Appeals Court: Health Plan Members May Be Entitled to "Lifetime" Benefits

March 17, 2005 ( - A federal appeals court has ruled that retirees may be entitled to "lifetime" heath benefits because of ambiguous plan language, and has sent the case back to district court to determine whether health benefits were vested in the case.

>Circuit Judge Richard Cudahy of the US 7th Circuit Court of Appeals ruled that a lower court erred in finding that Case New Holland (CNH) health plan documents were silent or incomplete on the matter of vesting; Cudahy ruled that the plan language was simply “ambiguous” and that a trial was needed to determine vesting issues.

>Retirees of the CNH have alleged that the company took illegal action when it attempted to alter benefits that they thought had been vested. In 2001, the company had tried to raise premiums on medical and dental plans and the retirees brought action in the state court; the case was eventually moved to the US District Court for the Northern District of Illinois. Two issues were to be decided: whether retirees had access to documents the company stated were privileged and whether they had been vested in the company health plan, effectively giving them “lifetime” health benefits. The lower court ruled against the plaintiffs and they subsequently appealed to the higher court.

>The appeals court noted that language discussing “lifetime” benefits was found in three separate plan documents (not all retirees in the suit were under the same health plan). The court also ruled that none of the plan documents made reference to the company being allowed to alter the plan. Although it rejected the plaintiffs’ claims that they had a right to privileged documents, the appeals court did send the case back to the district level for the issue of the ambiguous language regarding vesting to be ruled on.

>The case, Bland v. Fiatallis North America Inc., is available  here .