Federal court opens lost-benefits lawsuit to 14,000 retirees

A federal judge this week granted class-action status to a lawsuit by retirees against phone companies Sprint Nextel and Embarq for canceling the retirees' health benefits and life insurance.

The ruling by U.S. District Judge Eric Melgren in Kansas opens the retirees' lawsuit to some 14,000 phone company retirees, and thousands of spouses, in 18 states.

Previously, the suit represented 17 retirees, including 11 from North Carolina, seeking to have their health benefits restored. The case also represented 756 retirees, all in North Carolina, for age discrimination.

The retirees allege that for more than three decades, phone company representatives made promises verbally and in writing that their retiree benefits were guaranteed for life. Some took early retirement to lock in on the benefits.

The loss of coverage has cost the retirees thousands of dollars in benefits, and now many can't buy replacement insurance because of their advanced age and deteriorating health, said the retirees' lawyer, Stewart Fisher of Durham.

About five years ago, the phone companies eliminated free life insurance for most retirees and capped life insurance to $10,000 for some. An annual $500 drug subsidy was eliminated. And the retirees lost complimentary Medicare supplemental insurance, called Medigap, that paid deductibles, co-payments and other services not covered by Medicare.

Officials at Kansas-based Embarq told shareholders in 2007 that the benefit cuts will save more than $300 million. The company contends it had the legal right to modify and cancel benefits.

North Carolina has an estimated 3,200 Embarq retirees, more than any other state. The retirees worked for a number of companies that later became Embarq, including Sprint and Carolina Telephone & Telegraph. Embarq, whose local headquarters are in Wake Forest, has since been renamed CenturyLink.

CenturyLink, this state's second largest phone company, was formed when Sprint was broken out into wireless provider Sprint Nextel and landline provider, initially called Embarq.