Sixth Circuit Upholds Pension Fund’s Suspension of Benefits Due to Participant’s Post-Retirement Work

In Helgemo v. Operating Engineers Loc. 324 Pension Fund, No. 21-2951, 2022 WL 670139 (6th Cir. Mar. 7, 2022), Plaintiff-Appellant William Helgemo sued the Operating Engineers Local 324 Pension Fund for stopping his monthly pension benefits after it surfaced that he was engaged in post-retirement work prohibited by the Pension Fund. The Fund may suspend a participant’s benefits if he works full-time in Michigan in a job in the “same industry” as a fund-contributing employer, and in the “same trade or craft” in which he was originally employed. Prior to his retirement, Helgemo worked as a heavy equipment operator and superintendent for Hardman Construction. Several years into retirement Helgemo started working for S.S. Badger Lake Michigan Carferry Service as a laborer, but often performed work using heavy equipment. The Fund suspended Helgemo’s benefits on the basis that his work for S.S. Badger was in the same industry as Hardman and in the same trade or craft. The district court upheld the Pension Fund’s decision under the arbitrary-and-capricious standard of review and the Sixth Circuit affirmed.

The court first found that the district court properly applied the arbitrary-and-capricious standard of review and rejected Helgemo’s argument that the Pension Fund’s discretionary authority provision was prohibited by Michigan law. This is because the law, Mich. Admin. Code R. 500.2202(b), only applies to insurers and insurance contracts. The pension plan here is funded by employers, not insurance companies, and does not count as an insurance contract under Michigan law. Further, the Michigan Insurance Code does not purport to cover retirement funds.

The court then found that the Pension Fund reasonably interpreted its terms to determine that Helgemo’s post-retirement work fell within the same industry or the same trade or craft. The pension plan does not define “industry,” but applying the Department of Labor’s definition of industry to mean “the business activities of the types engaged in by any employers maintaining the plan,” it was reasonable for the Fund to find that both employers engaged in Great Lakes marine work or work in the maritime industry. The court rejected Helgemo’s argument that his pre-retirement industry should be considered at a lower level of generality, such as work in the heavy-duty construction industry, and his postretirement employment as in the shipping industry.

The pension plan also does not define “same trade or craft,” but applying the Department of Labor’s definition as “skills learned during a significant period of training or practice, which is applicable in occupations in some industry,” it was reasonable for the Fund to find that Helgemo’s postretirement employment had plenty of overlap in skills with his previous position. He operated similar heavy machinery which constitutes a type of skill that requires significant on-the-job training. Substantial evidence supported the Fund’s conclusion that Helgemo spent a lot of time over the course of his postretirement employment using the same skills he developed while at Hardman Construction.