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Disabled union worker loses benefits when plan is amended 16 years later

James Price is a union worker who became totally disabled in 1990.  All parties agree that he was elgible for disability benefits at that time and that he remains totally disabled from his occupation.  Nevertheless, in 2005 the Trustees of his multi-employer ERISA benefit plan amended the plan to limit workers to two years of occupational disability benefits, commencing December 31 of 2006.  On that date, Price stopped receiving disability payments.  He filed suit alleging that his benefits had "vested," making the premature discontinuation of benefits a violation of ERISA law.

The three-member panel of the federal Sixth Circuit Court of Appeals assigned to Price's case disagreed with regard to Price's rights.   The lower court had awarded him continued disability benefits, finding a violation of ERISA law in the Trustees' subsequent amendment discontinuing benefits.  It held that the amendment at issue could only apply to future disabled workers and could not apply to "revoke" disability payments already awarded (although the employee must continue to qualify as "disabled," of course).

Even though the particular ERISA agreement, which represents the parties' inferred agreement or expectation, provided that "no amendment shall be made which results in reduced benefits for any Participatnt whose rights have already become vested under the provisions of the Plan," the Appellate majority refused to infer that Price's benefits had "vested" over the 16 years of payment.  Judge McKeague and Judge Sutton concluded that, unlike retiree benefits, disability benefits do not "vest" when payment commences, and they may be bargained-away in subsequent Collective Bargaining Agreements. 

Judge Jonker filed a concurring opinion in which he explicitly disagreed with the rationale of the opinion authored by Judge McKeague.  Judge Jonker, a George W. Bush-appointee to the Western District bench in Michigan, saw no basis for distinguishing between this type of occupational disability benefit and a retirement benefit. Judge Jonker pointed out that if the McKeague holding is sustained, an injured worker will have no reliable disability plan and Union members will need to purchase their own individual plan.  He also pointed out that under the McKeague analysis, a Union member's death benefit could be discontinued after his death, by a subsequent amendment of the Plan:  in both cases, Judge Jonker believes that the ERISA welfare benefit should be determined on the date of the initial qualifying event (i.e., the death or determination of disability) and the Plan should not be allowed to modify the qualifying language after-the-fact.

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