The 8th U.S. Circuit Court of Appeals found that the Greater St. Louis Construction Laborers Welfare Fund was not wrong to deny a refund of overpayments to Park-Mark Inc. because the fund determined that doing so would hurt the pension plan participants. One of the funds’ administrators presented evidence that all of Park-Mark’s collective bargaining agreement (CBA) contributions, including overpayments, benefitted Park-Mark’s employees through health insurance coverage and pension contributions. Additionally, he stated that if the overpayments were returned, the funds would be required to deduct pension credits from Park-Mark’s employees that were based on the overpayments.The appellate court also ruled that a refund is not an equitable defense because Park-Mark delayed in bringing a claim for restitution. The court rejected Park-Mark’s argument that, although it began making overpayments in 2004, it did not learn of the overpayments until an accountant discovered them in 2010. “This factor still weighs in favor of the funds, however, because the CBA outlines when payments should be made by unambiguously defining the scope of the CBA’s jurisdiction. Park-Mark’s delay in bringing the claim was inexcusable, and has prejudiced the funds who are placed in the position of attempting to unwind six years of payments by trying to calculate whether Park-Mark’s employees truly received benefits from the payments,” the court said.
The multiemployer plan filed the lawsuit against Park-Mark in order to collect contributions the employer did not make after it learned of the overpayments. Park-Mark argued it was not liable for the missed payments since they offset the overpayments.
The 8th Circuit affirmed a district court’s decision that that the Employee Retirement Income Security Act (ERISA) allows for refunds of overpayments to a multiple employer welfare arrangement, but under Section 403, an employer alleging an overpayment of contributions may not unilaterally offset future contributions by the alleged overpayments of past contributions (see “MEWA Participating Employer Cannot Offset Contribution Overpayments”).
The district court also dismissed Park-Mark’s reimbursement claim, and on appeal, the employer argued that claim should not have been dismissed. However, the appellate court noted that at the time of the district court decision, Park-Mark neither requested a continuance, nor sought to have the discovery deadline extended. The discovery deadline had passed when the district court granted summary judgment in favor of the funds.The 8th Circuit’s opinion is here.