United States District Court, W.D. Pennsylvania
PAUL F. SIKORA, Plaintiff,
UPMC, a Pennsylvania non-stock non-profit corporation a/k/a UPMC Health System, and UPMC HEALTH SYSTEM AND AFFILIATES NON-QUALIFIED SUPPLEMENTAL BENEFITS PLAN, Defendants.
R. Hornak United States District Judge.
Paul Sikora worked for UPMC Health System from 1983 until his
retirement in December 2011 as the Vice President of
Enterprise Transformation. Following his retirement, Sikora
requested and was denied funds under a deferred-compensation
retirement plan. Sikora filed this suit against Defendants
UPMC and related entities (together, UPMC) alleging
violations of the Employee Retirement Income Security Act
(ERISA), 20 U.S.C. § 1001, et. seq., and breach
of contract. On December 22, 2015, the Court granted partial
summary judgment in favor of UPMC on Sikora's ERISA
claims. The parties then filed the instant cross-motions for
summary judgment on the last of Sikora's live claims,
breach of contract, and the Court heard oral argument on
November 17, 2016.
heart of the parties' dispute lies the question whether
Sikora's failure to satisfy an express condition
precedent to his eligibility for retirement benefits should
be excused. For the reasons that follow, the Court concludes
that it should not, and UPMC therefore did not breach the
parties' contract when it refused to pay Sikora.
UPMC's Motion will be granted, Sikora's will be
denied, and summary judgment will be entered in favor of UPMC
and against Sikora.
administers a Non-Qualified Supplemental Benefit Plan (the
Plan) under Section 457f) of the Internal Revenue Code. The
Plan is what is known as a "top-hat" plan: an
unfunded retirement plan maintained primarily to provide
deferred compensation to a select group of management and
other essential UPMC employees. It is administered by the Plan
Committee and delegates thereof, which, according to the Plan
Document, have "final, binding, and conclusive"
authority to make determinations regarding the distribution
of Plan benefits. ECF No. 1-2 at 19.
2008, Sikora was notified that he had been selected as a
participant in the Plan. At that time, he was given a copy of
the Plan Document, which laid out the essential eligibility
terms for . receipt of retirement benefits. Section 4.01 of
the Plan Document provided that:
A Participant is eligible to receive his or her retirement
benefit following: (i) the Participant's remaining
employed at all times until his or her Normal Retirement
Date, (ii) the Participant's entering in a Post
Retirement Service Agreement with the Employer, and (iii) the
Participant's satisfaction of his or her Post Retirement
Service Agreement with the Employer.
ECF Nos. 1-2 at 14; 80 at 2; 86 at 2. Section 1.01(t) of the
Plan defined a Post Retirement Service Agreement, or PRSA, as
the agreement entered into between the Employer and a
Participant which sets forth that for one (1) year following
the Participant's retirement, he or she will: (1) provide
substantial consulting services to the Employer to, among
other things, assist those who are taking on the
Participant's responsibilities and (2) refrain from
working for a competitor of the Employer or the Related
ECF Nos. 1-2 at 7-8; 79 at 3; 85 at 9-10.
August 2011, four months before Sikora retired, a UPMC
employee sent Sikora an email telling him that "[v]ested
benefits are not paid until you:. . . "[e]nter into a
post-retirement service agreement with UPMC; and [s]atisfy
the requirements of the one-year post-retirement service
agreement." ECF Nos. 80 at 3; 86 at 4. Despite receiving
the Plan Document and at least one email about these
eligibility requirements, however, Sikora did not sign the
PRSA before retiring, nor did he request to see a copy of it.
ECF Nos. 80 at 3; 86 at 4.
turned sour upon Sikora's departure from UPMC, by which
time he had accrued a Plan account balance of $59, 369.90.
Sikora applied for a distribution of this account balance,
but his request was denied, and his appeal of that denial was
also denied. ECF No. 1-4 at 2-3. A UPMC administrator
explained to Sikora in an April 2012 email that his first
request for a distribution was denied because he did not meet
the Plan's eligibility requirements: namely, he had not
signed and complied with a PRSA as the Plan required. In the
same email, the UPMC administrator offered Sikora additional
time to read, review, and sign the PRSA before Sikora
appealed the decision:
I am not entirely sure why you did not get or ask for [the
PRSA]. Nonetheless, I attach with this correspondence a
[PRSA] for your review and consideration. In order to provide
further support for your claim [for benefits] under the Plan,
UPMC will accept a signed [PRSA] from you now. This means you
need to consider whether to sign and return the [PRSA] and
abide by its terms and conditions, as stated in the Plan. If
you would like time to consider the Agreement and feel it
would be beneficial to you to have a temporary suspension of
the above time period for considering your request for
appeal, let me know. If you decide to sign and return the
[PRSA], you can choose to supplement your claim [for
benefits] and request for appeal by providing a signed
version of the [PRSA] to me as soon as you can. ... If I do
not receive a signed [PRSA] on or before May 10, 2012, we
will proceed with the appeal process on the basis that there
is no signed [PRSA].
ECF Nos. 58-1 at 9; 80 at 4; 86 at 7. Rather than take
advantage of this opportunity to sign the PRSA, however,
Sikora appealed the decision without doing so. Three months
later, in a letter dated July 23, 2012, Sikora was informed
that his appeal was denied because of his failure to sign the
PRSA. ECF No. 1-4 at 2-3. Sikora responded with this lawsuit,
alleging that UPMC's failure to distribute his retirement
benefits constitutes a breach of contract.
provides both a "past" and a "present"
explanation for his failure to sign the PRSA. Sikora says he
did not sign the PRSA before retiring because he did not know
about it. He simply does not recall reading the portion of
the Plan Document containing the PRSA requirement, nor does
he remember seeing the portion of the email notice that
mentioned the requirement. ECF No. 86 at 3-4. As for why he
has still not signed a PRSA, Sikora says that it contains
what he believes are "new, " unbargained-for
terms-terms that were not part of the written Plan Document
and were not binding amendments to the Plan. Specifically,
although the Plan Document provided that in order to qualify
for benefits Sikora must refrain from working for a
competitor of UPMC or its Related Entities, Sikora takes
issue with the fact that the PRSA additionally states he
shall not "at any point during or following his
employment. . . divulge . . . [UPMC's] confidential
information, " that he shall not "directly or
indirectly . . . establish or participate in" a
competing enterprise "[f]or one (1) year, " and
that Sikora shall not "solicit any employees or
consultants" of UPMC "[f]or one (1) year." ECF
No. 1-5 at 1-2.
responds that the terms of the PRSA are not "new"
at all. Instead, UPMC contends, the terms of the PRSA merely
implement in greater detail the broadly-drafted
forfeiture-for-competition provision contained within the
original Plan Document. Therefore, according to UPMC,