6th Circuit Permits Pension Estoppel Cases

May 20, 2010 (PLANSPONSOR.com) – A federal appellate court has ruled that a pension participant can raise the legal issue of equitable estoppel when suing plan administrators and fiduciaries.

The 6th U.S. Circuit Court of Appeals said its holding in Bloemker v. Laborers’ Local 265 Pension Fund represented the first time it had extended the right to raise the estoppel issue in a pension case rather than, as previously, limiting it to health and welfare programs.  Circuit Judge Eugene E. Siler Jr., in writing for the court, said estoppel claims would be allowed in instances where plan provisions were unambiguous and where the plaintiff can show the defendant was intentionally deceptive, that the plaintiff has the disputed statement in writing, and under several other circumstances.

Estoppel prevents a party from making an allegation or denial that contradicts what it had previously stated, or what has been legally established, as the truth.

Plaintiff Richard L. Bloemker claimed in his lawsuit that when he decided to take early retirement in 2005, the Laborers’ Local 265 Pension Fund’s third-party administrator, Stoner & Associates, sent him a benefit election form (BEF) that showed he would be receiving $2,339 per month in pension benefits. Relying on this BEF, Bloemker retired and began collecting pension benefits.

Almost two years later, according to the ruling, Stoner sent Bloemker a letter telling him that a computer programming error had caused the TPA to miscalculate his benefits. The letter explained that Bloemker had been overpaid more than $500 per month and that his monthly benefits would be cut back to $1,830 per month. The TPA demanded that he repay the plan more than $11,000 in benefits that he was overpaid.

Bloemker alleged in his ERISA lawsuit that the fund should be equitably estopped from reducing his benefits because Stoner had made material misrepresentations about his benefits and he had relied on those misrepresentations.  A lower court dismissed the estoppel claim, reasoning that the 6th Circuit only allowed equitable estoppel claims in the context of welfare benefits, not in the pension benefit context.