Compliance December 29, 2005

Disability Administrative Panel Upheld in Benefits Denial

December 29, 2005 (PLANSPONSOR.com) - A federal appellate court panel has cleared a disability pension benefit plan's administrative committee of any wrongdoing by denying benefits to a woman who hadn't yet met an age minimum before becoming disabled.
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The US 6 th Circuit Court of Appeals, in agreeing with a lower court ruling, asserted that committee members’ interpretation of the sentence structure of the plan’s eligibility provision – that plaintiff Marianne Anderson was not eligible – was a reasonable one.

According to the appeals court, the provision’s wording that an eligible participant “shall have attained at least age 40…and who becomes permanently and totally disabled” could mean that eligible participants must have been age 40 when they became disabled.Anderson was 33 when she was disabled.

Anderson worked for Emerson Electric Co. for 14 years when she became disabled, at which time her employment was terminated. Emerson’s disability pension plan provided that eligible participants were entitled to a $100 per month disability pension. When Anderson turned 40, she contacted Emerson about receiving benefits.

Because she was seven years shy of the eligibility requirement when she became disabled, the plan administrator turned down her benefits request.Anderson appealed the denial to the administrative committee, which upheld the administrator.

Anderson filed a lawsuit against Emerson and the plan under the Employee Retirement Income Security Act (ERISA). A federal judge in the US District Court for the Western District of Michigan found that the committee did not act arbitrarily in denying Anderson benefits.

The opinion inAnderson v. Emerson Electric Co., 6th Cir., No. 05-1036, unpublished 12/23/05, is here .

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