Peabody created Patriot in a 2007 spin-off, after which it agreed to continue funding the healthcare benefits of about 3100 retirees at Heritage, a former Peabody unit.

In a Bankruptcy Court filing Friday, Peabody asked the court to confirm the termination of its contractual obligation to fund these benefits.

“Under Patriot Coal's new labor agreements with the UMWA, its obligation to pay healthcare benefits for its retirees will terminate by January 1, 2014,” Peabody said Friday.

“Under the terms of Peabody's contract with Patriot, our obligation to fund certain of Patriot's retiree healthcare liabilities will terminate at the same time.”

Surratt-States gave Peabody permission to abandon the benefits in May, when she agreed that Patriot could amend its labor and retiree obligations.

Peabody argued that since Heritage (Patriot) was relieved of its obligation to pay for retiree health care by Judge Surratt-States, Peabody should be relieved of its obligation as well.

Surratt-States agreed and issued a ruling in Peabody’s favor, which was appealed and won by Patriot and Heritage last month.

Peabody released a statement following the appellate court’s decision outlining this uncertainty but saying it was “pleased” with the decision.

“The panel did not rule on how Peabody's level of funding would be determined with this new agreement in place,” Peabody said.

“Now that a new labor agreement has been approved, the provisions of the contract with Patriot will apply and any future funding levels are yet to be determined.”

The company is now arguing that its funding obligations, which are tied to the amount of benefits Patriot provides to its workers, disappear, because the deal transfers all benefits to an outside trust.

In the statement, Peabody accused the union of “grandstanding” and denying its members a greater benefit package.

“Despite the impending conclusion of Peabody's contractual obligations to fund Patriot's liabilities, Peabody has made several offers to contribute substantial funding to the newly-established VEBA.

“Unfortunately, the UMWA has continued to grandstand, and will have to explain to its members why it chooses to posture while denying them significantly greater retiree healthcare benefits,” Peabody asserted.

Peabody said UMWA’s “unreasonable” position had left it with “no plausible avenue but to protect our legal rights.”