Pension Benefit Guaranty Corporation psE 1200 K Street. N.W.. Washinglon. D.C. 20005-4026 

JAN Z 9 2004 

Re: Appeal I Case 181397, Noncontributory Pension 

~ian for Hourly Employees of Edgewater Steel company (the 

Plan) 

Dear i 

I The Appeals Board reviewed your appeal of PBGC's December 9, 

2002 determination that you were not entitled to a benefit under 

the Plan. For the reasons stated below, we changed PBGC1fi 

determination by finding that you continued to accrue "Continuous 

Service" for eligibility purposes until the Plan terminated on 

March 21, 1997, and that you are, therefore, entitled to a vested 

benefit under the Plan. 

As a result of our decision, the Insurance Operations 

Department (IOD), the PBGC group responsible for issuing benefit 

determinations, will send you a new determination letter in which 

they will inform you of the amount of the retirement benefit to 

which you are entitled under the Plan. The new determination will 

include a new 45-day right to appeal.. 

Determination and Appeal 

PBGC1s letter told you that you were not entitled to a PRGC 

benefit. It explained that you were ineligible because, when your 

employment terminated, the Plan required 10 years of service to 

qualify for a vested pension, and you had only eight years of 

service. It noted that the eight years included two years of 

service you accrued while receiving disability payments and that 

for pension purposes, service accrual ended after two years of 

inactive service. 

Your December 28, 2002 appeal stated that from 1978 to 2001, 

you were permanently disabled and could not work and that the 

Edgewater Steel Company (E:dgewater) did not have a light duty juh 

prescribed by your physician. You maintain that you were never 

terminated and that crediting of your service never ended. Yuu 

stated that you continue to receive permanent disability benefit 

payments from the LAberty Mutual Insurance Company on behalf of 

Edgewater. 
Discussion 

1. Employment and Injury 

Documents available to the Appeals Board show that you briefly 

worked for Edgewater from March 10, 1975 to May 31, 1975 when, as 

a probationary employee, Edgewater let you go because of lack of 

work. Edgewater rehired you on April 25, 1977. The last entry on 

your Edgewater employment record is dated January 30, 1978, when 

you transferred to the Ingot Department. With your authorization, 

PBGC obtained a record of your earnings as reported to the Social 

Security Administration (SSA) for the years 1977 through 1997, the 

year in which the Plan terminated. Your SSA record is formatted to 

show earnings for each calendar quarter in 1977, but only annual 

earnings for each subsequent year. The SSA record shows you 

received earnings from Edgewater for 1977 consistent with your 

rehiring in the second quarter of 1977. The SSA record also shows 

full employment, or significant perjods of earnings, in 1978, 1979 

and 1980. Your SSA-reported earnings declined sharply in 1981 and 

1982, and hardly any were reported for 1983. Your SSA record shows 

no earnings at all for the years 1984 through 1997. 

During telephone conversations on February 13, 2003, and 

March 6, 2003, you told the analyst assigned to your appeal that 

your back was injured at work on July 26, 1978, and that the injury 

resulted in removal of a disk. In response to the analyst's 

request for information reaardincr cessation of vow wahxs& 

compensation payments, 1 - 1 a law firm which represented you in your 

workers' compensation claim, sent us a letter dated March 18, 2003. 1 stated that you were paid workers' compensation 

benefits for temporary total disability as a result of the July 26, 

1978 accident until September 20, 2001, when your claim was 

enclosed 

resolved 

a 

by 

copy 

an agreement 

of the court 

on 

decision 

a lump-sum 

approving the 

payment. 71 

agreement. Ile 

also enclosed copies of three letters you received on different 

matters'in 1996, 1997 and 1998 either as a participant in the Plan 

or as an employee of Edgewater and stated that you were considered 

an active employee because you had sustained a work-related injury 

and were continuing to receive benefits. One of those three 

letters, a copy of which we have included as our Enclosure, is a 

March 6, 1996 1ett.e~ from Hallwell & Associates, which indicates 

that they were performing a study of the feasibility of a "buyout" 

of the Plan and had estimated ["based on the 196'3 Group Annuity 

Table wjt.h an even blend of male and female rates as required by 

the General Agreement on Tariffs and Trade (GATT) legislation, and 

a 6.37% interest rate, the GATT interest rate for calculating lumps 

sums as of Octoher 1995"J that a lump sum of $17,006 would be 
equivalent to the annuity otherwise payable to you as one of 

Edgewater's "active employees" under the Plan. 

2. Plan Provisions 

Section 2.11 of the Plan provided, as did the governing 

documents of the Plan from its inception, that Continuous Service 

was service from the last date of hire and that there would be no 

deduction for any time lost which did not constitute a break in 

Continuous Service, except that the portion of an absence due to a 

shutdown, layoff or physical disability that continued beyond two 

years was not creditable as Continuous Service. However, there was 

an exception to the exception, that being an absence due to a 

compensable disability incurred at work if the participant returned 

to work after the final payment- of the statutory compensation for 

disability or after the end of the period used in calculating a 

lump-sum payment of statutory compensation for disability. Plan 

Section 2.11 also provided that a Break in Continuous Service would 

be caused. by quit, discharge, termination, or an absence which 

continued for more than two years. With regard to the latter, an 

exception provided that there was no Break in Continuous Service 

for a participant absent due to a compensable disability incurred 

at work if the participant returned to work after the final payment 

of the statutory compensation for disability or after the end of 

the period used in .calculating a lump-sum payment of statutory 

compensation for disability. 

Based on the Plan provisions described above and your SSA 

earnings record, PBGC concluded that you incurred a break-inservice sometime in 1985 or 1986, because you did not return to 

work with Edgewater after receiving workers' compensation payments. 

3. Arbitrator's Decision 

If the Appeals Board were to base our review solely on the 

Plan provisions described above and your SSA earnings record, the 

Board might agree with PHGC's determination. However, records 

avajlable to the Board include the actuarial valuation reports 

(AVRs) prepared by Hallwell & Associates for Plan years 1991 

through 1993. In the "Remarks" sections of those AVRs, the Plan's 

actuaries wrote : 

"WORKERS' COMPENSATION 

Active participants who go on workerst compensation 

remain in the active group. This treatment resulted from 

an arbitration decision that. service contj.nues to accrue 

in thj s situation. '' 
Furthermore, in the Summarj.es of PlanProvisions found in each 

of those AWs, the Plan's actuaries defined "Continuous Service" as 

service from the applicablehire date, and stated: 

"Service continues to accrue while receiving workers' 

compensat j on. " 

Because the Appeals Board was unable to locate a copy of the 

arbitrator's decision, the Board does, not know the date of the 

arbitrator's decision and whether the arbitrator's decision should 

apply to your situation. However, because the Board's review of 

the history of the Plan's governing documents found that the Plan's 

provisions have not changed in any meaningful respect since the 

Plan's inception, and because the March 6, 1996 letter from 

Hallwell & Associates indicates that Edgewater considered you to be 

an active employee at that time, the Appeals Board decided that 

Edqewater likely considered you to be an active employee in March 

1.996 as a result of applying the arbitrator's decision to your 

sj tuatj on. The Roard concluded that you accrued "Continuous 

Service" under the Plan while you were receiving workers' 

compensation payments until the Plan terminated even though you did 

not return to work with Edgewater, and that you, therefore, 

fulfilled the requjrenlents for a vested benefit under the Plan. 

Decision 

Having applied Plan provisions and PRGC's rules to the facts 

in this case, the Appeals Board changed PBGC1s determination by 

finding that you continued to accrue "Continuous Service" for 

eligibility purposes until the Plan terminated, and that you are, 

therefore, entitled to a vested benefit under the Plan. 

When IOD receives a copy of this decision, they will send you 

a new determination letter in which they will inform you of the 

amount of the retirement benefit to which you are entitled under 

the Plan, and other matters. The new determination will include a 

new 45-day right to appeal. 

Sf you need more information about your benefit, please call 

the Customer Contact Center at 1-800-400-7242. 

Si ncerelv. 

Michel I~ouis 

Acting Chair, Appeals Board 

Encl osure