Pension Benefit Claims

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This week’s notable decision is a district court decision in Estate of Colleen J. Brownell v. Lyczak, et al., 2019 WL 5485392 (D.N.J. Oct. 25, 2019), which is another cautionary tale for the notion that murder doesn’t pay, well at least a murder conviction.

In this case, Defendant Lyczak pleaded guilty to murdering his girlfriend, Colleen Brownell, who was a plan participant in a 401(k) Employee Savings Plan (“the Plan”) administered by her former employer, Defendant PHH Corporation.  Lyczak was Brownell’s named primary beneficiary.  In other words, in the event of her passing, Lyczak was to receive all the money in her Plan account.  The plaintiff is the Estate of Colleen J. Brownell.  

The Estate moved for summary judgment on the basis that Lyczak’s guilty plea to the murder disqualifies him from being a beneficiary of Brownell’s 401(k) account.  Lyczak did not respond and PHH did not oppose the motion.  
Continue Reading Murder of Plan Participant Disqualifies 401(k) Beneficiary

This week’s notable decision is an unpublished ERISA preemption decision in Abernethy v. EmblemHealth, Inc., No. 19-422, __F.App’x__, 2019 WL 5302825 (2d Cir. Oct. 21, 2019), where the Second Circuit revived the state law claims retired officers brought against EmblemHealth after they cancelled the officers’ retiree medical coverage.

The retirees claimed that they were entitled to continued medical coverage based on their employment and separation agreements.  The employment agreements provide that the employee “shall be entitled to participate in, and receive benefits under” any retiree health benefit plan provided by EmblemHealth, “subject to the terms of such plans, program or policies.” But, the agreement also disclaims that the employee has any vested interest in any employee benefit plan, which the company may, in its discretion, change or revoke.  The separation agreements state that the employee will be able to “commence Retiree Health Benefits at the same level as that provided an active officer.”
Continue Reading Second Circuit Holds Breach of Contract Claims for Retiree Medical Coverage Not Preempted by ERISA

This week’s notable decision is O’Rourke v. N. California Elec. Workers Pension Plan, No. 17-17419, __F.3d__, 2019 WL 3850604 (9th Cir. Aug. 16, 2019), a case involving a dispute over the payment of early retirement benefits through a multiemployer ERISA plan.  The court was tasked with deciding whether Defendant abused its discretion by determining that Plaintiff’s work as an administrator for an electrical workers’ union falls within the Plan’s definition of “Prohibited Employment.”  The district court granted summary judgment in favor of the Plan’s board of trustees (“Board”), and for the reasons below, the Ninth Circuit affirmed the decision.  

The Plan provides for an early retirement benefit for participants at age fifty-five if they have accumulated ten or more years of covered employment.  No benefits are paid for either normal pensions or early pensions for any month in which a participant works in “Prohibited Employment.”  For participants under the age sixty-five, the Plan defines “Prohibited Employment” as “the performance of services in any capacity in the Electrical Industry.”  “Electrical Industry” is defined as “all branches of the Electrical Trade in the United States.” The Plan does not define “Electrical Trade.” 
Continue Reading Ninth Circuit Upholds Pension Plan’s Denial of Early Retirement Benefits for Participant’s Union Work