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Fourth Circuit Revives Retirees Claim of Vested Retiree Life Insurance Coverage

In Bellon v. PPG Emp. Life & Other Benefits Plan, No. 21-1812, __F.4th__, 2022 WL 2760764 (4th Cir. July 15, 2022), a putative class action brought by retirees of PPG Industries against the PPG Employee Life and Other Benefits Plan, PPG, and the PPG Plan Administrator, for wrongfully terminating their retiree life insurance coverage under the Benefits Plan, the Fourth Circuit vacated the district court’s grant of summary judgment to the defendants on plaintiffs’ vesting claim (Count I) due to a genuine dispute of material fact as to whether eligible employees working for PPG during the 15-year period from 1969 to 1984 vested in their right to retiree life insurance coverage.

The 1981 Summary Plan Description for the Benefits Plan stated, “the amount of [their] retiree life insurance is continued at no cost.” The 1981 SPD did not contain a reservation of rights clause with respect to retiree life insurance, but it had such a clause with respect to other benefits. In 1984, PPG inserted into the Benefits Plan a new reservation of rights clause that applied to retiree life insurance coverage. After the parties briefed their motions for summary judgment, the PPG defendants notified plaintiffs of newly discovered evidence consisting of 24 pages of 1984 meeting minutes of the PPG Employee Benefits Committee (“EBC”) (“undisclosed EBC minutes”) which revealed that PPG had a reservation of rights clause in the Benefits Plan prior to 1969 but it was removed in 1969 because it “caused doubt in the minds of retirees and the sense of security that retirees look for was absent.” It was also removed because the EBC believed “[t]he legal ability to enforce such caveats was … in doubt.” In 1984, the EBC adopted the new reservation of rights clause providing that retiree benefits other than the pension plan may be modified in the future for those retiring on and after September 1, 1984.

The district court denied plaintiff’s Rule 56(d) motion to authorize time for further discovery. Plaintiffs argued that the new documents provided compelling evidence that the retiree life insurance benefits are vested. The district court did not find the undisclosed EBC minutes to be material to the ultimate issues and ruled in favor of defendants. “The court suggested that even if retiree life insurance coverage constituted a vested benefit between 1969 and 1984, the adoption of the reservation of rights clause in 1984 allowed PPG to thereafter terminate such coverage for Plan participants who worked between 1969 and 1984, but who had not yet retired. In other words, consistent with ERISA, PPG could terminate retiree life insurance coverage for not only future Plan participants, but also present ones.”

On appeal, the Fourth Circuit found that the district court erred in awarding summary judgment to the PPG defendants on Count I. The court “agreed with the plaintiffs that if their retiree life insurance coverage were ever a vested benefit, PPG could not rely on the later-added reservation of rights clause to terminate that coverage.” If the removal of the prior reservation of rights clause in 1969 vested retiree life insurance coverage for Plan participants working between 1969 and 1984, then the 1984 reservation of rights clause only allowed PPG to modify or terminate retiree life insurance coverage for participants hired after the clause’s adoption. In light of this and other evidence manifesting an intent to vest benefits in 1969, the court determined that vesting is a disputed issue of material fact, vacated the court’s judgment with respect to this claim, and remanded for further proceedings.

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