Voluntary Termination Disqualifies Right to Plan Benefits

The U.S. District Court for the Eastern District of Pennsylvania has found that two doctors who voluntarily terminated their employment from a hospital are not eligible for benefits under their former employer’s non-qualified retirement benefit plan.

In dismissing the case, the court also ruled that Steven J. Feinstein, M.D., and Albert P. Sarno, M.D., were wrong in their belief that their non-qualified benefits would be merged into and vested under Saint Luke’s Hospital’s qualified plan because they were repeatedly told that if they voluntarily left the hospital, they would be ineligible for benefits under the Executive Retirement Benefit Restoration Plan. In addition, plan-related correspondence showed that such a merger of benefits was a one-time action, and not a “systematic practice.”  

The court also rejected the doctors’ claim for penalties from the hospital for failure to furnish plan documents because finding the hospital was not the plan administrator and therefore had no duty to provide the plan-related documents to the plaintiffs under ERISA.  

According to the court opinion, the plaintiffs are both perinatologists who were employed by Saint Luke’s Hospital from January 1991 and August 1993, respectively, until late November 2008, when there was an employment dispute between the hospital and the physicians. The court noted that the defendants indicated in an e-mail to the plaintiffs that the plaintiffs had repeatedly expressed their desire to terminate their employment and enter into private practice, and there is no e-mail response from the plaintiffs refuting that understanding. In addition, according to the court opinion, on September 12, 2008, counsel for the plaintiffs confirmed that both sides had mutually agreed that the doctors would continue their employment with the defendants until November 30, 2008, and in that letter, the plaintiffs provided the requested notice to the defendants that they had decided to terminate their employment with Saint Luke’s as of November 30, 2008. In advance of this letter, the plaintiffs were reminded by the defendants that, should they voluntarily leave their employment, they would not be entitled to benefits under the Restoration Plan.  

The case is Feinstein v. Saint Luke’s Hospital, E.D. Pa., No. 5:10-cv-04050-LS.