Court: Delta Pilot Doesn't Deserve Extra $900,000 on Pension Payment

May 9, 2003 ( - A Delta Airlines pilot who intentionally evaded retirement benefit notices for more than a decade doesn't now deserve more than $900,000 in interest and lost profits on his $1-million lump-sum benefits payment, a federal appeals court ruled.

>The 1st US Circuit Court of Appeals upheld a lower court ruling that a decision by the appeals committee of the Delta Airlines Pilots pension plan denying the interest and lost profits to plaintiff Thomas Twomey shouldn’t be disturbed because it was not arbitrary and capricious, Washington-based legal publisher BNA reported.

>According to the appeals court, Twomey was not entitled to his claim since he intentionally evaded payment of benefits from 1984 to 1998. Noting that there was nothing in the plan granting Twomey benefits in such circumstances, the appeals judges wrote, “Twomey is simply seeking identical relief through his attack on the (appeals) committee’s interpretation of the Plan, an invitation we refuse to accept.”

>The appeals court rejected Twomey’s arguments that he was entitled to interest under the plan because the plan mandated the payment of the actuarial equivalent in present value of, or interest on, his accrued retirement benefits. In addition, the 1st Circuit found the pension appeals committee did not act unreasonably in denying interest based on plan language that stated if the committee is unable, after three years, to find a retiree and if the retiree then reappears, “such benefit shall be reinstated as payable at his Normal Retirement Date.” There is no indication interest should be included in this amount, the court said.

Case Background

>According to the appeals ruling, Delta terminated Twomey’s employment as a pilot in November 1984 after he allegedly falsified a medical certificate necessary to maintain his pilot’s license. The termination was then reduced to a suspension, the court said.

>In August 1985, the Delta Airlines Pilots pension plan sent information on retirement benefits to Twomey’s home address in anticipation of Twomey turning 60 in July 1986. Under Federal Aviation Administration regulations, a pilot or co-pilot cannot continue working in such capacity after age 60, the court said. Over the next nine years, the plan made three unsuccessful tries to reach Twomey regarding his retirement benefits.

>Finally, in 1998, Twomey had a lawyer contact the plan regarding his retirement benefits. Twomey completed an application for benefits and returned it in February 1999. The next day, the plan sent him a lump-sum payment of over $1 million, the amount of monthly benefits retroactive to August 1986. In addition, monthly benefit payments started in March 1999.

>Twomey then turned to the plan’s appeal committee, asking for interest and lost profits of over $900,000. According to the ruling, Twomey explained that he intentionally did not file the retirement forms because he wanted Delta to reinstate him as a flight engineer. He allegedly thought that by filing his retirement forms, he would be conceding that Delta’s policy requiring pilots to retire at age 60, but flight engineers at age 70, was lawful – a legal interpretation he disputed.

>After the committee turned him down, Twomey filed suit in the US District Court for the District of Massachusetts, which upheld the appeals committee’s decision denying interest and lost profits. The appeals court case is Twomey v. Delta Airlines Pilots Pension Plan, 1st Cir., No. 02-1968, 5/7/03.