815 F.2d 975 (4th Cir. 1987), 86-2578, Dameron v. Sinai Hosp. of Baltimore, Inc.

Docket Nº:86-2578.
Citation:815 F.2d 975
Party Name:Rebecca DAMERON; Florence McLean; Pinkie Ricks, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. SINAI HOSPITAL OF BALTIMORE, INC.; Administrative Committee of Sinai Hospital of Baltimore, Inc.; Grace Pryor; Sinai Hospital of Baltimore, Inc. Pension Plan, for Employees Covered Under the Collective Bargaining Agree
Case Date:April 07, 1987
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 975

815 F.2d 975 (4th Cir. 1987)

Rebecca DAMERON; Florence McLean; Pinkie Ricks, on behalf

of themselves and all others similarly situated,

Plaintiffs-Appellees,

v.

SINAI HOSPITAL OF BALTIMORE, INC.; Administrative Committee

of Sinai Hospital of Baltimore, Inc.; Grace Pryor; Sinai

Hospital of Baltimore, Inc. Pension Plan, for Employees

Covered Under the Collective Bargaining Agreement between

the National Union of Hospital and Health Care Employees,

Division of R.W.D.S.W., AFL-CIO, and its affiliate Local

District 1119 E, and Sinai Hospital of Baltimore, Inc.,

Defendants-Appellants.

No. 86-2578.

United States Court of Appeals, Fourth Circuit

April 7, 1987

Argued Jan. 6, 1987.

Page 976

Jeffrey Elliot Rockman, Leonard E. Cohen (Frank, Bernstein, Conaway & Goldman, Baltimore, Md., on brief), for defendants-appellants.

Gill Wylie Deford (Neal S. Dudovitz, Nat. Sr. Citizens Law Center, Los Angeles, Cal., Luther Blackiston, Legal Aid Bureau, Inc., Legal Services for Sr. Citizens, Baltimore, Md., on brief), for plaintiffs-appellees.

Before WINTER, Chief Judge, SPROUSE, Circuit Judge, and MERHIGE, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.

HARRISON L. WINTER, Chief Judge:

Defendants Sinai Hospital of Baltimore, Inc. (Sinai Hospital), the Administrative Committee of Sinai Hospital of Baltimore, Inc., the Sinai Hospital of Baltimore, Inc.

Page 977

Pension Plan, and an individual administrator of Sinai Hospital (collectively Sinai) appeal from a summary judgment entered by the United States District Court for the District of Maryland in favor of plaintiffs Rebecca Dameron, Florence McLean, Pinkie Ricks and other similarly situated employees of Sinai Hospital. The district court granted the plaintiffs' motion for summary judgment because it found that Sinai had violated the nonforfeiture provisions of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Secs. 1001 et seq. The district court also subsequently certified a class of current and future retirees under the pension plan 1, 626 F.Supp. 1012, and awarded attorneys' fees to the plaintiffs. 644 F.Supp. 551. We affirm except with respect to the district court's application of the appropriate limitations period to the claim of plaintiff Dameron.

I

Pursuant to a collective bargaining agreement, defendant Sinai Hospital and the National Union of Hospital and Health Care employees, Local 1199E (the union) established the Sinai Hospital of Baltimore, Inc. Pension Plan (the plan), a defined benefit plan for employees covered under the collective bargaining agreement. The plan became effective January 1, 1976.

The plan states that eligible employees are entitled to receive a pension each year after age 65 of an amount equal to "50% of his final average compensation, less eighty-three and one-third percent of his annualized primary Social Security Benefit." The plan defines a primary Social Security Benefit as "[t]he estimated primary Social Security Benefit to which an eligible Employee (assuming he has always been a covered Employee under the Social Security Act ) was or would become entitled upon reaching the age of sixty-five." (emphasis added) Thus, the plan integrates Social Security benefits into the formula for computing pension benefits by deducting a percentage of the estimated primary Social Security benefit which an employee is entitled to receive. 2 Sinai uses tables which provide an estimate of an individual's wage history, adjusted for inflation, based on the employee's date of birth and his "current monthly compensation" in order to derive a figure for the estimated Social Security benefit.

Since the plan's inception, more than fifty employees have retired under the terms of the plan, including the plaintiffs in this action. When these persons applied for benefits from the plan, they found that their pension benefits were being offset by amounts greater than the actual Social Security benefits which they were receiving. Subsequently, plaintiff Rebecca Dameron filed this action challenging the plan's use of the estimated Social Security offset under ERISA and the Taft-Hartley Act on behalf of herself and all other persons similarly situated. 3

II

Sinai's method of estimating actual Social Security benefits abridges the nonforfeitable rights which are guaranteed by the plan, and violates the provisions of ERISA regarding integration of Social Security benefits. Under ERISA, an employer's pension plan must guarantee that an employee's right to a "normal retirement benefit is nonforfeitable." 29 U.S.C. Sec. 1053(a).

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The plan must also insure that an employee's claim to a benefit derived from his own contributions is nonforfeitable and that the plan satisfies one of three alternative vesting and accrual schedules set forth in the statute. Sec. 1053(a)(1)(2). The concept of vested nonforfeitable rights is "critical to the ERISA scheme." Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 510, 101 S.Ct. 1895, 1899, 68 L.Ed.2d 402 (1981). Congress intended through these provisions to guarantee that a worker who was promised a right to pension benefits upon retirement actually receives those benefits. Id.; Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 375, 100 S.Ct. 1723, 1733, 64 L.Ed.2d 354 (1980).

A nonforfeitable right under ERISA means a right under a pension plan which is unconditional and which is legally enforceable against the plan. 29 U.S.C. Sec. 1002(19). Thus, ERISA leaves the question of what rights are vested by a plan largely to private parties to decide. Alessi, supra, 451 U.S. at 511, 101 S.Ct. at 1900. The question of what rights are vested in employees by this plan thus depends in part on the language of the plan itself.

The plan in this case provides for offsetting a percentage of the annualized primary Social Security Benefit against the benefits payable under the plan. The plan's definition of the primary Social Security benefit sets forth that Sinai will estimate the primary Social Security benefit to which an eligible employee is entitled. The plan also explicitly authorizes Sinai to assume that an employee has always been a covered employee...

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