Promised health benefits fall short for Sparrows Point workers

Union says not enough money was set aside to make good on medical claims filed by unemployed steelworkers and retirees.


Steelworkers line up on Dundalk Avenue before a union meeting last August where they were told their health benefits would be extended by 20 days.

Photo by: Mark Reutter

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.

Be sure to check our full comment policy before leaving a comment.

  • cwals99

    It is your Democratic politician who is responsible for seeing that these corporate bankruptcy laws change so that it is the people who invested their lives in making the company what it was will be the first to be protected when these companies go bankrupt.  Why, when democrats had the supermajority in 2009 did they not make protective changes to the funding laws for all pensions, public and private?  Because Maryland’s Dems and the national leadership are Third Way corporate democrats who work for profits over people.  We need to run fiscal progressives against these corporate pols!

    We also need to address the billions that are lost in health fraud in Maryland alone.  All these union people will be heading towards entitlements and these corporate democrats have allowed these programs to be gutted with fraud.  Demand that this money is brought back as they tell you funds for health care are dwindling.

    This entire Sparrow’s Point deal was as Rotten as Denmark so to speak.  I’ve never seen so many questionable issues from start to finish.  If I were the unionists, I would pursue in court the real objectives of the original deal.  It appears to be a pay-to-play by O’Malley that never meant to end with a healthy Steel Mill.  I would seek damages from the state for bad faith conditions in obtaining Federal grants and tax incentives for a project that did not require upgrades to make the business viable.  I would seek retribution from the arbitration group that allowed a deal to be brokered that didn’t meet the needs promised.

    We need to hold elected officials responsible at the polls for these deliberate oversights on all labor wages and benefits.  Run your union members against incumbents!!!

    • George Lopez

      Politicians in General and the Governor in particular have nothing to do with this.

      • IronworkerSP

        Mr. Lopez we are all slowly coming to the same conclusion, and that is the blame for the collapse of Sparrows Point, Mingo and Warren is on the glut of steel in the market, a down market with reduced demand due to the a worldwide recession, skyrocketing transportation and raw material prices, and the list just goes on. 

        This is much bigger than O’Malley, our President, our local politicians, Union, management, and the workforce – all of us are helpless and not any government leader or business guru knows what to do to stop this depressing downturn. Now our steelworkers are facing the same healthcare nightmare millions of other Americans are facing. There IS something the politicians can do to help us and that is stop the doctors and hospitals from overcharging and double billing. The real Robber Barons are not the the Iras and Seversteals of the world, its the politician’s favorite children such as Johns Hopkins and the rest of the healthcare providers and lobbyists that they look out for at our expense!  

        Its time for a “Special Session” in Annapolis or Washington to come up with taxpayer funding to help pay our displaced steelworker’s healthcare bills. If they can have special sessions to raise our taxes or give another casino a break, why not bail out the steelworkers until this matter is resolved? After all the judge is a government employee and he should have looked after the escrow account, so the taxpayers should pay to settled his lack of due diligence.

        • George

          Yes Brothers, its time for all of us to have a big rally and invite all of the Democratic leadership to ask them to find some relief on our healthcare woes until the plant reopens, we find other jobs with benefits  or in the case of us older guys get our Medicare and SS benefits in order. Is this too much to ask?

          It used to be all the Democrats would jump when we had a request because without the unions helping them at election time they could never have stayed in office for so many multiple terms. Its time for them to return the favor and step up to the plate on our health insurance costs!  If they can find the money for the big casinos and Inner Harbor East developers they can find the money to bail us out on health insurance costs for at least until the end of January 2013 when we will  know the true fate of the Mill.  Good luck to everyone and have a nice Thanksgiving, have a drink or two, and keep up your good spirits!

          Capt. Georgie

  • ddbs00

    I’m not particularly knowledgeable about union machinations in general or the situation at Sparrows Point in particular, but if health insurance costs were estimated at $5.9M a month and it was agreed that $6.5M would go into an escrow account, wouldn’t the union reps who told their members to run out and take care of any and all of their health care needs ASAP be at least partially culpable for encouraging that without explicitly knowing the money was available to cover all of their claims? As the article states, there’s no known or available formula used to come up with the $6.5M number, so why didn’t the union do a better job estimating costs enough to feel comfortable telling their members to spend as much as possible in insurance claims between 8/11-8/31? I’m not pro or anti union, nor am I pro or anti management. I just don’t understand where lines of responsibility are drawn.

  • Kate

    Of course there wasn’t…they had to line their pockets and give it to the obama campaign. they should all be satisfied with that…

  • Joseph

    I retired when it was still,Severstahl. Icalled the trust and each acount is funded by payments from employees and the company,you will be paid for whatever you are funded for to date,in individual monthly payments.These accounts have been paid into, from,ISG,MITTAL,and SEVERSTAHL,not just the ripoff company RG.If you meet the requierments and can retire you will get your pension,if your recieveing a pension ,you will continue to recive it.As it was explained thats why it was put in a trust,not thru a company.
    The company,cannot default or stop pension payments because they do not pay the pensions, they are paid by whatever funds were put in the TRUST,and they do not own the TRUST.
    As for the HEALTH and WELFARE,go to the local gov.
              As for the company,telling people to go out and run up medical that they need after that sorry excuse for a company had allready closed those accounts ,well maybe a lawyer could help with that.

    • Nashorn


      It was not the Company but rather the Union that encouraged people to seek medical care.

      “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.

  • unioncaught

    There needs to be an appeal of some kind to help out the members that are affected by the money not being enough to cover their medical costs.

  • IronworkerSP

    I just got a call this evening from my mother in law that the L Furnace is all lighted up with the Star of Bethlehem Christmas lights and other lights are turned on too. Does this mean that someone is going run the primary side because we were told all the lights were turned out except for the airplane avoidance lighting and it would be dark until someone takes over steel making, what is going on?

  • roberth1

    me n my daughter went to the dentist on 8/14/ and i was told by the receptions that our bill was paid but she also said that about 15 other people that came in august didnt get paid so we made it under the drop!! so it seems the money stopped somewhere after that.

  • roberth1

    i just went by the point on the fin. side and that was dark, i came over the key bridge on my way home from a job interview in columbia and wen i looked over from the bridge everything looked dark, just not the same!!

    • IronworkerSP

      roberth1 got another call that the Bethlehem Star has been lighted. It is difficult to see from the Key Bridge side as we aimed it so you can see it coming down North Point Road MD 151 towards to Main Office. Its a good sign that Hilco switched the
      star on for the holidays because if they were going to scrap the L they would not rub it in by turning on the Star?   

  • unioncaught

    I hear the gang of six union reps got another 2 months pay for doing nothing for the membership. They each earn around $1000 a week meaning combined $24,000 a month. If that’s just these 4 months it means nearly $100,000 wasted. This money would be better spent helping the displaced workers.

    • bocephusjr

      Why weren’t you at the union meeting if you disagreed with “the gang of six” getting paid? Who do you think is going to represent your worthlesss ass? Are you ciir, blackburn or polanowski? These people only looked out after themselves and their family members.  All they do is continue to raise havic in our local union.  People threw them out of office and now nobody will hire them.  I wonder Why?

      • unioncaught

        Why can’t anyone explain what this gang of six is doing for the membership? Can they show in writing that there is someone interested in buying the plant? Could the nearly $100,000 a month they are getting paid be used for better purposes such as our unpaid heath care bills?

  • roberth1

    well if the starr is lit its hard to figure out the reason!! rub it in our noses or maybe hilco has a interested party for the plant and we wont no till next month!! my hope is that for everybodys sake, one way or the other we no something by or before xmas! i no one thing for sure all this waiting seems worse than the shut down because it all comes down to not knowing the unknown!!! im 58 and will b 59 in janurary so as soon as we find out that there is no new buyer im collecting my rule of 85 and if i get the job i went for there is no going back. also only 13 months away from my pbgc!!! the job i went for will pay 16hr, plus i will get 3hr from the ataa program, wich is 2yrs or 12thousand $ whatever comes first! that will take me to my pbgc!!!

    • Walter

      roberth 1 they must have an interested party and the return of the Star on the top of L Furnace is someone’s way of signaling everyone that hot metal will once again flow out of the Beast of the East?? I agree with you that the waiting is worse because other than the newly lighted Star, they are keeping everyone in the dark!

      The rising health insurance costs issue is not only here in 21219, but all over because the average cost of covering a family of 4 in the USA is over $15,000.00 yearly and this is with a $2,000.00 deductible and some co-pay!  This is just another reason why the mill must be reopened quickly. The older folks have a little bit of a safety net, the younger ones need to get back to work now or have the government step in to bail out SP and all the steelworkers just as they did the Wall Street Bankers and GM!  Why is SP any different??? 

      Dr. Walter      Phd. BS

      • Christian Pub. Pol. Pro.

        Dear Dr. Walter,

        I work for a production company making a PBS documentary of the increasingly tenuous idea of the American Dream. My team, part of Public Policy Productions, has been following and researching the case of the Sparrows Point mill and of RG Steel’s bankruptcy. Particularly, we want to examine the human cost of this corporate failure, including the reneged promises to provide medical benefits and pensions to its former employees.

        I see you are personally invested in this situation and I would love to speak with you. If you are interested in sharing your story and putting me in contact with similar individuals, please email me to arrange a telephone call or to simply exchange emails, whichever you prefer.

        As a side note to any readers associated with Sparrows Point, or perhaps another aspect of RG Steel, if you have a story to share, what I wrote to Dr. Walter applies to you. We appreciate input from a variety of sources, because each former employee surely has had a unique experience in the months following the plant’s closing.

        Thank you.

        Best regards,

        Christian McLaren

        Public Policy Productions

More of the Daily Drip »

Below the Fold

  • December 15, 2014

    •   “Ha ha, so not a surprise.” “Shocking…not!!” We get applause but also the occasional eye-roll these days for our accountability reporting – like last week’s piece about how tax cuts promised by the mayor as a selling point for Horseshoe Baltimore probably won’t happen, thanks to the casino’s lower-than-expected revenues. We get where the […]