Court Approves Suspension of Retirement Benefits for Employed Participant

December 31, 2007 ( - The U.S. District Court for the Western District of Wisconsin has approved a pension fund's suspension of retirement benefits for a former participant whom it discovered was engaged in "plan-related employment."

In its opinion, the court noted that the plan governed by the Wisconsin Carpenters’ Pension Fund provides that a participant may not work in the same industry or “an industry involving any business activities in which Employees covered by the plan were employed at the time [of retirement].” The district court found the fund’s determination that Charles M. Losinske was currently engaged in such employment was not arbitrary and capricious and granted summary judgment for the fund.

Former participant Losinske claimed the fund did not perform the fact-finding necessary to determine that his current work as an “estimator” and “contractor” was in the same industry and same trade or craft as covered under the plan. However, the court said it was undisputed that 50% of Losinske’s business was with his son’s company, Custom Design Cabinetry and Construction, Inc. and corporate tax returns for Losinske’s company describes its business activity as contracting. “Given the company names and the description given in the corporate tax returns, defendant’s finding is hardly a leap,” the opinion said.

The court further said Losinske’s claim failed because it relied on an incorrect view of the scope of the “fact-finding” requirement of federal law. The requirement that the determination be “based on the facts and circumstances in each case” does not require extensive fact-finding, the court asserted. The regulation does not prohibit drawing inferences or using common sense when information in the participant’s possession is not produced, the court pointed out. In addition the court determined Losinske had not presented facts to the fund during review that put “estimator” and “manager” outside the definition of “trade or craft.”

Losinske also claimed that the fund acted arbitrarily and capriciously by applying the plan’s presumption that plaintiff was working 160 hours each month. The fund argued that Losinske was precluded from presenting this argument because he failed to raise it before the fund during its review of the case. The court agreed, saying that, “When reviewing an administrator’s decision under the arbitrary and capricious standard, the court is bound by the administrative record.”

Losinske worked under a collective bargaining agreement for various employers who contributed to the fund and began receiving retirement benefit payments in November 2001. In February or March 2005, the fund learned that he had been employed fulltime at Custom Designed Cabinetry and Construction after his retirement. On March 31, 2005, the fund’s pension supervisor wrote Losinske to inform him that his retirement benefits had been suspended because of his employment. After several failed appeals of its decision, Losinske filed a lawsuit against the fund.

The opinion in Losinske v. Wisconsin Carpenters’ Pension Fund, W.D. Wis., No. 3:07-cv-00185-bbc, 12/19/07 is here .