashville Plantation, to J.D. Irving Ltd. in 1999.

While Pinkham’s current 85 employees – the lumber mill is still operating – may have health coverage through Irving’s plan, the retirees’ coverage quietly got lost in a tangle of corporate maneuvering, according to a union official.

Francis Vaillancourt, 63, of Portage, a Pinkham retiree who is fighting prostate cancer and relies on inhalers to help him breathe, was shocked to learn his company-paid health insurance is gone. He now is trying to get by on the limited, temporary coverage set up by the bankruptcy court handling the GNP case. That coverage runs out in 10 weeks.

Vaillancourt, who has canceled appointments with cancer and lung specialists this month, said he would refuse the expensive shots he receives every three months to help fight his cancer. “The cheapest one is $1,400,” he said. “If the doctor tells me I have to pay, I’ll refuse the treatment. I can’t afford that.” His last shot was in January. He is due for another one in April.

“I’ll be 64 years old pretty soon, and my wife is 60,” said Vaillancourt. “I can’t die and leave all this debt to my wife. I don’t care what happens to me.”

The Pinkham retiree said he would try to find a job to pay for health care, but lung problems prohibit him from working. His wife can’t work because she cares for their 29-year-old autistic son at home. Vaillancourt said Medicare would help when he turns 65. “But I still have a year and a half to go,” he said. “I’ve got time to make a lot of bills. My puffer [inhaler] is $300 a month.”

The couple’s monthly income is $2,165. Their prescriptions cost about $3,100 a month. “I need to pay my taxes. I need to heat my house. I need to bring my son to the doctor. I don’t know what I’m going to do,” he said.

Bowater’s involvement

Vaillancourt and many other retirees said they took cuts in their pensions, as much as 50 percent in some cases, to receive lifetime health care benefits, which they believed were held by Bowater.

Hundreds of retirees from Pinkham and Great Northern’s paper mills in Millinocket, union leaders and some lawmakers are charging that Bowater is financially responsible for selling its liability for retirees’ health care to a company that was not financially solvent – Inexcon Maine – and violated the National Labor Relations Act by not giving proper notice to the unions and retirees.

“We don’t believe that to be the case,” said Bowater spokesman Gordon Manuel this week. He declined to comment further on the allegations, saying it would be inappropriate, especially if the issue were to be litigated.

Harry Geair, a Bowater attorney, traced the liability as follows: Great Northern Nekoosa Corp., the parent company of Great Northern Paper Co., which owned more than 2 million acres of forestland in Maine, a massive hydroelectric system, paper mills in Millinocket and East Millinocket and Pinkham Lumber Co., formed a new corporation called Great Northern Paper Inc. in 1991 when Georgia-Pacific Corp. purchased GNN’s stock. In 1992, Bowater purchased 80 percent of the stock of GNP Inc. and in 1993 purchased the remaining 20 percent.

The attorney said Pinkham Lumber Co. was a division of GNP Inc. and people who worked there were employees of GNP Inc. When Bowater sold 1 million acres and the assets of Pinkham Lumber to Irving on March 12, 1999, Geair said, GNP Inc. retained the liabilities for retirees’ health care.

On Aug. 17, 1999, Bowater sold all of its GNP Inc. stock to Inexcon Maine, and that is how the liability for Pinkham retirees’ health care benefits got into the hands of the now bankrupt Great Northern. “People there [Pinkham] didn’t necessarily understand who they were working for,” Geair said.

“It’s not like we tried to pull the wool over anyone’s eyes,” said Geair. “It’s more like we sold them [Inexcon Maine] the whole corporation and they assumed all of the assets and liabilities, except the pension.” He said Inexcon Maine purchased GNP Inc. for a discounted price for assuming those liabilities. The agreed upon sale price was $250 million but was discounted by $130 million for employee-related liabilities, including retirees’ health care. So Inexcon actually paid about $120 million and assumed the liabilities.

Angry charges

Lucien Deschaine, an international union official, is charging that Bowater violated the National Labor Relations Act and said Geair’s comments are nothing more than “corporate arrogance.”

Deschaine said the union and retirees were never told by Bowater that Pinkham retirees’ health care was part of its deal with Inexcon Maine, and had they known it, they would have opposed the deal.

“They [Bowater] were obligated by the NLRB Act to notify us of any changes and to bargain the effects of those changes,” Deschaine charged. “We are looking at some type of compensation so these people maintain their benefits and so that Bowater will be held liable for it.”

Pursuing Bowater through the courts won’t be easy. Professor Norman Stein at the University of Maine School of Law in Portland said there is little protection for retirees’ health care benefits under federal laws.

“The protection has to come from language in the health care plan, from other documents and presentations that employers may have made to employees,” said Stein. “The problem is most of these plans have reservation of rights clauses or fine print that basically says the employer reserves the right to break the promise anytime he feels like it.”

Many retirees hope to recoup their health benefits through union negotiations with a new owner of Great Northern, but officials say that is highly unlikely.

Jonathan Beal, an attorney representing GNP papermakers, said when a company tries to cut off retirees’ benefits in a bankruptcy case, those retirees are represented by the unions from which they retired. But such representation is difficult when the unions sit at the bargaining table with a new owner. “If the retirees are counting on us to represent them, we don’t have any leverage,” said Beal. He said it is highly unlikely a new owner would even talk about retirees because there is no economic value in it for the owner.

Diane A. Khiel, an Orono attorney working with retirees of Pinkham and Great Northern, said she is very concerned about retirees going without medicine they need. She is working with Vaillancourt and many others to make sure they receive proper care. She said new prescription cards were not available yet. “Pharmacies are requiring 100 percent cash, and it may not be feasible for many retirees to come up with the money out of pocket,” she said.

Trish Riley, the director of the governor’s office of health, policy and finance, said officials are working as fast as they can to come up with a health plan for people who are uninsured.

Meanwhile, Pinkham union officials are trying to determine how many retirees are affected. Residents who have information about people who retired from Pinkham between 1992 and 1999 should contact Wendell Rafford Jr. at 435-6062 or Artemas Coffin at 435-6955.