Plan in the Clear for Recouping $118,000 in Pension Overpayments

September 14, 2005 ( - A federal judge has rejected arguments from a retired American Airlines pilot that it wasn't fair for the company to partially suspend his retirement benefits as a way of getting back $118,000 already mistakenly paid to him.

Chief US District Judge Steven McAuliffe of the US District Court for the District of New Hampshire ruled that plaintiff Don Tynan knew for six years he was getting too much in benefits and didn’t notify the plan of its error so he could not now assert that the plan’s efforts to recoup that money were not equitable.

According to court background Tynan retired from American in 1984 after flying for nearly 20 years. As an American employee, he participated in the American Airlines Inc. Pilot Retirement Benefit Program made up of two benefit plans: a fixed income plan and a variable income plan.

Tynan and his wife divorced in 1996. According to the resulting qualified domestic relations order (QDRO), Tynan was ordered to pay his ex-wife half of his benefits under each plan. American Airlines was notified of the QDRO and subsequently sent Tynan a letter specifying the amount of his distributions from both plans.

In April 1997, an error occurred that caused the plan administrator to only reduce by half the benefits paid to Tynan under the fixed income plan while he incorrectly received the original, unreduced amount from the variable income plan, the court said.

For six years, American Airlines was not aware of the overpayments. During this six-year period, Tynan was overpaid $118,151 in benefits. In an effort to recover the money, American Airlines suspended payments to Tynan from the variable income plan while continuing to pay him benefits under the fixed income plan.

The opinion in Tynan v. American Airlines Inc. Pilot Retirement Benefit Program, D.N.H., No. 04-CV-335-SM, 9/9/05 is  here .