Court Finds for Employer in Dispute over Benefit Election

The 6th U.S. Circuit Court of Appeals found a benefits committee used a reasonable process to conclude it paid a participant's benefits according to his election.

Participants in the Columbia Energy Group Pension Plan were given the choice in 2000 to elect to have their future pension benefits calculated using an Account Balance Method (ABI) or to continue to have their benefits calculated using the existing Final Average Pay (FAP) method. The appellate court found the committee investigated Terry Durbin’s assertions that he did not make the election to use the ABI method and found only evidence indicating the opposite.

The 6th Circuit cited a U.S. Supreme Court decision (Metro. Life Ins. Co., 554 U.S. at 117) which noted, where the administrator has taken steps “to promote accuracy,” a conflict in interest weighs less heavily. In addition to reviewing its records and investigating Durbin’s assertions, the benefits committee also investigated the accuracy of the records of Durbin’s election by looking for anomalies as compared to similarly situated employees. The court concluded that the committee’s decision to calculate Durbin’s benefits under the ABI program was reasoned and supported by substantial evidence.

Durbin argued that the committee was unreasonable in finding that a chronological anomaly in the pension plan’s call center phone log was not evidence of an error in identity. The log itself shows four entries in the following order: Durbin called Representative 16092 at 10:15 a.m. for general plan information, he called Representative 16085 at 10:37 a.m. and abandoned the call, he called Representative 24515 at 10:49 a.m. and was transferred to another team member, and he again spoke to Representative 16085 at 10:44 a.m. and elected to participate in the ABI program. Durbin questioned why the last two entries were out of chronological order and argued that could suggest a call was wrongly attributed to him. The court said an error in identity would be especially odd considering the requirement that participants provide personal information, such as a Social Security Number and a “PIN” number, before making an election.

Durbin also argued that because the committee is the sole custodian of the relevant evidence and because he would have to prove a negative to show that he did not elect to participate in the ABI program, fairness demands that the burden should shift to the committee to prove that he made the election. The court said Durbin misunderstands its role. "We do not make independent factual findings of whether he made the election; we merely determine whether the Committee acted in a principled way in making its own factual findings, which must be supported by substantial evidence," the court wrote.

According to the court opinion, Durbin alleges that he indicated on a paper ballot form that he intended to continue his participation in the FAP program, but there was no record of this paper ballot. On April 27, 2000, Hewitt Associates, the plan's third-party recordkeeper, mailed Durbin a confirmation letter regarding his election to participate in the ABI program. The administrative record also includes numerous documents exchanged between the plan and Durbin over the next decade.

Documents titled "Columbia Retirement Plan Account Balance Option Account Statement" showing the annual account balance for the previous year were sent to Durbin for each year from 2004 to 2010. Durbin signed three different forms titled "Plan Account Balance Option Preretirement Death Beneficiary Designation Form," each time designating his wife as his beneficiary. The option to designate was only available to ABI participants; FAP benefits automatically go to the spouse of a deceased participant. The record also shows Durbin was sent documents titled "Summary Plan Descriptions" that would have been specific to the ABI program.

The 6th Circuit's opinion is here.