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Sims v. American Postal Workers Accident Benefit Association

United States District Court, First Circuit

August 30, 2013

William P. Sims, Jr.
v.
American Postal Workers Accident Benefit Association Opinion No. 2013 DNH 115

MEMORANDUM AND ORDER

Paul Barbadoro United States District Judge

This is an ERISA case in which William Sims, a former employee of the American Postal Workers Accident Benefit Association (“APWABA”), is challenging the amount of the pension that he was awarded pursuant to the APWABA Pension Plan. The parties have filed cross motions for judgment on the administrative record.

I. BACKGROUND[1]

The APWABA is a non-profit accident benefit association organized by United States postal employees. The association provides for the payment of benefits to its members and their beneficiaries in the case of temporary disability, dismemberment, or death resulting from a covered accident. The APWABA provides a pension plan for its full-time officers and employees.

A. The Prototype Plan and Adoption Agreement

The APWABA pension plan (the “Plan”) is governed by the “Invesmart, Inc. Prototype Non-Standardized Non-Integrated Defined Benefit Prototype Plan” (the “Prototype Plan”). Def. Doc. No. 3.[2] The Prototype Plan anticipates that the employer will define certain elective provisions in a separate “Adoption Agreement.” Def. Doc. No. 3 § 1.6. Sims’ APWABA pension is governed by the “Adoption Agreement for Invesmart, Inc. Non-Standardized Non-Integrated Defined Benefit Pension Plan” (the “Adoption Agreement”) signed by Sims and James McCarthy on November 18, 2005. Def. Doc. No. 2. The Adoption Agreement adopts the terms of the Prototype Plan and sets forth specific provisions governing Sims’ pension. The Prototype Plan further provides that it, the Adoption Agreement, and any amendments thereto shall comprise the Plan. Def. Doc. No. 3 § 1.57.

According to the Adoption Agreement, Sims is entitled to receive three percent of his “Average Compensation” for each year of service credited. Def. Doc. No. 2 § 21. The Adoption Agreement defines “Average Compensation” as “the average of the Participant’s Compensation during the Averaging Period that falls within the Participant’s Compensation History.” Id. § 20. The “Averaging Period” is the three consecutive “Measuring Periods” that provide the highest average compensation. Id. § 20(b). The “Measuring Period” is the “Plan Year, ” which in turn is defined as a twelve consecutive month period beginning on January 1st and ending on December 31st. Id. §§ 7, 20. The Adoption Agreement defines “Compensation” as “[w]ages, tips and other compensation on Form W-2.” Id. § 19.

The Prototype Plan authorizes the APWABA to appoint a Plan Administrator and provides that if an Administrator is not appointed, the APWABA will be the Administrator. Def. Doc. No. 3 § 2.2. The Plan Administrator has the “power and discretion to construe the terms of the Plan and determine all questions arising in connection with the administration, interpretation, and application of the Plan.” Id. § 2.4. Any such determination by the Administrator is “conclusive and binding upon all persons.” Id.

Pursuant to section 2.11 of the Prototype Plan, an employee who has been denied a benefit by decision of the Administrator is entitled to request a hearing for further consideration of his or her claim. Id. § 2.11.

Article VIII of the Prototype Plan grants the APWABA the right to amend the Plan, subject to certain limitations. Def. Doc. No. 3 § 8.1(a). The APWABA may change the options in the Adoption Agreement or add an addendum to the Adoption Agreement if the addendum is “specifically permitted pursuant to the terms of the Plan.” Id. § 8.1(b). No amendment to the Plan is effective if it “causes any reduction in the amount credited to the account of any Participant.” Id. § 8.1(d).

B. Sims’ Pension Benefit

Sims served on the APWABA Board of Directors from September 1, 1998 through August 31, 2006. He served as the Assistant National Director from September 1, 1998 through January 2004 and the National Director from February 2004 through August 31, 2006. Sims was voted out of office and left the Board on August 31, 2006.

Sims participated in the ABWABA pension plan. According to the Adoption Agreement, Sims is entitled to receive three percent of his average compensation for each year of service. Def. Doc. No. 2 § 21. Sims completed eight years of full-time service with the APWABA and, pursuant to the version of the Plan that was in effect when he was terminated, he received another five years of pension credit based on his prior service with the United States Postal Service. Sims was thus entitled to thirteen years of service credit under the Plan. Both sides agree that Sims is entitled to a pension, but disagree about the proper method of calculating the amount of his pension.

Prior to Sims’ retirement, the Plan had been interpreted two different ways, according to Thomas Tierney, the Plan’s former actuary. Prior to July 3, 2003, all benefits were determined, with a few exceptions, using a Plan participant’s average annual salary during the thirty-six month period immediately preceding his or her retirement. Pl. Doc. No. 9 at 151. After July 3, 2003, Tierney used a new procedure to determine average annual salary. The new procedure was developed because in 2003 Hank Greenberg, the national director of the APWABA in 2003, wanted to increase a particular person’s pension. Pl. Doc. No. 2 at 46. Tierney advised Greenberg that the plan language was flexible and that he had the “administrative authority” to interpret the Plan differently. Id. at 47. Accordingly, Greenberg changed the interpretation of the Plan and began to “annualize” a participant’s wages in his or her last calendar year of service. Thus, if a participant worked only part of his last calendar year of ...


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