Benefits Committee Can be Sued for Benefits Misrepresentation

U.S. District Judge James L. Graham of the U.S. District Court for the Southern District of Ohio said Virginia Stark’s complaint is sufficient to state a claim against the Committee on all counts, as under the terms of the plan, the Committee qualifies as a fiduciary under the Employee Retirement Income Security Act (ERISA). However, Graham found the complaint fails to allege facts sufficient to show how Mars was acting in a fiduciary capacity in making the alleged misrepresentations.  

“The facts alleged do not show that defendant Mars had … ‘any discretionary authority or discretionary responsibility in the administration of such plan’ such as giving information or advice to plan participants,” Graham wrote. “The Plan itself provides that the Committee is the Plan administrator which has the binding authority to determine all questions concerning the eligibility for benefits and the amount of benefits.”  

The court also ruled that the complaint contains no allegations that the Mars Benefit Plans Appeals Committee made any misrepresentations to Stark about her benefits, but there is sufficient information in the complaint and related documents to support her claim against the Appeals Committee for denial of benefits.  

Graham rejected the defendants argument that Stark cannot pursue the claims for breach of fiduciary duty and estoppel because she has also asserted a claim for benefits. “Whether plaintiff is entitled to equitable relief based on the fact that plaintiff elected to begin receiving retirement benefits when she did (prior to reaching age 65) based on the misrepresentations that her benefit would be $5,364.63 involves issues completely distinct from whether plaintiff was actually entitled to the greater benefit under the terms of the Plan,” he wrote.  

According to the opinion, Stark was an employee of Kal Kan Foods, Inc., a division of Mars, Inc., when she received a letter advising her that she was eligible to elect pension benefits under the Associate Retirement Plan provisions of the U.S. Retirement Plan. She utilized the Web site made available for participants to research her payment options, and it said her monthly pension benefit would be $5,365.  

Stark spoke with an employee of Mars and/or the Committee, and asked for confirmation that the $5,364.63 payment was accurate, and she was informed that it was. She elected during this conversation to begin receiving pension benefits.  

Stark said her decision to elect the single life annuity option was based solely on the representations made by the Web site and during the telephone conversations, and that she relied on these representations by making purchase decisions and entertainment plans, doing landscaping projects, and undertaking home improvements.  

On August 3, 2009, Stark received a telephone call informing her that her pension benefit had been calculated incorrectly and that the correct amount of her monthly benefit was $2,303.12. The letter further stated that her monthly payments would be reduced to $2,199.93 to satisfy the overpayment of $15,307.25, plus interest.   

On September 29, 2009, Stark sent a claim letter to the plan administrator, which was denied. She appealed the decision, and that was also denied.