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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
from Spencer’s Benefits Reports: The National Football League’s (NFL) retirement plans for players improperly determined the onset date of a former player’s disability. This was the ruling of the Fourth Circuit U.S. Court of Appeals in Jani v. Bert Bell/Pete Rozelle NFL Player Retirement Plan (No. 05-2386).
The NFL enrolls all players in the Bert Bell/Pete Rozelle NFL Retirement Plan and the NFL Player Supplemental Disability Plan. The retirement plan language determines eligibility for benefits, while the supplemental disability plan operates to augment the size of benefits awards after eligibility has been established under the retirement plan. Together, the two plans provide for four types of benefits for players who suffer a total and permanent disability as a result of playing football. A player can qualify for “active football” benefits if a disability resulting from NFL football activities arises while the player is an active player and causes the player to be totally and permanently disabled “shortly after” the disability first arises. A lesser benefit, called “football degenerative” benefits, are available provided that the disability “arises out of league football activities, and results in total and permanent disability before the later of age 45 or 12 years after the end of the player’s last credited season.”
Mike Webster played center for the Pittsburgh Steelers from 1974 to 1988. After becoming a free agent, Mr. Webster played for the Kansas City Chiefs in 1989, and he played as a backup center in 1990. While playing as a center, Mr. Webster endured numerous blows to the head. After playing 16 years and sustaining multiple concussions, Mr. Webster retired from football in March 1991.
Mr. Webster’s remaining 11 years of life were plagued by a series of failed business ventures and stunted career attempts. Mr. Webster failed in auditions for a position as a football analyst for NBC, and he also failed in several investment positions. Mr. Webster then returned to football in 1994 as a strength and conditioning coach for the Kansas City Chiefs. The assistant general manager of the Chiefs indicated that Mr. Webster was hired “as a favor” and that he was not “doing very well during this time period and may have been living in his car.” Mr. Webster left the coaching position at the Chiefs in 1995, and he was mostly unemployed thereafter.
Mr. Webster contacted the NFL retirement plans on five occasions in 1995 and 1996, seeking an application for filing a disability claim, but he did not complete any of those applications. Then, in 1998, Mr. Webster was diagnosed with brain damage resulting from multiple head injuries that he had incurred while playing football. In the spring of 1999, Mr. Webster finally completed an application for disability benefits under the NFL plans. In support of his claim, Mr. Webster submitted his postretirement medical records from four physicians, which revealed that he sought medical treatment for physical ailments between March 1991 and September 1995. Those records indicated that Mr. Webster suffered from cancer of the lymph nodes, depression, obsessive-compulsive disorder, and post-concussion syndrome. A psychologist also diagnosed Mr. Webster with brain damage resulting from his football-related head traumas. On his application for benefits, Mr. Webster stated that his disability arose in March 1991.
The NFL plans awarded Mr. Webster the lesser football degenerative benefits prospectively without setting an onset date for his total and permanent disability. Mr. Webster appealed and submitted supplemental reports from two physicians, both of whom concluded that Mr. Webster was totally and permanently disabled as of March 1991. The plans then hired a private investigator to delve into Mr. Webster’s employment history, and the investigator found evidence that Mr. Webster was nominally involved in various business ventures. While the investigation was underway, Mr. Webster died of a heart attack on Sept. 24, 2002. The administrator of Mr. Webster’s estate then filed suit against the NFL plans in the U.S. District Court for the District of Maryland, seeking to recover the greater active football benefits. The district court held that the plans had abused their discretion by ignoring the unanimous medical evidence that established March 1991 as the onset date for Mr. Webster’s total and permanent disability, and the Fourth Circuit affirmed that ruling.
In rendering its decision, the Fourth Circuit initially explained, “Because a fiduciary must present substantial evidence to justify a denial of benefits, it logically follows that a fiduciary appears to abuse its discretion when, in denying benefits, it ignores unanimous relevant evidence supporting the award of benefits. The plans proffer two principal justifications for the denial of Active Football benefits. First, the plans argue that Webster could not possibly have been ‘substantially unable to engage in any occupation or employment for remuneration or profit’ because he was actually employed between 1991 and 1996. The plans cite Webster’s work as a strength and conditioning coach for the Chiefs in 1994-95, and his ongoing self-employment from 1991 to 1996. Not one of these ostensible occupations provides substantial evidence that Webster was not ‘substantially unable to engage in any employment’ between 1991 and 1996. First, Webster need only show that he suffered total and permanent disability ‘shortly after’ his disability first arose upon retirement.
“Second, Webster’s coaching position with the Chiefs is excluded from consideration by the plain language of the plan itself. Section 5.2 provides, ‘A player will not be considered to be able to engage in any occupation or employment for remuneration or profit merely because such person is employed by an employer’ that is, a team, ‘or is employed out of benevolence.’ Because Webster was ‘employed by an Employer,’ and, moreover, was ‘employed out of benevolence,’ the plan twice deprives Webster’s brief coaching spell of any conclusive value. Finally, Webster’s occasional representations in the early 1990s that he was gainfully employed and that his various sinecures demanded his full-time attention evaporate in the absence of any evidence to show that Webster ever earned a single dollar from or contributed anything other than his name to these enterprises. [The plan’s] own investigator refutes its conclusion that Webster was able to work after retirement.” Accordingly, the Fourth Circuit ruled that Mr. Webster was entitled to the greater Active Football benefits.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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