Appeals Judges Send Back Benefit Reduction Case

September 24, 2004 (PLANSPONSOR.com) - Appeals judges have thrown out a lower court ruling in a retiree lawsuit over whether a summary plan description (SPD) guaranteed life insurance benefits.

>The US 2 nd Circuit Court of Appeals ruled that the SPD language in two early retirement incentive programs was ambiguous as to whether a retiree’s life insurance benefits could be reduced, according to an EBIA report. The appeals judges sent the case back to a federal judge in the US District Court in the Southern District of New York for additional proceedings.

There, the trial judge had¬†reconsidered the retirees’ claim that their employer had promised them vested life insurance benefits and then breached its contract with them by decreasing their life insurance coverage. The court found that language in pre-1987 versions of the SPD did promise vested life insurance benefits. The pre-1987 SPDs contained no reservation of rights language and some versions described the life insurance benefits as lasting “for the remainder of your life.”

The court concluded that the employer had promised lifetime insurance benefits and that “once the [employees] began performance, pursuant to the pre-1987 SPD, [the employer] was not free to revoke.” The court further ruled that the retirees under two early retirement incentive programs also received vested life insurance benefits because the program documents reserved the right to amend only the programs themselves rather than the underlying life insurance benefits. addressed.

The case is Abbruscato v. Empire Blue Cross & Blue Shield, 2004 U.S. Dist. LEXIS 18286 (S.D.N.Y. 2004)].

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