* Miners question Patriot executives over health care
* Miners union says will seek money from Peabody, Arch
* Peabody and Arch shares close higher
By Steve James and Nick Brown
NEW YORK, Oct 18 (Reuters) - Retired U.S. coal miners said on Thursday they will target former employers, Peabody Energy and Arch Coal, to pay their health-care costs if bankrupt Patriot Coal cannot.
A delegation from West Virginia and Ohio attended a creditors' meeting to quiz Patriot Coal over miners' concerns they will lose health coverage. Bankruptcy laws allow companies to alter terms of employee healthcare and retirement benefits.
Patriot Coal, which was spun-off from Peabody five years ago and later acquired an Arch Coal business, has filed for Chapter 11 bankruptcy protection and the case is being heard in the U.S. Bankruptcy Court for the southern district of New York.
The United Mine Workers of America (UMWA) union is represented on the Patriot creditors' committee and bused about a dozen members into New York City to express their concerns to Patriot executives and lawyers.
UMWA spokesman Phil Smith said Thursday's meeting, while not a formal court hearing, was an informational session convened by the U.S. trustee, who oversees the bankruptcy process. The miners were not under oath.
"The ultimate goal here is not to get money out of Patriot," Smith told Reuters in a briefing. "We're going to go back and talk to the people who are responsible, who made these gentlemen the promise of health care, and that's Peabody and Arch.
"(But) Peabody and Arch, apparently, don't want to pay that," he said.
At the meeting, several union members questioned whether Patriot will push to hold Peabody responsible. "What will Patriot do to make Peabody honor its commitment to my healthcare?" said Larry Knisell, who said he was taking several medications totaling 23 pills per day, while his wife needs treatment twice a week for fibromyalgia.
Mark Schroeder, Patriot's chief financial officer, said Patriot would consider whether it may have claims against "other entities."
"We're trying to find the best way to get out of bankruptcy and survive," he said.
The union's Smith said Patriot has declared its health-care obligations for 10,000 retirees "unsustainable." Union lawyer Art Traynor said the company's primary reason for the Chapter 11 bankruptcy filing was to reduce costs associated with mining and the company had estimated total aggregate health care and pension costs at $1.3 billion.
In its Chapter 11 filing, St Louis-based Patriot said it has $3.57 billion in assets and $3.07 billion of liabilities. It has arranged for $802 million of financing to help it continue operating through reorganization.
In an email to Reuters, Peabody spokesman Vic Svec said: "Contrary to UMWA claims, a Peabody subsidiary assumed the obligation to pay more than $600 million in healthcare liabilities for certain retirees of Patriot subsidiaries as part of the spinoff.
"While these are administered by Patriot, Peabody has paid for these healthcare benefits since the spinoff and continues to do so today," said Svec.
In a filing with the Securities and Exchange Commission in the summer, Arch listed potential obligations of about $64 million due to contracts acquired by its Magnum subsidiary, which was bought by Patriot.
An Arch Coal spokeswoman, Kim Link, told Reuters that if Patriot does not emerge from bankruptcy, "Arch Coal could be responsible for medical benefits for a small subset of UMWA represented individuals who had retired as of September 1994."
Union member Cliff Tennant said he relies on the health care Patriot provides him, and that cutting it would be akin to "assisted suicide."
"Like Jack Kevorkian," Tennant said, referring to the late doctor who was jailed for assisting in suicides.