Employee Benefits Alert: Charlie Brown Participants

If you have been involved in the administration of a retirement plan, the following facts may sound familiar to you.  An individual makes a claim for a benefit under your plan asserting that he worked for your company (or a predecessor) from November 1967 until he resigned in September 1986.  Meanwhile, the company for whom the individual claims to have worked was acquired by your company in 1997.  The retirement plan has no record of owing the individual any benefit and the company’s records relating to the individual’s employment almost 30 years ago cannot be located.

The individual produces various documents in support of his claim for a pension benefit under the plan including social security records showing employment with various related companies.  The initial claim is denied based on the plan’s records that do not indicate that he is owed a benefit.  The individual appeals and provides additional anecdotal evidence of entitlement to a benefit but nothing conclusively establishing entitlement.  The committee reviewing the appeal denies the appeal because the individual presented insufficient evidence to override plan records.  The individual could not document that he worked 1,000 hours or more for each of the nearly 20 years he was employed by the acquired entity and its affiliates or that his employers participated in the plan.  Therefore, his appeal is denied based on his inability to show these facts.

The district court affirms the decision of the administrative committee applying the usual “abuse of discretion” review that requires the claimant to show that the plan administrator’s decision was (1) illogical, (2) implausible or (3) without support in inferences that may be drawn from the facts in the record.

Here is where the story gets troubling.  On these facts, the Ninth Circuit Court of Appeals recently held that where a claimant has made a prima facie case that he is entitled to a pension benefit but lacks access to key information needed to substantiate his claim, the burden shifts to the defendant (i.e., the plan and plan sponsor) to produce this information.  Estate of Barton v. ADT Security Services Pension Plan 2016 WL 1612755 (9th Cir. April 21, 2016).  The claimant must show through documentary or other objective evidence that he has a case that he is entitled to a pension.  If that is shown, then it is up to the employer to, in essence, refute that evidence.  The court held that to determine otherwise would essentially reward Lucy for pulling the football away from Charlie Brown.

Because the case was remanded back to the district court for further consideration, it is unknown what the ultimate outcome will be.  However, the Ninth Circuit Court of Appeals (which covers the states of Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington) has established a shifting burden that will apply to cases for denied claims brought in those states.  This will be very difficult for employers who have no record of claimants’ pension eligibility 30 years after the individual ceased to be an employee.

The Employee Benefits Alert is intended to keep readers current on matters affecting employee benefits and is not intended to be legal advice.  If you have any questions about this alert or any other issues relating to employee benefits, please contact Sandra Mihok at 412.566.1903, Kathryn English at 412.566.1226, Heather Stone Fletcher at 412.566.6112, Michael Herzog at 412.566.6130, or Paul Yenerall at 412.566.1944.

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