Appeals Court Upholds Denial of Supplemental Benefits

August 26, 2005 ( - The US 6th Circuit Court of Appeals has upheld a lower court ruling in a case where a former General Motors Corp. (GM) employee claimed he was entitled to supplemental retirement benefits according to a Summary Plan Description (SPD), in spite of being discharged.

Donald McGrew was discharged in 1990 from GM for participating in a “kickback” scheme where he received illegal bribes from vendors, according to the court document.   McGrew was eligible for normal retirement benefits because he had worked for the company for over 30 years, but GM denied him three supplemental retirement benefits because he was discharged for cause.

McGrew appealed this denial first to the plan administrator and then to the Board based on a 1996 SPD that did not mention that discharged employees were excluded from the supplemental benefits.   He then took his complaint to the US District Court for the Eastern District of Michigan, according to a BNA report.

The lower court determined that the language in the documents for the three supplemental benefit plans was clear that discharged employees were not eligible.   Under the supplemental health benefit plan he was not even considered retired since he had been discharged, according to the court document.  

The lower court further found that the 1996 SPD was addressed to those employees already retired as of 1996, and did not apply to McGrew.   Instead he was covered under a 1998 SPD that did say that discharged employees were not eligible for the supplemental benefits.

The appeals court affirmed the findings of the lower court.   The case is McGrew v. General Motors Corp., 6th Cir., No. 04-1765, 8/24/05.