Employees Claim Company Secretly Ended Health Insurance

02/07/02 12:00AM By Steve Zind



(Host) For more than a century, the Northeast Kingdom village of Gilman has been a mill town. The village is named after Isaac Gilman who once owned the paper mill there. While a number of mills in the region have closed recently, the Gilman plant is still operating. But recent developments have workers worried they'll soon be unemployed.

VPR's Steve Zind reports.


(Zind) The Gilman paper plant turns out commodity grade paper, used in stationery and envelopes. Like the rest of the paper industry, the Gilman mill has seen its ups and downs. The mill was closed for a time in 1999. Last year some of the workers were laid off. And employees are unsettled by what's been happening over the last several months.

Melinda Aubin's husband, Dave, works at the mill. They have three young children. Aubin says last fall the mill terminated the employees' health insurance without telling them. She found out when the doctors' bills started coming to her instead of CIGNA, her insurance company:

(Aubin) "The bills started coming in late October. And then I started to call to try to confirm what was going on and that's when CIGNA told us that we'd been dropped August 31."

(Zind) Aubin says plant workers went without health insurance for two and a half months while the owners continued to deduct $30 a week from employees' paychecks for coverage they weren't getting.

Steve Bean works at the mill. He's also the president of the local chapter of PACE, the paper workers' union. Bean says some mill employees are saddled with sizeable medical expenses they thought were covered by insurance:

(Bean) There's one I'm sure about that's over $24,000. And we have at least a handful that's over $4,000-5,000 each."

(Zind) The Gilman paper mill is owned by the American Paper Corporation in Hauppage, New York. Paul Repola is a vice president with the company:

(Repola) "There has never been a time when our employees have been without health care coverage."

(Zind) Repola says the story of how mill workers were left high and dry with their medical bills is a complicated tale of corporate bankruptcy.

It begins with American Tissue Incorporated. American Tissue owned dozens of mills around the country, including the ones in New Hampshire. When the company filed for Chapter 11 Bankruptcy last September, some of the mills were closed down. Others, including the Gilman mill, stayed open.

To keep them running and separate them from the bankrupt company, the mills were split off into a company called American Paper Corporation. Until the bankruptcy, American Paper was part of American Tissue. Now it's a separate firm, with the same owners.

Workers at the Gilman plant might not have been aware of these corporate maneuverings, if it hadn't been for the unpaid medical bills that turned up in their mailboxes.

The shuffling of mills and corporations was also lost on American Tissue's health insurance company. Repola says when the bankrupt firm failed to pay its share of the workers' health coverage, the insurance company stopped paying the medical bills for employees of both companies, including the Gilman mill workers. Repola says he knows it's a confusing situation:

(Repola) "I would say to our employees: Have patience with us. We're working through some very difficult issues, issues that are complicated as a result of a Chapter 11 proceeding. There were some 50 odd companies that were once one entity that are now being split apart."

(Zind) The union says it's run out of patience. It's filed a series of unfair labor practice charges against American Paper.

The most significant charges involve the unpaid medical bills. The union also says the company has failed to pay its share of the employees' 401K retirement plan. Repola says if American Paper had to come up with the retirement money, it might mean shutting down the plant.

Union officials say good jobs like the ones at the Gilman mill are hard to come by in the Northeast Kingdom. Steve Bean says the workers know the mill is struggling:

(Bean) "For a long time we were torn between putting pressure on the company to try to get these insurance issues solved and at the same time not wanting to force them into any kind of bankruptcy. It's extremely unstable and we didn't want to do anything to jeopardize our own jobs."

(Zind) Tuesday, the court appointed consultant in charge of the American Tissue bankruptcy announced it will pay the back health insurance premiums the company owes. A spokesperson for the consulting firm said this means the unpaid medical bills rung up since the American Tissue declared bankruptcy will be covered.

Steve Bean says the news is encouraging, but the company has broken promises in the past:

(Bean) "It's definitely real positive that the checks are finally coming. But because of the nature of the company, everyone's gonna be skeptical until their own personal claims actually do get paid."

(Zind) Bean says even if the health insurance issue is resolved, the union will press ahead with its other complaints.

For Vermont Public Radio, I'm Steve Zind.
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