Appellate Court Upholds Plan Amendment Invalidation

March 24, 2010 ( – A federal appellate court has upheld a ruling throwing out a trust plan amendment changing the definition of surviving spouse for the purposes of benefits determination.

Chief Judge David B. Sentelle, writing for the U.S. Court of Appeals for the D.C. Circuit, asserted that a federal judge in Washington was correct in declaring that the National Association of Letter Carriers (NALC) had not submitted its plan amendment to the fund’s actuaries for an evaluation and estimate of its cost, as required by the governing provisions of the plan.

Because of that error, the lower court decided, NALC had not properly enacted the surviving spouse definition amendment.

So, the lower court ruled, the effective definition of surviving spouse would entitle Paulette Overby to that status should she survive husband Halline while still married to him. Halline Overby, a letter carrier and NALC officer, and his spouse filed the suit to challenge the 1985 amendment after Mrs. Overby was told the changed definition would render her ineligible for benefits under the National Association of Letter Carriers Annuity Trust Fund.

The plan provides retirement annuities for NALC’s national officers, national business agents, certain branch officers, headquarters employees, and employees of NALC’s health plan, though not postal carriers.

For its part, the NALC argued before the appellate court that the lower court judge did not have enough evidence to come to the decision finally reached. Even if the court did have enough backing for the ruling, NALC contended, it was an error to say that the procedural implementation issue invalidated the surviving spouse amendment.

In NALC’s view, according to “[c]ourts should not invalidate amendments to ERISA plans thatare adopted without strict adherence to plan amendment procedures unless there is evidence of bad faith regarding the amendment procedure, active concealment of the amendment itself, or plaintiff’s detrimental reliance on the plan procedures.”

“Unfortunately for appellants, that is not the law,” Sentelle wrote.

The NALC ruling is available here