How will a court construe ambiguities in ERISA plan terms?

If the plan confers discretion to the administrator “to interpret plan terms,” ambiguities may NOT be construed against the plan administrator.

Here’s the case of Porter v. Lowe’s Companies, __ F.3d__ (5th Cir. September 24, 2013) (PDF).

FACTS: Elizabeth Porter, employed with Lowe’s and eligible for ERISA death benefits, died in an auto accident while driving to work to respond to a security alarm.  The plan conferred discretion to “interpret the terms of the Plan to determine eligibility for benefits.”  Newman, the plan administrator, denied the death benefit claim because the Plan excludes injuries or death sustained “during travel to and from work.”  The surviving spouse sued.

District Court Held: Administrator abused discretion in denying benefits because employee was injured in an accident while on her way to work.  Court concluded the employee was on a “Bonafide Trip” and therefore the beneficiary was entitled to death benefits under the plan.

5th Circuit REVERSES and finds no abuse of discretion:

  1. Ambiguities may not be construed against the plan administrator when the administrator is given discretion to interpret plan terms.  Op. at 7, fn. 13.
  2. The Court, in reviewing a Plan administrator’s decision, can by-pass without deciding whether the determination is legally correct, “and move directly to whether the determination was an abuse of discretion.” Op. at 9.
Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Mike Reilly Mike Reilly

Mike Reilly is a nationally recognized labor, employment and employee benefits attorney, named one of the “Top 100 Most Powerful Employment Attorneys in the Nation” for the past five consecutive years by Human Resource Executive®. He has decades of experience providing strategic employment…

Mike Reilly is a nationally recognized labor, employment and employee benefits attorney, named one of the “Top 100 Most Powerful Employment Attorneys in the Nation” for the past five consecutive years by Human Resource Executive®. He has decades of experience providing strategic employment advice, and has represented clients in more than 75 jury trials, arbitrations, bench trials and claims before the EEOC and Washington State Human Rights Commission.

Small and large employers retain Mike for his strategic advice and decades of experience in employment issues and litigation, business decisions and litigation avoidance. Mike provides advice in claims involving discrimination, retaliation, wrongful discharge, disability accommodation, ERISA and non-ERISA employee benefit claims, and wage/hour claims. He served as lead counsel in an employee raiding/trade secret case as reported in the Wall Street Journal, and defends employers in class action claims.

Mike’s remarks on employment issues have been quoted in NewsweekCorporate Legal TimesSeattle TimesEmployee Relations Law JournalPuget Sound Business JournalCFO.com, and other professional journals and management publications. Chambers USA’s Guide to America’s Leading Lawyers for Businessrates Mike in the top ranking (band one) for his work in labor and employment law, and has described him as “one of Seattle’s top-rate attorneys” who is “truly phenomenal [with] superb legal instincts” and “an amazingly assertive litigator.” His clients include Nordstrom, Seattle Seahawks, Home Depot, KeyBank, Starbucks, Fred Hutchinson Cancer Research Center, Red Robin and Seattle Chamber of Commerce, among others.