Michael Bartolic Wins Another Pension Dispute Under ERISA § 502(a)

Employees in Chicago receiving pension benefits, often through a union-sponsored multi-employer pension plan, rarely see exactly how the pension benefits are calculated. It becomes even more complicated when a divorce requires allocating some of that pension to a former spouse, rather than payment as a life annuity or survivorship annuity when the employee is married at retirement. We recently won a case where our client attempted to discover exactly what his pension benefit would be in light of a divorce, only to have the pension fund amend the pension payment amount ten years later and seek a refund of what it called overpaid pension benefits.

In Thorpe v. Indiana Electrical Workers Pension Trust Fund, I.B.E.W., No. 19-cv-2988, 2021 WL 4081628 (S.D. Ind. Sept. 8, 2021), Mr. Thorpe retired with an early retirement subsidy, and previously submitted to the pension fund a Qualified Domestic Relations Order awarding his ex-wife a portion of his pension benefits. The Pension Fund determined based on the terms of the pension plan and the QDRO that until Mr. Thorpe’s ex-wife applied for the benefit, it would pay Mr. Thorpe the entire accrued benefit, and adjust the amount if and when his ex-wife claimed the pension payment. When Mr. Thorpe’s ex-wife did claim the pension ten years later, the Pension Fund then told Mr. Thorpe it should have immediately reduced his pension when he applied, and sought to recoup nearly $250,000 from Mr. Thorpe by withholdings from his ongoing, adjusted pension payments.

Mr. Thorpe sued the Pension Fund under ERISA § 502(a), challenging the recoupment, and seeking to hold the Pension Fund to its original application of the pension plan’s terms and QDRO. The Court analyzed the pension plan’s terms and the QDRO and determined the Pension Fund could not recoup any payments made to Thorpe in the decade between his retirement and his ex-wife’s. The Court explained it did not need to determine whether there was any overpayment. Under the pension plan’s terms when Mr. Thorpe retired, the Trustees were only authorized to recoup benefits overpaid due to the participant’s fraud, which nobody asserted happened in this case. Years after Mr. Thorpe retired, the Pension Fund added a new section to the Plan authorizing recoupment of overpayments due to “administrative error,” but the new version of the Pension Plan explicitly stated it only applied to participants who worked in covered employment in 2014 and later, while Mr. Thorpe retired in 2008. In addition, the Thorpes’ QDRO stated that to the extent the Pension Fund inadvertently paid any fund to Mr. Thorpe that were due to his ex-wife, Mr. Thorpe would be a constructive trustee of those funds for his ex-wife. The Court thus held the Pension Fund could not recoup any alleged overpayments from Mr. Thorpe under the Pension Plan, and if those alleged overpayments were truly benefits due to Ms. Thorpe, the QDRO already addressed the remedial scheme for such an error.

If you have a dispute over your pension benefits with a union-sponsored pension fund, call a skilled ERISA pension lawyer today.