Plan Effort to Recoup Mistaken Distribution Funds Gets Court OK

July 18, 2007 ( - A federal judge in Texas has turned aside efforts by a former plan participant to block his ex-employer from recouping $240,000 the plan mistakenly included in an early retirement distribution.

U.S. District Judge Jorge A. Solis of the U.S. District Court for the Northern District of Texas rejected Michael Frawley’s contention that the Verizon Enterprises Management Pension Plan’s efforts to get back the money came after legal deadlines set by Texas law.

Solis ruled that the claim by the plan’s administrative committee fell under a Texas law governing suits over “money had and received,” which includes a four-year statute of limitations. So, the claim was still considered timely and would be allowed to proceed, the court said.

Frawley had argued that the plan’s efforts to get back part of his distribution should be considered a claim for ” unjust enrichment” under Texas law – with a two-year statute of limitations – and deemed to be past the deadline.

According to the ruling, Frawley worked for R.H. Donnelly Co. for 15 years before becoming a Verizon Communications employee in July 2000 when Verizon acquired Donnelly. He accepted an early retirement offer from Verizon in May 2003 and received a $563,982 lump-sum payment.

Two years later, according to the ruling, Verizon notified him it had committed an “administrative error” in calculating his benefits. Verizon told Frawley that his years with R.H. Donnelly should not have counted toward his Verizon retirement and that Frawley had been overpaid by nearly $240,000.

Frawley refused to return the money and the plan took the matter to court. In response, Frawley sued Verizon, alleging that he would have postponed his retirement to continue accruing benefits had he known how the administrative committee would figure his distribution total and asked the court to allow him to rescind his early retirement decision.

Solis refused to throw out Frawley’s suit against Verizon last year.  

The case is Verizon Employee Benefits Committee v. Frawley, N.D. Tex., No. 3:05-CV-2105-P, 7/12/07.