Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Employee, suffering depression and related disorders, received short-term disability benefits for 26 weeks. The administrator denied the employee long-term disability benefits. The district court ruled in favor of the employee in a suit under the Employee Retirement Income Security Act, 29 U.S.C.1132(a)(1)(B) and denied the plan's claim for overpaid benefits. The Third Circuit vacated and remanded. The administrator acted consistently with a plan provision requiring it to determine whether employee was incapable of performing the requirements of any job for any employer … for which the individual is qualified or may reasonably become qualified … , other than a job that pays less than 60 percent of his former pay.The administrator acted without meaningful conflict of interest.The plan specifies the receipt of Social Security benefits as a particular fund from which reimbursement is to be made and gives rise to an equitable lien by agreement over those funds that are overpayments under the plan.

The company filed a Chapter 11 bankruptcy petition and continued to make payments to pension plans, as required by collective bargaining agreements. When the company was sold and it no longer employed individuals covered by the plans, the pension fund filed a claim for $5,890,128 (withdrawal liability) and requested that the claim be classified as an administrative expense. The bankruptcy court classified the claim as unsecured debt. The district court reversed and remanded, holding that the portion of withdrawal liability attributable to the post-petition period was entitled to priority. The Third Circuit affirmed. If entire withdrawal liability were automatically classified as a general unsecured claim, it would undercut the purpose of the Multiemployer Pension Plan Amendments Act, 29 U.S.C. 1381, amendment to the Employee Retirement Income Security Act: to secure the finances of pension funds and prevent an employer's withdrawal from negatively affecting the plan and its employee beneficiaries.

The decedent, killed in a motorcycle accident in 2008, was covered by a life insurance policy, subject to the Employee Retirement Income Security Act, 29 U.S.C. 1101. The insurance company denied a claim by the decedent's widow, claiming that the decedent's anti-coagulant medications contributed to his death so that it fell within an exclusion for medical conditions. The district court concluded that the policy gave the company discretionary authority to determine eligibility and entered summary judgment in the company's favor. The Third Circuit reversed in part and remanded. Deferential review was not appropriate, given the language of the policy. The words "proof of loss satisfactory to Us," surrounded by procedural requirements, do not notify participants that the company has the power to re-define the entire concept of a covered loss on a case-by-case basis. The district court's interpretation of the medical exclusion, in favor of the company, was correct; the clause was not ambiguous.