Judge: No ERISA Violation Found In Capping Injury Plan Benefit

August 1, 2003 (PLANSPONSOR.com) - Amending an employee injury plan to place a cap on the amount of benefits available did not violate ERISA.

>US District Judge Lee Rosenthal of the US District Court for the Southern District of Texas determined that a participant receiving benefits before the plan was amended did not have a vested right to an uncapped benefit total. Instead, any claim to benefits was controlled by the plan in effect at the time the plan discontinued her benefits and, under that version of the plan, she was subject to a cap on benefits, according to Washington-based legal publisher BNA.

“[T]he controlling plan was the plan in effect when (the plaintiff’s) claim for benefits accrued. That occurred when the decision to deny further benefits was made in February 1999. It is undisputed that under the Plan in effect at that time, (the plaintiff) was no longer eligible for benefits,” Rosenthal wrote, in granting summary judgment in favor of the employer.

>With the ruling, Rosenthal rejected the participant’s argument that the plan was not subject to amendment because the plan lacked language that would allow the sponsoring employer to make amendments. The plan’s failure to provide procedures for amendment did not prevent the plan from being changed, Rosenthal found.

Injury Case

>Plaintiff Yolanda Singleton was an employee at San Jacinto Methodist Hospital and sustained an on-the-job injury in 1995.   Singleton participated in the hospital’s employee injury plan, which at the time of her injury, did not contain a limit on the amount of benefits an employee could receive under the plan.

>However, in February 1998 the plan was amended to provide a procedure for amending the plan. The following month, the plan was amended to limit the number of weeks an employee could receive benefits. Pursuant to this amendment, the hospital terminated Singleton’s benefits in February 1999.

>Singleton sued the hospital alleging it violated ERISA by terminating her benefits. The violation was because the version of the plan in effect when she began to receive benefits had no explicit provision for amendment, the hospital could not amend the plan to reduce her right to continue receiving monthly benefits, Singleton argued.

The case is Singleton v. San Jacinto Methodist Hospital, S.D. Texas, No. H-02-1396, 7/14/03.