The US 5 th Circuit Court of Appeals upheld a lower court ruling that the Wilson N. Jones Memorial Hospital of Sherman, Texas make the additional payments plus interest to workers covered by the hospital’s terminated pension plan (See Participants Net $3 Million After Pension Calculation Deemed Wrong ).
The Pension Benefit Guaranty Corporation (PBGC), which steps in to take over pension plans for ailing or bankrupt companies, ordered the extra payments after auditing the hospital’s plan termination and finding that employees taking lump sums had gotten underpaid because the hospital had relied on the wrong interest rate factor.
“This ruling serves as a useful reminder that PBGC plays an active role in auditing standard terminations,” said PBGC Executive Director Brad Belt. “When we find something amiss, we will take all necessary steps, including legal action, to ensure that employers pay benefits in full.”
The pension plan terminated as of December 31, 1995, and the PBGC audit followed. The appeals court decision caps three years of litigation in which the agency sought to enforce its audit findings. The decision does not affect participants in the hospital plan who receive their benefit as monthly payments, the PBGC said.
The ruling is at http://www.ca5.uscourts.gov:8081/isysquery/irl5595/1/doc .
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