U.S. District Judge Stephen N. Limbaugh Jr. of the U.S. District Court for the Eastern District of Missouri noted that 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.
According to the opinion, when Park-Mark Inc. received an audit report indicating overpayments had been made, it did not file a federal common law restitution and/or unjust enrichment action. Instead, it unilaterally deducted the alleged overpayment amounts from its mandated contributions, an action not authorized under ERISA or under any collective bargaining arrangement (CBA) in effect at the time.
In addition, the employer did not show that the overpayments were made as the result of “a mistake of law or fact,” as required by ERISA in order to be due a refund.
Limbaugh also noted that the welfare fund provided health insurance coverage to the affected employees based on the contributions made on their behalf, and if the fund “refunds” the alleged overpayments to Park-Mark, it will in turn have to deduct the pension credits from the accounts of the affected employees, causing them to suffer a real economic hardship.The case is Greater St. Louis Construction Laborers Welfare Fund v. Park-Mark Inc., E.D. Mo., No. 4:10-cv-02197-SNLJ.