ST. LOUIS (AP) -- Coal producer Peabody Energy Corp. remains obligated to continue health-care benefits for some 3,100 retirees of one of the company's former holdings, an appeals court ruled Wednesday in reversing a bankruptcy judge's absolving Peabody of that tab.
The three-judge 8th U.S. Court of Appeals' bankruptcy panel overturned U.S. Bankruptcy Judge Kathy Surratt-States' May ruling, which affected the largely Midwestern retirees of Heritage Coal Co. and was linked to the bankruptcy of Patriot Coal Corp., which Peabody also spun off in 2007.
Patriot earlier this year sued Peabody, seeking to ensure Peabody didn't try to use the bankruptcy to avoid the debated health-care obligations to the retirees whose future benefits wouldn't be part of the package Patriot proposed to the United Mine Workers of America union.
Surratt-States sided with Peabody, only to be reversed Wednesday.
"Akin to a once amicable divorce gone awry, the parties here disagree about the nature of their dissolution agreement after one of them has experienced a change in circumstances," the appeals court judges wrote in ruling against Peabody. "We disagree with the bankruptcy court that only Heritage is liable for the benefits; both parties are liable."
Peabody's next move was not immediately clear. Messages were left Wednesday with the company, the world's biggest private-sector coal producer.
"This is a bright ray of good news in what has been a long, dreary period for the retirees, their dependents and widows who have been desperately worried about what's going to happen to their health care," Cecil Roberts, international president of the miners' union, said in a statement.
"Peabody has spent years trying to get rid of its obligations to the thousands of retirees who made it the richest coal company in the world," he added. "This decision foils part of that plan. And it makes us even more determined to keep fighting to make sure the company lives up to its entire obligation to these miners."
Arguments between Patriot and Peabody over the benefits were part of a weeklong April hearing over Patriot's efforts to reorganize in bankruptcy. Surratt-States later ruled that Patriot could abandon its collective-bargaining agreements with the union and make its own cuts to wages and benefits.
But Patriot and the union continued bargaining to softened the blow with a deal ratified last Friday by some 85 percent of the 1,800 current or laid-off Patriot workers in West Virginia and Kentucky who were eligible to vote on it.
On Tuesday, Surratt-States gave Patriot the go-ahead to put in place the agreement, which restores most wage cuts Patriot had sought, maintains pension benefits for thousands of retirees, and allows active employees to continue earning pension credit.