Opinion ID: 3009695
Heading Depth: 2
Heading Rank: 3

Heading: The Elimination of Haberern's Life Insurance

Text: Benefit and the Simultaneous Increase of the Doctors' Life Insurance Benefit The district court found that the appellants' elimination of life insurance benefits in the defined benefit plan for beneficiaries over age 56, a change which affected only Haberern, and the simultaneous tripling of the face amount of the life insurance policies for Kaupp and McDonald, constituted a violation of section 510 of ERISA. The district court reached this conclusion after finding that the appellants' stated reason for the changes, that they wished to reduce costs, was beyond belief in light of the increase in coverage for the doctors. Haberern, 822 F. Supp. at 262. The appellants argue that section 510 does not apply because, while it prohibits discrimination against a plan participant for the purpose of interfering with the attainment of 28 plan rights, it does not prohibit plan amendments which affect only one person. We agree. Section 510 of ERISA provides: It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan . . . or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan. . . . 29 U.S.C. § 1140. We have stated that Congress enacted section 510 primarily to prevent unscrupulous employers from discharging or harassing their employees in order to keep them from obtaining vested pension benefits. Gavalik v. Continental Can Co., 812 F.2d 834, 851 (3d Cir.) (quoting West v. Butler, 621 F.2d 240, 245 (6th Cir. 1980)), cert. denied, 484 U.S. 979, 108 S.Ct. 495 (1987). See also Ingersoll-Rand, 498 U.S. at 143, 111 S.Ct. at 485 ([b]y its terms § 510 protects plan participants from termination motivated by an employer's desire to prevent a pension from vesting. . . . We have no doubt that his claim is prototypical of the kind Congress intended to cover under §510.) (citations omitted). Section 510 makes it unlawful to discharge, fine, suspend, expel, discipline, or discriminate. . . . 29 U.S.C. § 1140. The only one of these terms capable of broad interpretation is discriminate. But courts construing discriminate have concluded, consistently with our approach in Gavalik, that the term should be limited to actions affecting the employer-employee relationship, and we adhere to this construction. 29 McGath v. Auto-Body North Shore, Inc., 7 F.3d 665 (7th Cir. 1993), is helpful. In McGath, the employer hired the plaintiff, McGath, in July 1983. At that time it maintained an ERISA-qualified pension plan for its eligible employees. One of the requirements to qualify for the plan was the completion of one year of service. After completing one year of service, an employee would be admitted into the plan on the next entry date, either October 1 or April 1. After McGath had completed one year of service, but before the next entry date into the plan, the employer became concerned that it would not survive financially subsequent to McGath's entry into the plan. To solve this problem, on September 30, 1984, the employer amended the plan to require three years of completed service. McGath continued to work for the employer. Two years later, on September 30, 1986, when McGath was one day short of becoming eligible under the plan, the employer amended it to limit eligibility to those eligible on September 30, 1986. When McGath retired three years later, he unsuccessfully claimed benefits under the original plan. McGath filed suit alleging that the defendants had interfered with his attainment of pension benefits by deliberately discriminating against him in violation of ERISA section 510, 29 U.S.C. § 1140. The district court granted the defendants summary judgment. It concluded that section 510 protects only against actions intended to deny plan rights that affect the employment relationship. 30 Because the amendments affected only the terms of the plan, and did not affect McGath's employment, there was no violation. The court of appeals affirmed. It noted that it had previously determined that: the focus of § 510 is not on amendments to the plan itself. Rather we held that '[i]t is clear from the text of the statute . . . that § 510 was designed to protect the employment relationship against actions designed to interfere with, or discriminate against, the attainment of a pension right. . . . Simply put, §510 was designed to protect the employment relationship which gives rise to an individual's pension rights. . . . This means that a fundamental prerequisite to a § 510 action is an allegation that the employer- employee relationship, and not merely the pension plan, was changed in some discriminatory or wrongful way.' McGath, 7 F.3d at 668 (quoting Deeming v. American Standard, Inc., 905 F.2d 1124, 1127 (7th Cir. 1990) (emphasis in original)). The court then concluded McGath did not have a cognizable section 510 claim. The court noted that McGath also alleged that the employer discriminated against him by bending the eligibility requirements for others. The court rejected the argument that there was a genuine issue of triable fact as to whether such discrimination took place, concluding: We need not address, however, this nettlesome issue because, even if Mr. McGath were able to show such disparate treatment, we do not believe that § 510 provides him any relief. Because the employer, as the settlor of the plan, had the right to change the plan's terms, Mr. McGath cannot claim that the alleged discriminatory injury flows from the plan amendments. . . . ERISA § 510 affords protection from discrimination that interferes 'with the attainment of any right to which such participant may become entitled under the plan.' Mr. McGath does not have a right to treatment that is contrary to the terms of the plan, even if those terms are breached for others. 31 McGath, 7 F.3d at 670 (emphasis in original). Other courts have reached similar results. See West v. Butler, 621 F.2d at 245-46 (we conclude that discrimination, to violate § 510, must affect the individual's employment relationship in some substantial way.); Deeming v. American Standard, Inc., 905 F.2d at 1128 ([s]ection 510 of ERISA is simply not the appropriate vehicle for redressing the unilateral elimination of severance benefits accomplished independently of employee termination or harassment.); Owens v. Storehouse, Inc., 984 F.2d 394, 398 (11th Cir. 1993) ([i]t is insufficient merely to allege discrimination in the apportionment of benefits under the terms of the plan); McGann v. H & H Music, 946 F.2d 401, 408 (5th Cir. 1991), cert. denied, 113 S.Ct. 482 (1992) (section 510 does not apply to a plan limit on AIDS-related claims for all employees even if AIDS benefits singled out for discriminatory purpose) But see Newton v. Van Otterloo, 756 F. Supp. 1121, 1136 (N.D. Ind. 1991) ([r]etaliatory curtailment of benefits under an ERISA plan may trigger § 1140); Vogel v. Independence Fed. Sav. Bank, 728 F. Supp. 1210, 1226 (D. Md. 1990). Our analysis compels us to hold that the appellants' action in adopting the life insurance amendment is not actionable under section 510. If we held otherwise, our ruling would contradict the plain language of that section. Additionally, we would overlook the structure of ERISA which sets forth separate provisions for the protection of the employment relationship in section 510 and the protection of beneficiaries from 32 discriminatory modifications of pension plans in section 240(g), 29 U.S.C. § 1054(g).0