No Payment for Employee Who Died before Request was
Received
August 7, 2009 (PLANSPONSOR.com) - The 3rd U.S.
Circuit Court of Appeals has ruled that a plan administrator
did not abuse its discretion in denying a disability
retirement benefit payment to an employee who died before his
payment application was received.
In its opinion, the court said the plan explicitly
granted the Committee the authority to create a requirement
for receipt of the application before death and the
requirement is not an unreasonable interpretation of the
plan. "[T]he Committee has consistently applied the
receipt requirement, it does not conflict with the Plan,
and it is consistent with both the Plan and ERISA's
statutory provisions," the court said.
The appellate court also determined the Summary Plan
Description for the plan does not conflict with the main
plan document, which is silent as to how applications may
be presented to the company. It rejected widow Rosann
Delso's argument that the language of the SPD
constitutes a reduction of rights or benefits, pointing out
that it merely sets forth the procedures to be followed for
presentation of a claim, as it is required to do by
statute.
According to the opinion, James Delso was an hourly
employee at Merck & Co. when he died suddenly on
December 26, 2002, at 6:14 a.m. On December 24, 2002, while
hospitalized, he signed a letter-application declaring his
intention to go on disability retirement immediately and
requesting a lump sum payment of his pension under the
Retirement Plan for the Hourly Employees of Merck & Co.
Mr. Delso's union representative, delivered the application
to Merck Human Resources on December 26, 2002, at 4:25
p.m., after Delso's death.
The plan's SPD included a rule that an application
was considered received if it was (1) received by employee
services by mail, delivery, or fax before the
participant's death; (2) mailed to employee services
and postmarked before the participant's death; or (3)
received by a designated human resources employee before
the participant's death.
Mrs. Delso argued that the receipt requirement was
unenforceable because it was contained in the
SPD but not in the plan itself and also because the
committee's interpretation of the plan was
unreasonable. She argued that because of the Christmas
holiday, she had no way to contact the company prior to her
husband's death and that she had done all she could do.
The 3
rd
Circuit opinion is
here
.
Rebecca Moore
editors@plansponsor.com