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Sikora v. UPMC

United States District Court, W.D. Pennsylvania

January 10, 2017

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.


          Mark R. Hornak United States District Judge.

         Plaintiff 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.

         At the 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.

         I. BACKGROUND

         UPMC 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.[1] 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.

         In 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 follows:

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 Entities.

ECF Nos. 1-2 at 7-8; 79 at 3; 85 at 9-10.

         In 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.

         Things 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.

         Sikora 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.

         UPMC 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, Sikora's ...

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