Court Finds Employee Did Not Have Information to Prove Benefits Claim

The 9th Circuit reversed a district court decision that a participant did not prove he was entitled to benefits, saying the burden of proof should be on the employer, which had all the necessary information.

The 9th U.S. Circuit Court of Appeals has held that when a retirement plan participant has made a prima facie case that he is entitled to pension benefits, but lacks access to the key information about corporate structure or hours worked that are need to substantiate his claim, the burden shifts to the employer to produce this information.

In doing so, the appellate court reversed a district court ruling that found Bruce Barton, a participant of ADT Security Services Pension Plan, did not prove he had sufficient years of service with ADT or its affiliates to be entitled to benefits from the plan. The district court held that the applicable standard of review was abuse of discretion and that the employee benefits committee did not abuse its discretion in denying Barton benefits.

When Barton reached age 65, he contacted the pension plan’s recordkeeper about his benefits. A letter form a pension benefit administrator said the administrator couldn’t find any information about Barton’s employment with ADT. Barton then provided documentation regarding his employment with ADT-related entities. But, the recordkeeper said the documents Barton sent failed to establish he had a vested pension benefit.

Barton then filed a claim with the Employee Benefits Committee. He included the documents he sent to the recordkeeper, as well as a letter from the president of ADT congratulating Barton on completion, in 1977, of 10 years of service, copies of key cards and identification/business cards issued by ADT, W-2s, pay stubs and documentation of Social Security and FICA withholding from 1968 to 1980.

NEXT: Who controls the evidence?

The committee denied Barton’s claim, saying there were no plan records indicating eligibility for participation, actual participant or eligibility for benefits. In addition, it said the documents Barton provided did not make it clear whether he had earned 10 continuous years of service required to be vested in a plan benefit.

Barton filed suit in federal district court, which found for the defendants. He appealed to the 9th Circuit.

The 9th Circuit noted that in a previous opinion, it found a claimant may bear the burden of proving entitlement to Employee Retirement Income Security Act (ERISA) benefits where a court reviews a plan administrator’s decision de novo. In its opinion, the appellate court said this makes sense if the claimant has equal or better access to evidence needed to prove entitlement—for example, to establish an illness to qualify for disability benefits, the claimant can provide test results, physician reports and other such evidence. However, the court said in Barton’s case, the defending entity solely controls the information that determines entitlement, leaving the claimant with no meaningful way to meet his burden of proof.

The 9th Circuit found ADT was in a much better position than Barton to establish whether the various employers for which Barton worked participated in the plan, and whether he worked the requisite number of hours per year for vesting credit.

The appellate court remanded the case back to the district court to apply the correct burden of proof. Its opinion is here.