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KELLY v. RETIREMENT PENSION PLAN FOR CERTAIN HOME OFFICE

July 11, 2002

THOMAS P. KELLY, PLAINTIFF,
V.
RETIREMENT PENSION PLAN FOR CERTAIN HOME OFFICE, MANAGERIAL AND OTHER EMPLOYEES OF PROVIDENT MUTUAL, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Marvin Katz, District Judge

      FINDINGS OF FACT AND CONCLUSIONS OF LAW

Plaintiff Thomas Kelly ("Kelly") brings various claims against his former employer, Provident Mutual Life Insurance Company ("Provident") and its retirement plan, the Retirement Pension Plan for Certain Home Office, Managerial and Other Employees of Provident Mutual. Kelly brings a claim for pension credit for certain years of service; a claim for disability retirement benefits; and claims of wrongful termination based on age, disability, common-law retaliation, and breach of implied contract.*fn1

After a bench trial, and upon consideration of the parties' pre-trial and post-trial submissions, the court makes the following findings of fact and conclusions of law:

Kelly has worked for Provident since 1981.

Prior to March 1, 1988, Kelly's employment was governed by various written contracts specifying him as a "Special Agent" or an "Associate Manager."

Beginning March 1, 1988 Kelly was employed by Provident under written contract as an Agency Manager. Kelly managed Agency 46, which was located in Mt. Laurel, New Jersey and was established to market and sell Provident insurance products.

An Agency Manager is required, inter alia, to travel offsite in order to effectively recruit sales agents, to train and supervise field agents and supervisors, and to conduct interviews for regulatory compliance purposes.

In March, 1993 Kelly injured his back in a snowmobile accident.

From immediately after the accident until October 4, 1993, Kelly was physically absent from work and unable to do any work.

During his absence Kelly continued to receive salary payments from Provident.

During his absence Kelly began collecting long-term disability benefits under Provident's long-term disability plan administered by UNUM Life Insurance Company of America ("UNUM"). After Kelly returned to work, UNUM discontinued his long-term disability benefits; Kelly eventually sued and the parties settled in 1998, with the result that at least until the date of this trial, Kelly continued to receive partial long-term disability benefits.

On October 4, 1993 Kelly began to work again on a very limited part-time basis.

By May or June of 1994, he was able to work approximately 30-34 hours a week, a schedule that he maintained until he was terminated in 2000.

Kelly's injury precluded him from working the 60 hours per week that an Agency Manager generally works. Before and after returning to work, Kelly discussed his limitations on his working hours with Charles Cronin, former Senior Vice President and a direct supervisor of Kelly's at that time, who told him that such a reduction in hours was not a problem from the company's perspective as long as Kelly managed to do his job.

As a result of his injury, Kelly was and remains unable to drive or sit for extended periods of time, and the discomfort, pain and fatigue he suffers is a constant distraction. His injury is a direct cause of his inability to work at the pace and level that he worked at prior to having the accident. Kelly is also limited in his ability to lift heavy objects, ski, scuba dive, hike, golf, and perform general housework.

After returning to work until his termination in 2000, Kelly required the assistance of Tom Leonards, a sales manager in his agency, to handle most duties requiring offsite travel, especially recruitment. Kelly also relied on Leonards to assist in other activities such as training and supervision.

Because they did not have faith in Leonards' abilities to recruit or perform other managerial duties, Kelly's supervisors at times expressed disapproval of the arrangement to Kelly and to Leonards. In 1997, Leonards' salary was lowered as an incentive either for Leonards to improve his recruiting skills or to encourage the replacement of Leonards with a more skilled recruiter. However, Kelly either would not or could not obtain a different recruiter, and personally made up the difference in Leonards' salary when it was lowered by the company. Kelly's supervisors were aware that Kelly wanted Leonards to continue recruiting and that the arrangement remained ongoing despite their disapproval. None of Kelly's supervisors forced the arrangement to end, but rather the supervisors tacitly permitted it to continue.

Kelly also required a clerical employee to assist him with any heavy physical lifting, and requested and received from Provident a special chair because of his back injuries.

In early January, 1999 Kelly was placed on probation. On February 22, 2000 Kelly was terminated as Agency 46 Manager. Kelly continues to work 30-32 hours per week as a sales agent for Provident.

Benefits Committee Decisions

Certain Provident employees are entitled to certain benefits under the Retirement Pension Plan for Certain Home Office, Managerial and Other Employees of Provident Mutual. Kelly introduced into evidence the version of this document that was effective January 1, 1989 (the "Home Office Plan"). Kelly did not assert at trial that that particular document in fact governed the benefits decisions contested in this case, which were made in 2000, but noted that he never received the appropriate documents despite repeated requests made prior to and in connection with this litigation. The Home Office Plan was the product of a merger of two previously separate plans, the previous Retirement Pension Plan for Home Office and Certain Other Employees and the Retirement Pension Plan for Managers in Agency Offices Operated by the Company and Certain Other Employees (the "Managers Plan").

The Home Office Plan has designated a Benefits Committee to exercise certain powers and duties under the Plan, including discretionary authority to make factual determinations and to resolve questions or disputes relating to eligibility for benefits.

Because the plan vests the plan administrator or fiduciary the discretionary authority to determine eligibility for benefits or to construe the terms of the Plan, plaintiff may recover on his ERISA claims only if the contested Benefits Committee's decisions were an abuse of discretion. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Mitchell v. Eastman Kodak, 113 F.3d 433 (3d Cir. 1997). Specifically, Kelly challenges the Benefits Committee's decisions to 1) deny him pension credit for the years 1981 through March 1, 1988 and 2) deny him a disability retirement date of either March, 1993 or February, 2000.

In order to find that a plan administrator's determination was an abuse of discretion or arbitrary and capricious, the determination must be found to have been "without reason, unsupported by the evidence or erroneous as a matter of law." Mitchell, 113 F.3d at 439. Such a determination must be made on the basis of the evidence that was before the plan administrator when he made the decision being reviewed. Id. at 440.

There is no dispute that from March 1, 1988 until his termination on February 22, 2000, while Kelly was employed as an Agency Manager, he was covered under the Home Office Plan and amended versions thereof.

However, by letter dated December 29, 2000, the Benefits Committee denied Kelley's claim for credit for the years 1981 through March 1, 1988 for retirement benefit accrual purposes. This denial is the subject matter of Count One in the instant litigation.

When Kelly went back to work after his accident in 1993, he personally believed that his years of employment from 1981 to 1988 qualified for retirement benefit accrual purposes under the Home Office Plan. Kelly's belief was based on language from the Summary Plan Description issued February 1993 stating that a "full-time managerial employee on a regular annual salary basis" is qualified to participate in the Home Office Plan. However, the Summary Plan Description clearly states that legal rights to benefits were governed not by the summary but by the actual plan document. See also Gillis v. Hoechst Celanese Corp., 4 F.3d 1137, 1142 (3d Cir. 1993) (plan document controls where plan document conflicts with Summary Plan Description). Kelly's claim that Provident's Human Resources personnel told him in correspondence and phone calls that he was covered under the Home Office Plan prior to March 1, 1988 is also to no avail, particularly as he was unable to provide any specific details or documentary evidence supporting his testimony on this point.

Section 3.2 of the Home Office Plan defines "Covered Employee" as, inter alia, "an active, full-time Home Office employee (other than a Regional Pension Manager, a Pension Consultant or a Pension Sales Representative) on a regular annual salary basis as classified on the Home Office payroll by the Home Office Administration," or "an active, full-time Managerial Agency employee on a ...


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