Appeals Judges Throw Out Disability Benefits Ruling

October 18, 2002 ( - A federal appeals court has handed a legal victory to three New York Daily News employees who challenged the company's move to reduce their long-term disability (LTD) benefits by the amount of their social security payments.

In overturning a lower court ruling, the US 2 nd Circuit Court of Appeals decided that the newspaper company couldn’t reduce the long-term disability payments to plaintiffs Raymond Feifer, Nicholas Pocchia, and Edwin Molina. Such an action was not set out in a 21-page benefits summary, which the appeals judges said legally represented the plan itself.

The appeals court noted that ERISA requires that every employee benefit plan be maintained according to a written instrument, a requirement that cannot be avoided by treating a written document as merely a summary of a plan that is nowhere else in writing.

The Daily News plan summary met ERISA’s definition of a plan: a “scheme decided upon in advance,” identifying the intended benefits, class of beneficiaries, source of financing and procedures for receiving benefits, the appeals judges said.

The court said the company’s benefits summary unambiguously did not provide for LTD reduction because it failed to mention such reductions while specifically allowing the reductions in the company’s short-term disability program.

Mentioning it in one but not the other implied that the silence regarding LTD reductions was intentional, the court said.

After the employees took their dispute to federal court, US District Judge Leo Glasser of the US District Court for the Eastern District of New York ruled that the benefits summary booklet was a “flawed” version of the ERISA-required summary plan description. A company group insurance contract actually represented the official plan, Glasser said.

Since the group insurance contract did provide for long-term disability benefits reductions (for Social Security, etc.), the workers were bound by them, Glasser ruled.