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Plaintiff Gets Served With Attorney Fees in Pension Case

A plan beneficiary whose “claim had no merit” has been ordered to pick up some of the legal fees incurred defending against the suit — and the case provides an interesting perspective on the costs of defending ERISA litigation.

The plaintiff in Angichiodo v. Honeywell Pension & Sav. Plan (2017 BL 153418, D. Ariz., No. 2:15-cv-00097-NVW, 5/8/17) is the surviving spouse of a vested participant in Honeywell’s DB plan. The decedent elected a pre-retirement benefit option that would provide a monthly pension to his surviving spouse equal to one-half of his vested benefit if he died before retirement. As it turns out, after he was eligible to retire he became terminally ill, but he did not retire or complete forms to initiate retirement – and if he had done so, his spouse would have been entitled to a monthly payment greater than the amount she is currently receiving.

After her husband died, the plaintiff spoke with a call center representative of the Honeywell Retirement Service Center, who incorrectly said that an employee’s supervisor or HR representative could initiate the retirement of a terminally ill employee. However, the court noted that even if this information had been correct, the plaintiff or her husband would have had to inform the Honeywell Retirement Service Center that he was terminally ill. However, the court noted that there was no process for expediting the plaintiff’s husband’s retirement, that the plan imposed a minimum 45-day period required for verification and approval of a retirement application before commencement of benefits, and that even if the husband had applied for retirement immediately upon receiving his cancer diagnosis, he died in less than 45 days, and she still would not have received the survivor benefit for a retiree.

All that notwithstanding, the plaintiff filed a lawsuit alleging failure to pay plan benefits, based on a miscalculation of Social Security retirement benefits and breach of fiduciary duties “by concealing the process of retiring a terminally ill employee in order to permit the employee to make an appropriate pension election” and “by failing to properly train human resource employees and managers about the proper procedures to follow when an employee becomes terminally ill.” She later amended the complaint charging the defendant with breached their fiduciary duties by “failing to provide Plaintiff with proper explanation of benefits,” “misrepresenting facts during the appeal process,” “concealing information during the process,” and “acting in their financial self-interest.”

On Dec. 9, 2016, the court granted the defendant’s motion for summary judgment, but the plaintiff sought “other appropriate equitable relief”— a claim the court said “rested on her incorrect belief that the Honeywell Retirement Service Center had procedures to terminate a participant’s employment immediately, complete a participant’s application for retirement benefits on behalf of a participant, and/or expedite the time required for verification and approval of a retirement application and that the procedures were not disclosed in the information provided to Plaintiff and her husband.” Moreover, Senior Judge Neil V. Wake of the U.S. District Court for the District of Arizona noted that the defendants “had no duty to disclose a procedure that did not exist.”

In the process of defending the suit, defendants incurred $533,217.46 in fees and nontaxable costs, and requested “award of a sufficient portion of those fees to deter groundless litigation and to reduce prejudice to other Plan participants,” such as an award of 10% of the total fees awarded in another case.

Judge Wake noted that “no significant legal question regarding ERISA was raised or decided by this litigation,” and thus the court “…need not decide whether Defendants’ money was well spent in defending against Plaintiff’s groundless claims because the fee award will be greatly reduced from the amount requested.”

Judge Wake also noted that the plaintiff contends that the fees and nontaxable costs sought by the defendants were calculated based on “excessive hourly rates, redundant and duplicative billing, excessive time, and work that is not compensable.” However, Judge Wake noted that those “…criticisms are moot in light of the Court’s denial of more than 95% of the fee award requested.”

And ordered the plaintiff to pay $25,000.