THERETIREE GUARDIAN NEWSLETTER OF THE ASSOCIATION OF U S WEST RETIREES News from Association members in all 14 U S WEST/Qwest states 2006 ISSUE 3 www.uswestretiree.org www.qwestretiree.org “YOUR PENSION DEATH BENEFIT ON TRIAL!”
CHAIRMAN’S LETTER Qwest’s intention to cancel our ruling, it has become necessary to Pension Death Benefit has become gather documents, take depositions our most important challenge. from witnesses including former and This threat also brings a big current Employee Benefit Committee increase in our legal expenses. members, cover administrative travel In September of 2003 the Associ- costs for our attorney Curtis Kennedy, ation of U S WEST Retirees Board and hire an expert witness to go over members met with Qwest representa- the reams of paper work that have tives who presented a dated letter been gathered concerning our Pension announcing the cancellation of the Death Benefit. Pension Death Benefit. After some In the last issue of the Retiree heated debate, the company agreed to Guardian, Phyllis Kielblock and John hold the letter. The officers of Dick Johnson O’Brien reported on the history of our AUSWR have asked the company to Litigation Fund, and on the need to withdraw the letter permanently, and agree the reinstate the Litigation Fund because of these legal Pension Death Benefit is an earned benefit and is expenses to protect our earned benefits. protected by the Employee Retirement Income AUSWR has hired an expert witness, Leonard Security Act (ERISA) and cannot be cancelled. Garofolo. He comes with excellent qualifications. To date, the company has declined to reverse From 1983 to 1998 Mr. Garofolo served as the their intention to cancel the Pension Death Benefit. Regional Director of the US Department of Labor’s As a result, AUSWR has filed suit in Denver Federal Pension and Welfare Benefits Administration. He District Court to protect our rights to the Pension was responsible for enforcing Title I of the Employee Death Benefit. Your Pension Death Benefit is equal Retirement Income Security Act of 1974 (ERISA). to one year’s pay at the time of your retirement from During his 15 year tenure as Regional Director, the telephone company, if at the time of your death, he initiated thousands of employee benefit plan you have a qualified dependent beneficiary. investigations. These investigations involved the A non-jury trial will be held in January, 2007. application of ERISA’s fiduciary standards, the In order to make a strong case for a positive (continued on page 2)
INSIDE 2 3 7 8 10 12 19 President’s Hidden A View From 12-Step Nacchio Legal Grassroots Letter Burden Washington Program Aids Watch Activities Network Recovery
WE WERE THE OPERATORS AND REPAIR CLERKS, THE INSTALLERS AND TECHNICIANS, THE ENGINEERS AND NETWORK PLANNERS, THE CRAFT AND MANAGEMENT EMPLOYEES OF EVERY DESCRIPTION WHO BROUGHT TELECOMMUNICATIONS TO THE HOMES, BUSINESSES, AND INSTITUTIONS OF 14 STATES. NOW WE ARE UNITED IN OUR COMMITMENT TO PRESERVE AND ENHANCE THE RETIREMENT BENEFITS PROMISED TO US AND TO THOSE WHO FOLLOW US AS TODAY’S ACTIVE EMPLOYEES. RETIREE ASSOCIATION PRESIDENT’S MESSAGE
PRESIDENT’S LETTER Dear Fellow Retirees, pension reform and funding to The season of politicking has excessive executive compensation once again rolled around prior to and disclosure, to Health Care the November elections. Through reform and spiraling health care our continuous involvement in the costs. National Retiree Legislative Go hear your candidates speak Network (NRLN), we work with and ask them questions about their the Washington D.C. staff to raise positions on issues that will affect awareness and to lobby for or the quality of life for retirees for against bills affecting retirees. We decades to come. Ask them how continually remind the members of they voted on particular bills, and Congress and their staffs about the why they voted that way. Ask who thousands of voters that make up contributes to their campaign and the ranks of our Associations. The Mimi M. Hull does that make them beholden to results of NRLN are well special interest groups. And then, documented in the e-mails and newsletters of when you have cut through all of the rhetoric, spin AUSWR, and you have often responded to our and doublespeak, please do what every loyal requests to e-mail, write a letter or call your American should be doing – that is, VOTE! legislators about a particular bill. And please vote as an informed voter who has But now it is time for the members of Congress tested the candidates and knows where they stand and other candidates for elected offices to hear on the issues. This election will be pivotal for the directly from you, face to face, about issues that are quality of life for seniors. It is in your hands. Thank important to you as retirees. Please take part in the you. national debate on issues from Social Security to Mimi Hull, President income indexed Medicare Part B Premiums, from Association of U S WEST Retirees
“YOUR PENSION DEATH BENEFIT ON TRIAL!” (continued from page 1)
review and interpretation of plan documents, and the five-state area, which is 36.3% of the total implementations of remedies where ERISA viola- membership in the 14-state area of AUSWR. A letter tions were uncovered. is being prepared to be sent to every member to In 1999 Mr. Garofolo founded ERISA Consult- request a donation to the Litigation Fund and where to ing Group to provide consulting services to attorneys send your check. If you would like more detailed on legal actions brought under ERISA. He also information, go to our website www.uswestretiree.org provides expert advice and consultation to employee or www.qwestretiree.org then to legal developments pension and benefit plan officials on ERISA then to pension death benefit litigation, then to July 3, regulatory and compliance issues. 2006 Expert Opinion Report by Leonard Garofolo. After considering what had to be accomplished The total report is 102 pages long and you can read all to put this case together, the AUSWR Board of his report or just parts of the document. authorized a 14-state drive to raise $200,000 for the Look for the Litigation Fund letter in your U.S. Litigation Fund. The NWB-USW-Qwest Retiree mail box! Association’s share is $72,600. Our share is In Unity, Dick Johnson, Chairman determined by how many members we have in the NWB-U S WEST-Qwest Retiree Assocation
To date, the company has declined to reverse their intention to cancel the Pension Death Benefit.
Retiree Guardian – 2006 Issue 32 IA/MN/NE/ND/SD Edition HIDDEN BURDEN -- AS WORKERS’PENSIONS WITHER, THOSE FOR EXECUTIVES FLOURISH --
Are “working stiffs” [and retirees] picking up the tab for posh executive retirement benefits? That’s the bottom line question developed in a recent executive pension plan report in the Wall Street Journal. [June 23, 2006, by Ellen E. Schultz and Theo Francis]. Excepts of their investigative report follows.
AT&T 189,000 regular employees. David Dorman was chief executive of AT&T AT&T’s controller, John Stephens, confirmed Corp. from 2002 until its merger with SBC that executive pensions cause a bigger drag on Communications in November. He left in January. earnings, per dollar of liability, than pensions for His total of five years at AT&T earned him a yearly others. He added that AT&T, like some other pension of $2.1 million. That will replace 60% of companies, has informally earmarked an his annual salary and bonus in his final three years. undisclosed amount of assets for paying executive By contrast, former AT&T accountant Ralph pensions in the future. But while these assets earn Colotti’s $28,800 annual pension replaces 33% of investment returns, they don’t lower pension his final pay. He was at the company for 33 years. expense, because the assets aren’t irrevocably Mr. Colotti’s pension was held down by a dedicated to this purpose. The executive pension change AT&T made in 1998 in the formula used to plan, in other words, isn’t funded. calculate pensions. The switch had the effect of freezing pension growth for older workers like him. Lucent Retirees The 55-year-old now works at another company Lucent Technologies Inc. has pointed to retiree with a pension plan. “Working here another 10 years benefits as a burden and has cut benefits in a won’t make up for what my old pension would have number of ways. For instance, for various retirees in been” without AT&T’s change in formula, he said. recent years, Lucent has used a less-generous AT&T described its retirement benefits as pension formula; eliminated dental and spousal excellent and said a pension on the scale of Mr. medical coverage and death benefits; and raised Colotti’s is good in the telecommunications retiree health-insurance premiums. In a recent industry. Mr. Dorman’s richer deal is “reasonable, filing, the Murray Hill, NJ telecom-equipment firm customary and comparable to what similarly sized said, “Lucent’s pension and postretirement benefits companies offer,” AT&T said. A spokeswoman plans are large...and also costly.” noted that “in any industry, senior executives are Yet the pension plans for regular Lucent almost always provided with enhanced levels of employees and retirees, who number about benefits as a way to recruit and retain the best talent 230,000, are overfunded. In fact, they’re so full of and the best leadership possible to lead the cash that the investment return on their assets not company.” only erases the pension plan’s expense - it adds to At AT&T Inc., the pension liability for earnings. In the fiscal year ended last Sept. 30, these executives was a modest 3.8% of the company’s pension-plan assets pumped $973 million into total pension obligation at the end of last year. Yet Lucent’s bottom line, accounting for about 82% of these promises to 1,000 or so highly paid people the company’s profit. generated more than 45% of AT&T’s pension They would have pumped in still more, save for expense. The expense for them came to $113 an unfunded pension plan for Lucent’s highest-paid million last year, and reduced AT&T’s 2005 people, which had a liability of approximately $422 earnings by that amount. million last year. Lucent confirmed that pensions The other 55% of pension expense? It covered (continued on page 4)
“. . . in any industry, senior executives are almost always provided with enhanced levels of benefits as a way to recruit and retain the best talent and the best leadership possible to lead the company.”
Retiree Guardian – 2006 Issue 33 IA/MN/NE/ND/SD Edition HIDDEN BURDEN (continued from page 3)
Companies disclose little about any of this. But a Wall Street Journal analysis of corporate filings reveals that executive benefits are playing a large and hidden role in the declining health of America’s pensions.
for its executives and those earning more than starting next January, as well as of those 5,200 $210,000 in 2005 reduced net income. It declined to highly paid employees. The freeze of the executive say by how much. A spokeswoman said Lucent pensions will cut GM’s pension liability by $60 follows U.S. pension accounting and disclosure million, while its freeze of salaried workers will rules and that if the expense for retiree medical yield a far bigger reduction, $1.6 billion. plans were subtracted, its overall retirement A spokeswoman for GM said its concerns about benefits contributed $718 million to income. its pension plans have eased, though the company remains concerned about retiree health-care costs. General Motors With the pension freeze and improved returns on its To help explain its deep slump, General Motors pension assets, including billions of dollars GM has Corp. often cites “legacy costs,” including pensions contributed to the plans in recent years, “I would for its giant U.S. work force. In its latest annual say pension really is not a problem any more,” the report, GM wrote: “Our extensive pension and spokeswoman said. She said that GM has no fixed [post-employment] obligations to retirees are a obligation to pay the executive benefits and could competitive disadvantage for us.” Early this year, renege at any time, although she called such a move GM announced it was ending pensions for 42,000 unlikely. workers. GM has often said its U.S. pension plans added But there’s a twist to the auto maker’s pension about $800 to the cost of each car made in the U.S. situation: The pension plans for its rank-and-file in 2004. It declines to say how much was due to U.S. workers are overstuffed with cash, containing executive pensions. about $9 billion more than is needed to meet their obligations for years to come. The “Squeeze” Another of GM’s pension programs, however, This is the pension squeeze companies aren’t saddles the company with a liability of $1.4 billion. talking about: Even as many reduce, freeze or These pensions are for its executives. eliminate pensions for workers – complaining of the When General Motors cites retiree costs, the costs – their executives are building up ever-bigger giant auto maker has a point: It owed nearly pensions, causing the companies’ financial obliga- 700,000 U.S. workers and retirees pensions that tions for them to balloon. totaled $87.8 billion at the end of last year. Companies disclose little about any of this. But But $95.3 billion had already been set aside to a Wall Street Journal analysis of corporate filings pay those benefits when due. reveals that executive benefits are playing a large All of these assets are earning investment and hidden role in the declining health of America’s returns, which offset the pensions’ expense. GM pensions. Among the findings: lost $10.6 billion in 2005. But deep as its losses • Boosted by surging pay and rich formulas, have been, they would have been far worse without executive pension obligations exceed $1 billion at the more than $10 billion per year in investment some companies. Besides GM, they include income that the GM pension plan for the rank and General Electric Co. (a $3.5 billion liability); file generates. AT&T Inc. ($1.8 billion); Exxon Mobile Corp. and The pension plan for GM executives is another IBM Corp. (about $1.3 billion each); and Bank of matter. Executive pensions are unfunded to the tune America Corp. and Pfizer Inc. (about $1.1 billion of $1.4 billion. It detracts from GM’s bottom line apiece). each year. GM doesn’t break out the figure for • Benefits for executives now account for a executive pensions. It said executive pensions are significant share of pension obligations in the U.S., “a very small portion of our overall expense” but an average of 8% at the companies above. Some- declined to give the figure. times a company’s obligation for a single Earlier this year, GM announced it would executive’s pension approaches $100 million. freeze the pensions of its 42,000 salaried workers (continued on page 5)
Retiree Guardian – 2006 Issue 34 IA/MN/NE/ND/SD Edition HIDDEN BURDEN (continued from page 5)
• These liabilities are largely hidden, because pension plans, 401(k) plans don’t create a corporate corporations don’t distinguish them from overall debt or liability, since employees provide most of pension obligations in their federal financial filings. the assets and firms are typically free to halt any • As a result, the savings that companies make contributions of their own. by curtailing pensions for regular retirees – which Companies generally are also free to alter, have totaled billions of dollars in recent years – can freeze or end regular employees’ pension plans, mask a rising cost of benefits for executives. unless a union contract is involved. But executive • Executive pensions, even when they won’t be pensions often are protected from management paid till years from now, drag down earnings today. interference by employment or other contracts. And they do so in a way that’s disproportionate to By curtailing pensions for regular workers, their size, because they aren’t funded with dedi- large companies have reduced pension obligations cated assets.One reason executive pensions have to them by billions of dollars in recent years. So grown so large is that they are linked to ballooning pension obligations to regular workers are stable or overall executive compensation. Companies often shrinking at many companies while those for design retirement payouts to replace a percentage of executives rise. At BellSouth Corp., for example, what a person earns while active. the obligations for pensions for ordinary workers But for executives, the percentage of pay have edged down 3% since 2000. The liability for replaced is itself higher. Compensation committees pensions for executives is up 89% over the same often aim for a pension that replaces 60% to 100% period. A BellSouth spokesman noted that, like of a top executive’s compensation. It’s 20% to 35% many executive pensions, the benefit could be lost for lower-level employees. in the event the company becomes insolvent. In percentage of pay replaced, Pfizer’s The promise of any pension becomes a chairman and CEO, Henry McKinnell, does best of corporate obligation. Although the payments are in all. His future $6.5 million-a-year pension will the future, the promise means the company has a replace 100% of his current salary and bonus. liability now. And a number can be put on it. Cutting Back Deferring Compensation Creates Even as executives’ pensions grow, many com- Debt to Executives panies are curtailing those for the rank and file. In As a result of the executive compensation one move, hundreds of employers, including trends, executive pensions make up a significant Boeing Co., Xerox Corp. and Electronic Data portion of total pension liabilities at many com- Systems Corp., have switched to pension formulas panies: 12% at Exxon Mobil and Pfizer; 9% at known as “cash balance” plans. One effect is to Metlife Inc. and Bank of America; 19% at slow the growth of older workers’ pensions or halt Federated Department Stores Inc.; 58% at insurer it altogether. That’s what happened to Mr. Colotti at Aflac Inc. AT&T. At some companies, the only people who have Other companies, including Verizon Communi- pensions at all are executives. At Nordstrom Inc., cations Inc., Unisys Corp. and Sears Holdings the nearly 30,000 ordinary employees don’t get Corp., are freezing their pension plans for some pensions. But 45 executives do. At retailer, Dillard’s workers. A freeze leaves intact pensions already Inc., pensions are only to certain officers. earned but prevents any further growth during a Companies’ retirement liabilities for their worker’s career. executives have also grown through another little- noticed trend: Over recent years, an increasing Completely Legal Change portion of executives’ pay has been postponed, via Companies that restrict regular pension plans pension and deferred-compensation plans, rather often point to the 401(k), some noting that they’ve than given in current paychecks. enhanced their match of contributions. Unlike
Over recent years, an increasing portion of executives’ pay has been postponed, via pension and deferred-compensation plans, rather than given in current paychecks.
Retiree Guardian – 2006 Issue 35 IA/MN/NE/ND/SD Edition SOL GOT $72 MILLION Taken from articles by Jeff Smith, Rocky Mountain News, August, 2006
Qwest Communications agreed to pay then- million worth of office space and administrative U S WEST CEO Sol Trujillo a $72 million golden support, and nearly $1 million in perks. parachute a day before the merger between the two The agreement was signed by Frank Popoff, communications giants closed on June 30, 2000. then chairman of the Qwest board’s human The severance package, which included $5.5 resources committee. Popoff, still a Qwest director million for the use of a corporate plane for 3 years, and a former chairman and chief executive of Dow excludes the value of stock options that immedi- Chemical Co., couldn’t be reached for comment. ately vested and certain other long-term incentives. Kennedy noted the amended agreement to Details of the package – believed to be previ- Trujillo followed a testy exchange between Trujillo ously unreported and amended from an earlier and Nacchio over U S WEST’s plans to pay its severance agreement – were recently found by a stockholders one final dividend upon completion of Denver attorney in court documents connected with the merger. a case involving shareholder dividends. Nacchio believed the money would be better Qwest apparently wasn’t required to file the spent on investing in video services, wireless pro- last-minute arrangement with the Securities and grams and customer-service improvements. Exchange Commission. In a letter to Nacchio on June 2, 2000, Trujillo Just months before, Trujillo had decided not to wrote that “our shareholders” interest and expecta- stay on with the merged company because of style tions are important to us, and we do not believe it differences with then-Qwest CEO Joe Nacchio. would be in our mutual interest to surprise them this Trujillo reportedly left a four-year retention package late in the game.” The U S WEST board approved worth $48 million on the table. the 53.5 cents-a-share dividend on June 5. Over the years, Trujillo’s severance has been Replied Nacchio on June 6: “U S WEST materi- reported in a wide range – from the $36.9 million to ally breached the merger agreement by declaring a as high as $230 million by a shareholder advisory $270 million dividend payable to shareowners of group. record at the close of business on June 30.” Curtis Kennedy, attorney for the Association of On June 7, U S WEST changed the shareholder U S WEST Retirees and the one who discovered the record date from June 30 to July 10, effectively documents, characterized Trujillo’s severance enabling Qwest to kill the dividend after the merger. agreement of June 29, 2000, as “outrageous.” On June 21, U S WEST shareholders went to “We’re the little people, the retirees who built Denver District Court to try to force the phone the company, and these big shots were taking care company to set aside $273 million to pay the stock of themselves . . . greedy and gluttonous, lining their dividend. pockets,” Kennedy said. On June 23, the motion was denied. Trujillo’s Trujillo is now chief executive of Telstra, an amended golden parachute agreement was dated Australian communications giant. He had a 26-year June 23 and signed on June 29. career with U S WEST, including a two-year stint as Last year, U S WEST shareholders won a $50 chief executive. million class-action settlement on the dividend The $72 million payment to Trujillo, according issue. Kennedy ran across the Trujillo severance to court documents, included a $36.9 million documents while preparing an appeal of the $16.3 change-in-control payment, a $10 million payment million award to the plaintiff attorneys, a fee he has to sign the agreement, a $13.7 million pension said is another example of “greed gone wild.” payment, the $5.5 million airplane allowance, $2
Trujillo’s golden parachute: Change-in-control payment: $36.9 million • Payment for signing agreement: $10 million Pension payment: $13.7 million • Corporate airplane allowance: $5.5 million Office space and administrative support: $2 million • Dividend equivalent award: $1.5 million Other perks: $943,441 (including Glenmoor and Castle Pines country club memberships, $100,000 in limousine services and $13,000 to attend the World Economic Forum) About 2 million stock options, which immediately could be exercised
Retiree Guardian – 2006 Issue 36 IA/MN/NE/ND/SD Edition AVIEW FROM WASHINGTON NRLN PRESIDENT’S REPORT Report On Pension Reform “wearaway” often inflicted on Thank you! The passage of The older workers. Pension Bill in both houses of Next, the prevention of a Congress represents a major reduced level at which a pension accomplishment by the NRLN and fund “surplus” can be transferred our Grass Roots Network mem- to offset corporate operating bers. You are commended for your expenses for a retiree health care determined efforts to convince benefits. (So called Section 420 your Senators and Representatives transfers). of the urgent necessity to pass And, finally, pension plan legislation tightening corporate disclosures to participants are pension funding rules and closing improved. For example, each year the loopholes that have enabled Pension Plans must affirmatively companies to accumulate huge disclose their funding levels and pension liabilities. A.J. (Jim) Norby make extra disclosures if they are On the very last vote before under 100%. These reports must adjourning for the Congressional summer vacation, be published in the form of statements to retirees Congress finally passed The Pension Reform Bill. within 120 days from the end of the Plan year. The Senate passed 93 to 5. The House passed 279 Today, we get nothing for 10 months, too late for to 131. taking action. Also, under the new law, detailed I don’t believe everyone ever gets everything one filings must be made available electronically. wants in a Bill; however, the NRLN certainly got a Had it not been for the constant pressure exerted good number of its key issues included in the by the NRLN and its Grass Roots Network legislation that has passed. members, I’m convinced the legislation would have First, the basic thrust of the Bill substantially been much less favorable to workers and retirees. In tightens pension plan funding requirements and fact, there probably would have been no bill passed greatly reduces the risk that plans will default to the at all. This is an election year, and our Senators and taxpayers via the Pension Benefit Guaranty Congressmen must recognize the power of the Corporation (PBGC) in the future. retirees at the ballot box. As I have shared with a Second, the change in the 5-year asset smoothing number of members of Congress, as retirees we rule on the timing an amount of funding a company may be older, but most of us still know how to has to add back to a Pension Plan after the assets drive, and we know our way to the polling places. plummet due to a Stock Market loss. This means Additional information is available on our companies will face having to add assets back after Website: www. NRLN.org. And look for more 2 years, instead of after 5 years. A clear win for us. information in the next edition of the “A View Third, the defeated effort to retroactively legalize From Washington.” Cash Balance Conversions, and the benefit Until next time, good luck and God speed.
Had it not been for the constant pressure exerted by the NRLN and its Grass Roots Network members, I’m convinced the legislation would have been much less favorable to workers and retirees. In fact, there probably would have been no bill passed at all.
Retiree Guardian – 2006 Issue 37 IA/MN/NE/ND/SD Edition 12-STEP PROGRAM AIDS QWEST’S RECOVERY
By Bob Mook, Denver Business Journal, Friday, August 11
With quarterly earnings reports showing a profit have improved the company’s public image. for two consecutive quarters and its stock gaining The company set out to improve its customer traction on Wall Street, the questions about Denver- service scores, which Shaffer claims are now “higher based Qwest Communications International Inc. than they’ve ever been.” have swung from “will it survive?” to “how’d they Step 5: Make amends with shareholders and do it?” in the past five years. debtholders – Notebaert credits Qwest’s financial “The recovery is behind us,” said Oren Shaffer, team with being “very creative” in restructuring its chief financial officer of Qwest. “Now, we’re debt. building on the recovery.” On Shaffer’s watch, Qwest’s debt has shrunk to But true recovery, as they say in various 12-step $14 billion from a high of $19 billion. The company programs, is an ongoing process. expects to lower that number even more as its Talking to analysts and Shaffer about Qwest’s finances improve. recovery, the Denver Business Journal identified 12 Step 6: Make a fearless and searching inventory steps Qwest took – and must continue to take – to of the organization – In Notebaert’s time, Qwest has ensure its relevance in the rapidly consolidating eliminated 11,000 positions (largely through telecommunications universe: attrition) and dramatically reduced the company’s Step 1: Admit there’s a problem – Joe Nacchio’s operating expenses. “voluntary” resignation in mid-2002 set the stage for “All local telephone companies have a history of Qwest’s recovery. Indeed, Qwest’s then- bloated cost structures,” Cleland said. “Qwest is plummetting stock actually rose more than 20 involved in a two-decade transition from a former percent to $5 a share on the day Nacchio resigned. monopoly to a competitive convergence player. They Nacchio’s Qwest also earned a reputation for had to transform from a caterpillar to a butterfly. It’s poor service, low morale and dismal market not an easy trick to pull, especially when you’re performance that managed to disenchant customers, transforming from a narrow-band base into a shareholders, debtholders, vendors and employees. broadband future.” Step 2: Recruit new executive leadership to Step 7: Recognize weaknesses and build on restore sanity – Immediately after Nacchio’s strengths – As demand for traditional phone services, resignation, Qwest’s board unanimously elected which remains Qwest’s main revenue source, slowly Dick Notebaert its chairman and CEO. Upon getting declines, the Baby Bell continues to build its the Qwest job, Notebaert declared he would focus on broadband customer base. repairing the company’s balance sheet and damaged Qwest added 120,000 new DSL customers in the reputation. second quarter – up 51 percent from the previous Step 3: Make amends with employees – Qwest year – as more people converted from dial up. While workers, particularly those from the U S WEST era, DSL revenue didn’t grow proportionally, Shaffer were completely demoralized by the time Notebaert said growth of broadband is critical for Qwest to lock came on board. in customers as the company expands its offerings – Scott Cleland, president of the Precursor Group, including its planned expansion of TV service. a McLean, Virginia telecom research firm, said Step 8: Build partnerships – Because Qwest sold Notebaert was wise in tackling concerns from Qwest its wireless business and doesn’t have a strong employees early on. presence in TV yet, the company provides cellular “The first thing he did was to calm down all the and satellite TV services through resale agreements irate constituencies and buy himself time,” he said. with Sprint Nextel Corp. and DirecTV. “After that, he rallied the employees and company Step 9: Build on other markets – Paulak fears around his new “Spirit of Service” vision. He Qwest may be missing an opportunity to provide basically rallied the company around the new idea voice and data services for business – particularly in and ideal.” the area of managed hosting services. Step 4: Make amends with customers – Given Step 10: Find new efficiencies – Qwest cut its the magnitude of Qwest’s problems, Shaffer said it total operating expenses to $3 billion in the second would have been easy for Notebaert to focus on the quarter of 2006 from $3.2 billion the same time last company’s internal trappings. But that wouldn’t (continued on page 9)
Retiree Guardian – 2006 Issue 38 IA/MN/NE/ND/SD Edition 12-STEP PROGRAM AIDS QWEST’S RECOVERY (continued from page 8) year (a 6 percent reduction) – part of an ongoing investors take Qwest seriously or undermined the effort to reduce costs. company’s recovery. Shaffer said Qwest invested more money on The fact that Qwest lined up backing for the technology and software to help customer service proposed $9.7 billion deal illustrated the confidence representatives and technicians do their jobs more financial institutions had in the company, analysts effectively and efficiently. said at the time. Step 11: Put the past behind – Though Qwest’s Most analysts agree it’s unlikely that Qwest will new leadership has distanced itself from the Nacchio be acquired by the two other remaining Baby Bells – era with a proposed $400 million class-action Verizon and AT&T – since both companies have settlement for shareholders and $250 million their hands full with recent acquisitions, and Qwest’s settlement with the Securities and Exchange debt and sparsely populated coverage area is still Commission (SEC). considered too much baggage. Step 12: Surrender to a higher power (or become Cleland said Qwest more likely will “stay on the higher power) – Depending on who’s talking, course” and pursue “opportunistic” acquisitions. Qwest’s failed bidding war for MCI either made
THE DENVER BUSINESS JOURNAL MISSED ONE MORE STEP Arnie Albrecht, Roseville, MN
Step 13: Make promises to employees and then legal department to fight the retirees in every way break those promises after they retire. Examples are possible, including causing the Retiree Association as full Medicare Part B payments and 100% healthcare much expense as possible in an attempt to break the coverage. Also attempt to eliminate concession Association. service for certain retirees. The savings from eliminating the Pension Death However the big one is to try to eliminate the Benefit will increase Qwest’s earnings and thus Pension Death Benefit that was promised in writing increase Notebaert’s bonus. A win for Qwest, a win to employees and retirees and that they relied on for for Notebaert and a terrible blow to thousands of many decades. Then when retirees go to court to try surviving spouses. to save the Death Benefit, have Notebaert tell his
QWEST NEXT STEP Don Kelly, Brooklyn Park, MN
After reading the 12-step program for Qwest the retires since 1990 it grows to six figures very recovery, I feel a very important step was missed. The quickly. When I tried to point out that we all worked additional step would be the reduced cost or income at two to three percent below the benchmarks for from the changes in the medical plan for retirees after our jobs for years to offset the benefits, I was told 1990. The monthly rate has migrated from zero to that I needed to think about someone besides myself $155.00 or more a month. Co-pays from $5.00 to – and that Mr. Notebaert received this treatment $20.00 a month to $150.00 to $200.00 a month. from the company he retired from, so it was the way When you take the difference multiplied by all it should be.
Retiree Guardian – 2006 Issue 39 IA/MN/NE/ND/SD Edition NACCHIO WATCH (MOTION SICKNESS?)
Sometimes it’s difficult to follow all of the actions and activities of former Qwest Chairman Joseph Nacchio, who faces 42 counts of insider trading in connection with selling $100 million of Qwest stock in the first five months of 2001. In addition to criminal charges, each count of which carries a one million dollar fine and a maximum penalty of 10 years in prison, Mr. Nacchio faces civil fraud charges in a suit brought by the Securities and Exchange Commission. Here’s a brief compilation taken from the press.
Rocky Mountain News - June 23 Nacchio’s attorneys said in May they wanted to Joe Nacchio’s attorneys reiterated that insider- move the trial out of Denver, contending that the trading charges against the former Qwest chief former chief executive officer could not receive a executive should be dismissed citing grand-jury fair trial in Qwest’s hometown. They asked the judge testimony by former Qwest President Afshin for time to research the issue but did not provide a Mohebbi to support their position. In a wave of specific date for filing the motion. court filings, Nacchio’s attorneys also rebutted government assertions that they have exaggerated Rocky Mountain News - August 1 the complexity of the criminal case to delay a trial Attorneys for former Qwest Chief Executive Joe until next year. Nacchio on Monday reiterated the claim that he is “among the most reviled figures in recent Denver Wall Street Journal - July 8 history” and that his insider-trading trial should be U.S. District Judge Edward Nottingham moved out of state. Nacchio’s attorneys also said a delayed an important hearing in the Joseph Nacchio trial in Denver would force his family to relocate case because of the complex logistics involved in from New Jersey and add to his personal burden. reviewing classified material introduced by the defense. Nacchio’s attorneys say he needed extra Rocky Mountain News - August 16 time for his staff to get the security clearances and Top officials at the Justice Department’s facilities that are legally required for handling the counterespionage section are among those who will classified materials. Prosecutors argued that the be handling the classified documents relating to the national security aspect of the defense is a criminal case of former Qwest Chief Executive Joe smokescreen with no relevance to the charges. Nacchio, a court order indicated Tuesday. Denver federal Judge Edward Nottingham issued a 26-page Denver Post - July 8 order that describes how the classified information Nacchio didn’t obtain security clearances until will be stored, handled and controlled in a secure March 2001 (after his alleged insider trading facility. occurred), according to sources familiar with the situation. Some legal experts consider Nacchio’s Denver Business Journal - August 19 defense to be a desperate ploy to delay the case, Federal prosecutors in the case against Joseph although they also say it is almost sure to complicate Nacchio are asking a U.S. District Court judge to matters in terms of what evidence a jury is allowed keep the trial in Denver, despite claims from to hear. Nacchio’s lawyers that the former CEO of Denver- based Qwest Communications International Inc. Dow Jones News - July 25 can’t get a fair trial in the city. In addition to the criminal case, Nacchio is one “While press coverage of Qwest and the of several former executives accused by the defendant has not been insubstantial, it has been Securities and Exchange Commission of orchestra- neither inflammatory nor prejudicial. In fact, the ting a financial fraud that forced Qwest to restate majority of the examples proffered by the defendant billions of dollars in revenue. are objective, factual and contain no mention of the The SEC said fraud occurred between April defendant by name; a good proportion of the 1999 and March 2002 which allowed Qwest to coverage is of ordinary court proceedings and improperly report approximately $3 billion in motion practice,” stated U.S. Attorney Troy Eid in a revenue that helped clear the way for its 2000 motion opposing the change of venue. acquisition of the Baby Bell, U S WEST. (continued on page 11)
Retiree Guardian – 2006 Issue 310 IA/MN/NE/ND/SD Edition NACCHIO WATCH (continued from page 10)
Rocky Mountain News - The long-awaited action August 24 begins more than 15 months after An Enron prosecutor has been federal prosecutors accused named to head the government’s Nacchio of improperly using insider-trading case against former inside knowledge when he sold Qwest CEO Joe Nacchio. Cliff $101 million in stock five years Stricklin, one of four prosecutors ago. in the trial of Enron executives Nacchio’s attorneys argued his Ken Lay and Jeff Skilling, will trial should be moved to New replace Bill Leone as first assistant Jersey where he lives, citing what U.S. attorney in Colorado. they called pervasive negative publicity that linked Nacchio to Bloomberg News - Qwest Communications Inter- August 25 national Inc.’s multibillion-dollar U.S. District Judge Edward Joseph Nacchio accounting scandal. “The press Nottingham today rejected former just keeps pounding away,” Qwest CEO Joe Nacchio’s claim that prejudicial Nacchio attorney Jeffrey Speiser told Nottingham. news coverage in Qwest’s headquarters city has “He’s charged simply with insider trading. He’s not made Nacchio a hated figure. The publicity “has not charged with doing harm to Qwest.” been such that the court proceedings will be Court documents filed early in September infected” by juror bias, Nottingham said. named more than 15 former Qwest executives and directors who may be critical to the government’s Denver Post - September 5 criminal case against former CEO Joe Nacchio. A civil fraud case against former Qwest chief • Gregory Casey, former top sales executive, executive Joseph Nacchio and five other former settled civil fraud charges Qwest officials might advance even before • William Eveleth, former senior vice president Nacchio’s criminal insider-trading case is of financial planning, settled civil fraud charges completed. • Peter Hellman, board audit committee The SEC alleges in its suit that former Qwest member executives fraudulently boosted revenues by $3 • Roger Hoaglund, former senior vice billion from 1999 to 2002. Qwest later restated that president, settled civil fraud charges revenue. The SEC wants the executives to repay • Mark Iwan, Arthur Andersen audit partner, stock-sale profits and, in some cases, salaries. sanctioned by the SEC • Steve Jacobsen, former executive vice Rocky Mountain News - September 12 president Federal prosecutors want to continue to freeze • Afshin Mohebbi, former chief operating the government’s civil-fraud case against six former officer, faces civil fraud charges Qwest executives until the criminal trial of former • Yash Rana, former senior associate general CEO Joe Nacchio is completed. The government counsel argued in a federal court filing Monday that the • Tom Stephens, former chairman of the boardís end of a freeze, or stay, is in “clear sight” now that audit committee Nacchio’s insider-trading trial is set to start • Robin Szeliga, former chief financial officer, March 19. pleaded guilty to insider trading • Drake Tempest, former chief legal counsel Various Sources - Late September • Bryan Treadway,former controller, acquitted Joe Nacchio’s insider trading trial scheduled to of fraud charges start March 19, 2007 is estimated to take about 30 • Lee Wolfe, former investor relations director days, split equally between the prosecution and the • Robert Woodruff, former CFO, faces civil defense. fraud charges.
The long-awaited action begins more than 15 months after federal prosecutors accused Nacchio of improperly using inside knowledge when he sold $101 million in stock five years ago.
Retiree Guardian – 2006 Issue 311 IA/MN/NE/ND/SD Edition “PENSION DEATH BENEFIT” RULING -- JUDGE REFUSES TO DISMISS KERBER CASE --
LEGAL ACTIVITIES by Curtis Kennedy, AUSWR Litigation Counsel
The Kerber v. Qwest case, known to increase the uncertainty of the plaintiff’s members as the “Pension Death Benefit” retirement benefits, and decrease their case, was given a major retiree favorable ability to compensate for the uncertainty.” ruling by Denver Federal Judge Boyd N. Qwest Defendants have also asked Boland. On October 5, 2006, Judge Judge Boland to grant them a summary Boland issued a 13-page order. He ruled judgment, based upon the relevant against Qwest not to dismiss the case. Curtis Kennedy evidence. But Qwest’s defense team has Since March, we have been engaging deliberately ignored historic language in in formal discovery in order to gather proof that the pension plan documents and the course of dealings Pension Death Benefit, which is payable from the when U S WEST administered the two qualified pension plan, now called Qwest Pension Plan, is a defined benefit pension plans after taking over its vested benefit, not something that can be reduced or share of the two original Bell System pension plans taken away at the whim of Qwest leadership. divided up when AT&T was broken apart. This dispute started as a result of Qwest During formal discovery which ended on leadership’s announced plan to eliminate the September 8, 2006, we gathered all the old pension Pension Death Benefit for all retirees. documents, bulletins, summary plan descriptions, and The Kerber case is filed as a proposed class obtained statements from persons who were involved action for both management and non-management with administering the pension plans during 1984- retirees. On September 8, 2006, a formal motion 1999. We obtained a very detailed and favorable was filed asking Judge Boland to certify the case as expert opinion report. On October 3, 2006, we a class action for all service pension eligible retirees. submitted all of that information to Judge Boland. Qwest senior leadership’s position is that the There is a great deal of information posted at the Pension Death Benefit was never considered to be AUSWR website and there will be further updates either a vested or protected pension benefit. They about the Kerber case as matters develop. Presently, want the right to pull the trigger and end this benefit. the case is set for trial during January 22-25, 2007. Qwest hired a cadre of defense lawyers who filed a Between now and then, Judge Boland will likely motion with legal brief asking Judge Boland to address: 1) the pending motion for class certification; dismiss the case, but that effort failed. and 2) Qwest Defendants’ pending motion for Among other things, Judge Boland said, summary judgment. Go to the AUSWR website at “delayed review of the issue would serve only to http://www.uswestretiree.org/legal2.htm#death.
SUMMARY JUDGMENT - A legal decision made on the basis of statements and evidence presented for the record without a trial. It is used when there is no dispute as to the facts of the case, and one party is entitled to judgment as a matter of law.
Curtis Kennedy Selected Among The Best Lawyers In America® The Best Lawyers in America is widely regarded as the preeminent referral guide to the legal profession in the United States since 1983. The Best Lawyers lists, representing 80 specialties in all 50 states and Washington, DC, are compiled through an exhaustive peer-review survey in which thousands of the top lawyers in the U.S. confidentially evaluate their professional peers. The current 13th edition of Best Lawyers (2007) is based on more than 1.8 million detailed evaluations of lawyers by other lawyers. No advertising nor fees are involved in the selection process.
Retiree Guardian – 2006 Issue 312 IA/MN/NE/ND/SD Edition QWEST CONSOLIDATED FEDERAL SECURITIES CASES: UPDATE LEGAL ACTIVITIES by Curtis Kennedy, AUSWR Litigation Counsel
“I’m very happy about the outcome . . . that shareholders will receive something more from this,” said Hazel Floyd, a regional vice president of legislation for the Association of U S WEST Retirees. She credited the group’s attorney, Curtis Kennedy, for pursuing the issue and prevailing.
On September 29, 2006, Denver Federal Judge fought the $96 million in attorney fees sought by Robert Blackburn issued a ruling agreeing with Lerach Coughlin, the lead law firm for the plaintiffs, some of AUSWR’s significant objections to the calling the fees excessive and tantamount to winning attorney’s fees and costs that the Lead Plaintiffs’ law the lottery. firms wanted to be paid. They were seeking $96 Blackburn’s decision to cut the attorney fees million, plus $2.2 million costs out of the $400 means investors will get $36 million more from the million settlement fund in the partial settlement of settlement than they would have otherwise. the Qwest Federal Securities Cases. Judge “I’m very happy about the outcome . . . that Blackburn limited his award to $60 million, plus shareholders will receive something more from this,” $2.0 million costs, a savings of over $36 million to said Hazel Floyd, a regional vice president of be distributed to shareholders. AUSWR will seek legislation for the Association of U S WEST recovery of costs and fees for our efforts. Retirees. She credited the group’s attorney, Curtis Kennedy, for pursuing the issue and prevailing. Excerpts from Jeff Smith of the Rocky Nacchio and Woodruff had argued their rights Mountain News: had been subverted by a settlement that excluded U.S. District Judge Robert Blackburn also them. denied motions by former Qwest Chief Executive But Blackburn disagreed, concluding Nacchio Joe Nacchio and former Chief Financial Officer and Woodruff “do not have standing to assert the Robert Woodruff to be included in the settlement. interests of the plaintiff class (Qwest investors) as a Investors want to take Woodruff and Nacchio to trial basis to challenge the settlement.” on civil securities fraud charges. Many investor groups, as indicated by those The settlement fund for investors will total $650 opting out, felt the $400 million settlement was million because it also will include a $250 million inadequate. penalty paid by Qwest to the Securities and Blackburn himself, in reducing the attorney fees, Exchange Commission. Still, the settlement will noted the Pennsylvania State Employees’ Retirement only pay a fraction of the money lost by investors System had argued that class members would be when Qwest stock plummeted from a high of $66 a receiving only about 15 cents per share, not share in March 2000 to a low of $1.07 a share in including the SEC payment. August 2002. But Blackburn concluded the $400 million was About two dozen institutions and dozens of “fair, reasonable and adequate” based on the risks of individuals have opted out of the settlement, with recovery, an apparent reference to Qwest’s testimony many pursuing separate litigation in hopes of getting about what it could afford based on its financial a premium over the settlement amount. condition. Qwest’s financial condition has improved Investor groups alleged Qwest and former since the settlement was announced last fall. executives such as Nacchio misled them, inflating “We’re pleased the court has approved the company revenues between 1999 and 2002 to keep fairness of the settlement,” Qwest spokesman Bob the stock price artificially propped up. Qwest Toevs said Friday. eventually erased more than $2.5 billion of revenues Qwest had $105 million in reserves for those from its 2000 and 2001 books. additional costs as of Dec. 31, 2005, according to a The Association of U S WEST Retirees had regulatory filing.
Retiree Guardian – 2006 Issue 313 IA/MN/NE/ND/SD Edition SHAREHOLDER DIVIDEND CASE: UPDATE LEGAL ACTIVITIES by Curtis Kennedy, AUSWR Litigation Counsel
In this state court case, the trial judge at the the 5,282 page trial court record. “Fairness Hearing” made an instant decision to AUSWR discovered that soon after the decision award the attorneys the full amount they requested - was made to avoid paying the $273 million $15 million in fees and another $1.3 million for U S WEST shareholder dividend, an agreement was expenses and costs, no questions asked, out of the executed on June 29, 2000 – a day before the $50 million Settlement Fund. merger closed – to provide U S WEST CEO AUSWR’s leaders decided to appeal this ruling Solomon D. Trujillo a severance payout valued in before the Colorado Court of Appeals. The opening excess of $70 million cash, including $5.5 million appellate brief was filed on August 5, 2006. During for Mr. Trujillo’s use of corporate jet services. the course of preparing AUSWR’s opening (See page 6 “Sol Got $72 Million” for details appellant brief, a thorough review was conducted of on the settlement package.) RATHBUN V. QWEST TELEPHONE CONCESSION CASE: UPDATE LEGAL ACTIVITIES by Curtis Kennedy, AUSWR Litigation Counsel
In this case, AUSWR intervened to protect AUSWR intervention successfully caused the retirees’ rights to continue to receive the telephone case to exclude tens of thousands of retirees. concession on an income ‘tax free’ basis. AUSWR agrees with Qwest’s position. The plaintiff and her Washington, DC based The same attorneys pressing forward in the attorneys have been arguing that the retiree telephone Rathbun case are the same ones who tried to derail concession should be treated as an ERISA-governed the settlement we obtained in the Colvin case benefit, which would mean taxation applies. which, fortunately, was successfully concluded.
Additional information on the pending legal activities including the “Pension Death Benefit Litigation” are available at the U S WEST/Qwest Retiree website: www.uswestretiree.org or www.qwestretiree.org
QWEST HAS APLAN TO REDUCE YOUR GROUP LIFE INSURANCE TO A MERE $10,000 LEGAL ACTIVITIES by Curtis Kennedy, AUSWR Litigation Counsel
Most recently, Qwest was compelled to answer details, and continue to financially support my questions that uncovered this dastardly ‘plan.’ If AUSWR, so that AUSWR can continue to protect they carry out this plan, certainly, AUSWR will fight your benefits!!!! back. Visit the AUSWR website, stay tuned for more
Retiree Guardian – 2006 Issue 314 IA/MN/NE/ND/SD Edition HULL V. DEPARTMENT OF LABOR: UPDATE LEGAL ACTIVITIES by Curtis Kennedy, AUSWR Litigation Counsel
In this case, Mimi Hull, AUSWR President, that we requested. successfully pursued a claim to cause the United Also, in early October, 2006, the DOL finally States Department of Labor (DOL) to comply with agreed to make a $25,000 payment for attorney’s the Freedom of Information Act to disclose what, if fees and costs. anything, was going on with the DOL’s AUSWR’s expenditure and payment of fees investigation of the Qwest Pension Plan. will be fully reimbursed. Now, the DOL is most The DOL was compelled to give us information cooperative whenever AUSWR seeks information. IINN TTHEHE MMEDIAEDIA From media coverage around the region and nation.
QWEST CIVIL CASE IS ON AGAIN; FEDS: CRIMINAL TRIAL NOT AFFECTED Excerpts reported by Jeff Smith -- Rocky Mountain News Defendants in a civil-fraud case against six Chief Financial Officers Robert Woodruff and Robin former Qwest executives can begin taking some Szeliga, former Chief Operating Officer Afshin depositions in December, a federal magistrate ruled Mohebbi and former Qwest accountants James September 28, 2006. Kozlowski and Frank Noyes. Federal magistrate Craig Shaffer’s decision to The U.S. attorney’s office in Colorado previously unfreeze the case came after a federal prosecutor had been opposed to depositions in the civil case, agreed that depositions of certain individuals won’t arguing they could harm the criminal case. interfere with the government’s criminal insider- At a status conference, Assistant U.S. Attorney trading case against former Qwest Chief Executive Kevin Traskos still spoke about the need to ensure the Joe Nacchio. criminal case “isn’t subverted.” The parties still need to reach an agreement on the But Traskos also said there certainly were deposition list, but it tentatively includes about a “substantial pieces” of the civil fraud case that aren’t dozen former KPMG and Arthur Andersen account- related to the criminal action against Nacchio. ants and Qwest employees. The depositions are The bulk of the depositions in the civil case are expected to focus primarily on how Qwest accounted expected to be conducted after the Nacchio criminal for its fiber-optic capacity and telecommunications trial is completed next spring. The 30-day trial starts equipment sales in the late 1990s. March 19. Shaffer indicated he wants to move the case The attorneys for Kozlowski and Noyes forward to preserve witness memories as much as especially have been pushing to move the civil case possible. forward in hopes of winning a dismissal or otherwise The civil-fraud lawsuit, filed by the Securities and resolving the matter as soon as possible. Exchange Commission in 2005, alleges that Nacchio Attorneys for Nacchio, Woodruff, Szeliga and and several other former Qwest executives Mohebbi took more neutral positions, deferring to the orchestrated a $3 billion financial fraud between 1999 U.S. attorney’s office. and 2002. Separately, Denver federal judge Marcia Krieger Other defendants in the civil case include former refused to dismiss the civil fraud case against Szeliga.
Retiree Guardian – 2006 Issue 315 IA/MN/NE/ND/SD Edition IINN TTHEHE MMEDIAEDIA From media coverage around the region and nation.
QWEST EX-CFO SENTENCED Excerpts by Forbes magazine business reporter Gary Levine Think of her as the female Enron’s Andrew Fastow Qwest. As a former C-suite dweller, Szeliga was the – minus the prison time. company’s highest-ranking executive to plead guilty - Robin Szeliga, once the chief financial officer of and thus might be the most valuable witness in the Qwest Communications International learned the price trial of the company’s former Chief Executive Joseph July 28, 2006, for insider trading she allegedly Nacchio, who has pleaded not guilty to 42 counts of committed amid the telecom’s huge accounting insider trading. U.S. Attorney Bill Leone reportedly imbroglio. But the former finance honcho, who described Szeliga’s help in the Nacchio case as “very pleaded guilty to one count of insider trading, won’t be substantial.” playing the harmonica inside a correctional facility: However, forgiveness – or at least, leniency – Szeliga’s sentence was two years’ probation, six does not signify forgetfulness. “I do not divorce this months of home detention and a $250,000 fine. conduct from the overall illegality,” Judge Walker In return for her freedom and fresh air, she will Miller declared. “There does seem to be [at Qwest] a reportedly assist the government with its case against culture of – I would use the word – greed.”
STATES GIVE QWEST “FLEXIBILITY” by Andy Vuong -- Denver Post -- Monday, September 4
Ten of the 14 states in Qwest’s service territory regulators 30 days in advance when it wants to change have reduced regulatory oversight of the company’s prices or bundle its phone service with wireless, phone business, giving the carrier more leeway to Internet and TV offerings. change prices and package services. But Qwest is The regulatory changes have helped the company facing stiff opposition from four states – New Mexico, boost the amount of money it makes per customer Oregon, Montana and Wyoming – that say there isn’t through bundles – a package of phone, high-speed enough competition yet to warrant less regulation. Internet, satellite-TV provided by DirecTV and Most of those 10 states still fully regulate Qwest’s wireless service provided by Sprint. In the second basic residential and small business service. But the quarter, the Qwest’s average revenue per user company is free to change prices on upgraded phone increased 6.5 percent to $49 from $46 a year ago. The service features, such as call waiting and caller ID. company’s bundle penetration increased to 54 percent Also, Qwest no longer has to notify competitors or from 48 percent.
QWEST EARNED TOO MUCH, MONTANA COMPLAINT SAYS Business Briefs -- Rocky Mountain News -- October 6, 2006
Qwest Communications has earned millions more legislator Ken Toole, of Helena, claims Qwest’s than Montana regulators authorized, charges a earnings during the past five years exceeded its complaint filed by a legislator running for Montana’s authorized profit by $85 million. Rick Hays, Qwest’s utility board and by two dozen other telephone Montana vice president, responded that the rates are customers. fair and that the commission approved and examined The complaint submitted to the Montana Public the rates. Service Commission by a group led by Democratic
Retiree Guardian – 2006 Issue 316 IA/MN/NE/ND/SD Edition IINN TTHEHE MMEDIAEDIA From media coverage around the region and nation.
CALIFORNIA PUC APPROVES PLAN TO ABOLISH MANY PHONE-RATE PRICE CAPS By James S. Granelli -- Los Angeles Times -- Thursday, August 24 Ending decades of government price regulation, percent from five years ago. the Public Utilities Commission on Thursday Congress in 1996 allowed cable and phone approved a plan that allows California’s major phone companies to use their networks to compete head-on carriers to raise residential rates at will. for the same customers. That’s why cable carriers now The unanimous decision to abolish most price sell phone and Internet service alongside ESPN and caps came after the commission concluded that HBO. competition from cable carriers and wireless providers The two biggest wireless phone companies, has grown strong enough to check rate hikes by Verizon Wireless and Cingular Wireless, are owned by traditional landline phone companies such as AT&T Verizon and AT&T, respectively. Together, Verizon Inc. and Cingular control half the wireless market. AT&T, the state’s dominant phone carrier, said the Neither AT&T nor Verizon plan to change average monthly bill in California is $37.71, down 28 prices soon.
MINNEAPOLIS OK’S CITYWIDE WI-FI NETWORK; QWEST TOUTS ITS OWN NET PRODUCT By Jeff Smith -- Rocky Mountain News -- September 6, 2006 The city of Minneapolis has become the second The Minneapolis network, covering all 54 square large market in Qwest’s territory to build a high-speed miles of the city, is expected to launch operations in municipal wireless network. The City Council about a year. approved U.S. Internet to install and operate the $20 The $20-a-month residential service will be at a million citywide network and charge residents $20 a speed of 1 megabit a second – or about 18 times faster month for Internet service. than standard dial-up service. Qwest by comparison Qwest opposes municipal broadband networks, offers 1.5- megabits-a-second Internet service for which mean additional competition. “Qwest believes $26.99 a month when packaged with a home phone it’s wrong to use taxpayer money to subsidize a private service, or $31.99 a month a la carte. A higher speed company to compete with existing businesses,” said is available for an additional $5 a month. John Stanoch, Qwest president for Minnesota.
“Qwest believes it’s wrong to use taxpayer money to subsidize a private company to compete with existing businesses.” milestones Currently UNAVAILABLE from the Qwest Pioneers web site. We apologize for having no retiree and death information from the last quarter of 2005. Qwest had not posted this information on their web site at the time we went to press. Please check the web site www.qwestpioneers.org/about/deathsandretirements.asp. to see if the information has become available.
Retiree Guardian – 2006 Issue 317 IA/MN/NE/ND/SD Edition WHAT’S AHEAD? -- SOMETIMES THE OLD NEWS IS BETTER THAN THE NEW NEWS --
Dateline 1956, Pioneer Newsletter “Minne-Kotah,” Minnesota and North Dakota
Northwestern Bell Telephone Company - People will dial across the country as easily as President, A. F. Jacobson predicts “The world is on they now call across the street. the threshold of a vast change in the telephone art. - A small telephone will be available to carry on It will be brought about by developments coming one’s person. from the Bell Telephone Laboratories, like the - The rural-party line will have given way to transistor, solar battery, silicon junction diode and private-line service in farm areas. the thermistor. - Combined telephone and television services “Telephone service will be even better, cheaper will be available. relatively, and more widely used in the near future - The speakerphone will be widely used by than it is today. We can look forward to the time those who need to move about as they talk and for when . . . group conferences. - A telephone in nearly every room in the - Graphic records will be transmitted easily and average home will be considered essential. rapidly to any place in the country.” IINN TTHEHE MMEDIAEDIA From media coverage around the region and nation.
COURT: UNISYS MISLED RETIREES By Akweli Parker -- Staff Writer -- Philadelphia Inquirer -- October 4, 2006 In 1992, Unisys retirees sued the company after it fiduciary duty to the retirees and had misled them. went back on commitments to pay them lifetime Rueter recommended another judge order Unisys to medical benefits. Unisys forced them onto a newer reinstate free medical coverage for 12 of the 14 plan costing increasingly more toward post-retirement retiree-plaintiffs in the case. medical premiums, typically $349 a month out of Alan Sandals, the plaintiffs’ lead attorney since pocket with the help of Medicare, and more than $870 1992 said, “The responsible thing is to make peace without it. with these people” and reinstate the free health Unisys countered that the language of its premium benefits. retirement plan permitted the company to change the Unisys spokesman John Schneidawind offered terms at will. this statement from the company: “Although we have But U.S. Magistrate Judge Thomas J. Rueter of not yet had the opportunity to study the opinion in the U.S. District Court for the Eastern District of detail, we disagree with Judge Rueter’s conclusions, Pennsylvania ruled Unisys had indeed violated its and we are currently reviewing our appellate options.”
“The responsible thing is to make peace with these people” and reinstate the free health premium benefits.
Retiree Guardian – 2006 Issue 318 IA/MN/NE/ND/SD Edition GRASSROOTS NETWORK by Hazel Floyd, AUSWR Regional Vice President for Legislation email: [email protected] / tel. 303-455-1535
An agenda of retiree-focused issues forms the event of corporate bankruptcy filings. No bill AUSWR/NRLN Legislative Network’s future direc- pending in Congress. tion. Topping the list – reduced patented medicine expenses, tax deductions for health care costs, Other Health Care Legislation bankruptcy protection of pension benefits and high • The NRLN Health Care Committee is currently health care costs, Universal Health Care, and evaluating two Proposals in Congress to establish a Medicare Part D. This gives you a start when you ask Health Care Information Technology Act. Senate questions of your 2006 Congressional candidates. 1418 and House H.R. 4157 have been referred to Find out how they support these issues. AUSWR and their respective Committees for further action. NRLN will provide updates in the future. Here’s Both of these bills purport to implement a what’s currently in the legislative mill, followed by national technology information system [aka information on contacting your Senators and national electronic medical records] recommended Representatives. by the National Council for Health Care (NCHC). Patented Medicines AUSWR Members Legislative Web Page • Importation of safe prescription drugs to lower The AUSWR Legislative Activities Web Page is costs (as allowed in the Veterans’ Health Care Plan). redesigned to better serve our members for contacts Senate Bill 334 is pending. with their elected representatives and help in our • Prevention of in-year changes and interruptions pursuit of affordable health care and pension benefit of Medicare Part D. House Bill H.R. 4685 is pending. protection. The website is: www.uswestretiree.org/ • Suspension of Late Filing Penalties for legislative2htm. Put this address in your Favorites or Medicare D eligible subscribers. Senate 2810 & Bookmarks for instant access. When you click on House 5399 Bills are pending. Congressional Directory, and click on your state in • Legislation to permit competitive bidding by the map of the USA, you will receive the addresses Medicare for prescription drugs (as allowed in the for all your Congressional Representatives. Veterans’ Health Care Plan). No bills pending. If you wish to research a certain bill in Congress, • Support of legislation to eliminate Medicare D click on the Additional Congressional Links and go Doughnut Hole. No bills pending. to the Thomas Web Site. You can read summaries of any bill by number or word/phrase you enter. Income Tax Deductions If you would like to read the latest in Health • Legislation to make health care premiums and Care, you can access that on the Health Care Web out-of-pocket medical costs fully income taxable Page. deductible. No bill is pending in Congress at this time. Another avenue to contact your Congressional • Legislation enabling tax free rollovers from Representative is to click on the National Retirees 401K, IRA, or other individual retirement accounts to Legislative Network website: www.nrln.org where Health Care Savings Accounts, regardless of age, and you may use the CapWiz network to Write to permit tax free use of such accounts to pay for members of Congress by entering your Zip Code. healthcare costs not covered by insurance. No bill Other Organizations such as the AARP pending in Congress at this time. (www.aarp.org) and Pension Rights Center (www.pensionrights.org) are also available as Bankruptcy Protection resources with just a click. • Protection of health care and pension benefits in
IMPORTANT NOTE: You must remember that all contacts with legislative representatives must always be non-partisan. When you are representing AUSWR in any matter, you cannot take any one political party’s position. This would be against the law concerning our IRS non-profit status.
Retiree Guardian – 2006 Issue 319 IA/MN/NE/ND/SD Edition GUARDINGADVOCACY OUR BENEFITS:
NEXIUM IS OUT!! medications requiring a doctor’s prescription. In late August United Health Care (UHC) sent a Of these three medications, one is the generic letter to employees and retirees notifying them that Prilosec, for which Nexium has been prescribed as UHC would no longer cover the cost of the replacement when Prilosec doesn’t do the job. One prescribed medication NEXIUM. of the medications suggested as an option would cost You know NEXIUM. It’s that little purple cap- a total of 17-cents difference for a 90-day supply, as sule you have seen on TV and in magazine and compared to the cost of Nexium. There are virtually newspaper advertising. no cost-savings. The third option shown was not UHC recommends an Over-The-Counter (OTC) available from Medco. drug, Prilosec OTC, which must be paid for by the Our position is this: the elimination of coverage retiree. According to UHC and the drug’s brochure, for Nexium, after it has already been covered, is in Prilosec OTC is used to treat heartburn and stomach violation of the Phelps lawsuit settlement which ulcers. states there can be no reduction in Health Care Nexium is used to treat other conditions, among benefits for pre-’92 retirees. them rehabilitation of the esophagus. Prilosec OTC Because of all of these problems we’ve does not claim to provide this relief. described, we filed a formal request for a review of In addition, the UHC web site drug description the decision to eliminate Nexium from coverage. states that Prilosec OTC can only be taken for 14 This request has been made to both UHC and Qwest days. Benefits. As of September 12, 2006, we’ve received The rationale given by UHC for their decision is no response from Qwest or UHC. based upon cost savings when the OTC drug is We checked the UHC web site, which now “therapeutically” equivalent to Nexium. shows Nexium is no longer covered by the Health In addition to the recommendation of the OTC Care drug benefit. drug, the letter offers options including three other Howard Rickman, Ombudsman, AUSWR
If you have a question or issue that you are unable to resolve during your inquiries to Qwest and other benefits providers, please contact your state Advocate for assistance: Iowa/South Dakota Vikki Farrand 605-332-3670 Minnesota Barb Hermanson 763-757-4985 Nebraska Milt Jenner 402-333-4455 North Dakota Arnie Pauls 701-451-0771
GET OUT AND VOTE!
The only required attire on Election Day in November is the little sticker you receive as you leave your polling place. We do not tell you how to vote for a particular party, candidate or issue. We DO recommend you study issues and candidates’ positions, talk with your friends and neighbors, and make your position and your opinion count at the ballot box. If you choose not to participate, you have no right to complain about anything until you choose to get involved in the next election.
Retiree Guardian – 2006 Issue 320 IA/MN/NE/ND/SD Edition Membership Directory Updates / October 2006 - Issue 3 Listed below are members who joined the NWB-/U S WEST-Qwest Retiree Association since publication of the Membership Directory in February 2006. There are also corrections for errors that occurred during production. Future updates with names of new members will be printed in The Retiree Guardian. Changes of a member’s address, phone or e-mail will not be published on these update pages. Please put these update pages in your Membership Directory to keep it up to date. Membership Directory Updates / October 2006 - Issue 3 Listed below are members who joined the NWB-/U S WEST-Qwest Retiree Association since publication of the Membership Directory in February 2006. There are also corrections for errors that occurred during production. Future updates with names of new members will be printed in The Retiree Guardian. Changes of a member’s address, phone or e-mail will not be published on these update pages. Please put these update pages in your Membership Directory to keep it up to date.
MEMBERSHIP CORNER
Some days I have a hard time remembering things, do you? One thing I’d like you to check is – did you remember to renew your membership? Right now look at the line above your address label. It’s right on the back cover of this issue. Does it read, Renewal Date: Jul2007 or higher? If it does, it means you are a current member. If it doesn’t, it means your membership in the Association has expired, and this is the last issue of The Retiree Guardian you’ll receive. Won’t you please take a moment right now to complete the membership application and renewal form on the back page, make out a check and send it into our office? Also, please notice you now have the option to renew for one year or multiple years (with a discount).
If the date above your name did read Jul2007 or higher, you’re not off the hook!
I’d like to ask you play like Paul Revere and spread the word! You obviously believe in the goals of our Association. Please when you see other folks you worked with or who are newly retired, let them know about the Association, tell them why you belong and tell them how it can benefit them. You’d be amazed at the number of retirees who don’t even know we exist. Feel free to contact me with their name and address and I’d be happy to send them a copy of The Retiree Guardian. Or if you like, I’ll send you an extra copy to give to them. Whatever it takes, we want to spread the word! Thank you for your continued support.
Mary Ann Neuman, Membership Coordinator Phone: 763-535-3865 / E-mail: [email protected]
Retiree Guardian – 2006 Issue 322 IA/MN/NE/ND/SD Edition 2007 ANNUAL MEETING SITE CHOSEN Mark your calendar now. The NWB-U S WEST-Qwest Retiree Association’s 2007 Annual Meeting will be held on Thursday, April 19th at the Mystic Lake Hotel and Casino. Mystic Lake is southwest of the Twin Cities.We’ll provide times, speaker info and a more detailed map in the next edition of the Retiree Guardian. More information is available at www.mysticlake.com
FEBRUARY 2008 PHOENIX LUNCHEON MEETING OF RETIREES
Here’s your opportunity to plan for an event well ahead of time. All Northwestern Bell, U S WEST, Qwest, Western Electric, AT&T and Lucent retirees who worked in the NWB five-state area and their guests are welcome to attend the Northwestern Bell Retiree Luncheon, to be held at Phoenix Golf and Country Club on Saturday, Feb 23, 2008 from 10 AM to 2 PM.
We’ll have more detailed information in future Retiree Guardians. If you have questions now, please e-mail or call Ellie Brooks ([email protected] / phone 623-544-8848).
Remember to send your address and e-mail changes to your retiree group...saves $$$ for us all.
Retiree Guardian – 2006 Issue 323 IA/MN/NE/ND/SD Edition NWB-U S WEST-Qwest Retiree Association, Inc. NON PROFIT ORG. 205 Heritage Circle North U.S. POSTAGE Burnsville, MN 55337-2667 PAID NWB-U S WEST-Qwest Retiree PERMIT NO. 3844 Association, Inc. Directors: MPLS MN Chairman, Dick Johnson, Blaine, MN 763-757-1962 [email protected] Vice Chairman, Jim Burns, Omaha, NE Address Service Requested 402-333-2697 [email protected] Secretary, Rose Bailey, Sioux Falls, SD 605-336-7771 [email protected] Arnie Albrecht, Roseville, MN 651-489-1972 [email protected] Marlyn Beaudine, St Cloud, MN 320-253-6232 [email protected] Ada Bork, Omaha, NE 402-572-9277 [email protected] Tom Burns, Papillion, NE 402-597-6205 [email protected] Larry Smith, Fargo, ND 701-235-1300 [email protected] Roger Williams, Waterloo, IA 319-236-0595 [email protected] The Retiree Guardian is the newsletter of the Association of U S WEST Retirees in Iowa, Minnesota, Nebraska, North Dakota and South
Dakota. We publish on a quarterly basis.
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