Defined Procedures Required to Amend ERISA Plans

Article excerpt

THE U.S COURT OF APPEALS for the Third Circuit has held that the Curtiss-Wright Corp. (CW) violated the Employee Retirement Income Security Act (ERISA) when it cut off health insurance benefits for employees who'd retired from its Wood-Ridge, New Jersey, plant. The court reasoned that, because the employer's plan did not include an amendment procedure, an amendment to the plan providing the cutoff of such benefits to coincide with the plant's closing was invalid.

From 1966 to 1983, CW provided health benefits to active and retired employees through various different insurance providers. In 1976, CW established a welfare benefit plan in accordance with the recently enacted ERISA statute. It provided that CW reserved the right to modify, amend or terminate the plan. The company's summary plan descriptions (SPD), summary annual reports and other documents involving the benefit plan also provided that benefits could be modified, amended or terminated at CW's discretion.

In 1983, CW issued a new SPD that provided that: "Coverage under this Plan will cease for retirees and their dependents upon the termination of business operations of the facility from which they retire."

Later that same year, CW closed its Wood-Ridge plant. In accordance with the 1983 SPD, CW also notified individuals who had retired from the plant that their health benefits were being terminated.

A number of retirees who had their benefits terminated brought a class action suit against CW. They alleged that retirees had a vested right to retiree health benefits for life and sought damages as well as declaratory and injunctive relief.

Following trial, a federal district court found that, although CW had reserved the right to modify, amend or terminate the plan, the 1983 SPD permitting termination of retiree benefits upon closure of the plant at which they had worked could only be effective if added to the plan as an amendment. …


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.