Appellate Court Upholds Plan Amendment Invalidation
March 24, 2010 (PLANSPONSOR.com) – A federal appellate
court has upheld a ruling throwing out a trust plan amendment changing the
definition of surviving spouse for the purposes of benefits determination.
Chief Judge David B. Sentelle, writing
for the U.S. Court of Appeals for the D.C. Circuit, asserted that a federal
judge in Washington was correct in declaring that the National Association of
Letter Carriers (NALC) had not submitted its plan amendment to the fund’s actuaries
for an evaluation and estimate of its cost, as required by the governing provisions
of the plan.
Because of that error, the lower court
decided, NALC had not properly enacted the surviving spouse definition
amendment.
So, the lower court ruled, the
effective definition of surviving spouse would entitle Paulette Overby to that
status should she survive husband Halline while still married to him. Halline
Overby, a letter carrier and NALC officer, and his spouse filed the suit to
challenge the 1985 amendment after Mrs. Overby was told the changed definition
would render her ineligible for benefits under the National Association of
Letter Carriers Annuity Trust Fund.
The plan provides retirement annuities
for NALC’s national officers, national business agents, certain branch
officers, headquarters employees, and employees of NALC’s health plan, though
not postal carriers.
For its part, the NALC argued before
the appellate court that the lower court judge did not have enough evidence to
come to the decision finally reached. Even if the court did have enough backing
for the ruling, NALC contended, it was an error to say that the procedural implementation
issue invalidated the surviving spouse amendment.
In NALC’s view, according to “[c]ourts
should not invalidate amendments to ERISA plans that
are adopted without strict adherence
to plan amendment procedures unless there is evidence of bad faith regarding
the amendment procedure, active concealment of the amendment itself, or
plaintiff’s detrimental reliance on the plan procedures.”
"Unfortunately for appellants,
that is not the law,” Sentelle wrote.
The NALC ruling is available here.
Fred Schneyer
editors@plansponsor.com