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Pension and Employee Benefits: Code, ERISA, & Regulations
Authoritative and comprehensive reference to pension and selected welfare benefit provisions of the I.R.C., ERISA and the associated regulatory authority.
A waiver of rights to a joint and survivor pension annuity benefit that is valid on its face nevertheless will be invalid if the plan breached its fiduciary duty to the widowed spouse of a participant to disclose material information to her while she was signing the waiver forms, the U.S. District Court for New Jersey (DC NJ) has ruled in Canestri v. NYSA-ILA Pension Trust Fund and Plan.
In December 2004, the wife of a pension plan participant signed a series of forms in which she waived her rights to a J&S annuity benefit as part of her husband's pension. Sixteen months later, her husband was dead, and she was not entitled to further benefits.
The widow sued the plan, alleging breach of fiduciary duty. The court made an initial ruling that ERISA preempted any common law claims, then proceeded to analyze her claim as a claim for benefits under ERISA §502(a)(1)(B) and for breach of fiduciary duty under ERISA §502(a)(3).
Involuntary waiver
The widow argued that her waiver was not knowing and voluntary. Neither she nor her husband read the documents they were signing. The plan representative failed to explain the documents to them. Her husband was using portable oxygen as he signed the documents, and remarked to the plan representative that he felt unwell and needed insulin.
The plan argued that even if all the widow's factual assertions were true, they are irrelevant because the waiver as executed conforms on its face to the requirements set forth in ERISA §205(c).
It's true that generally speaking a properly executed waiver cannot be challenged later by protestations from an aggrieved party regarding what her actual intent might have been. However, the court explained, plan representatives participating in the execution of such waivers have a fiduciary duty to disclose to the beneficiary material facts which the beneficiary should know for her own protection. If that duty is breached, then the waiver is invalid.
Fiduciary breach?
The court rejected the plan's summary judgment motion, citing evidence in the record that might allow a fact finder to determine that a fiduciary breach had occurred. Conflicting testimony suggested that someone other than the widow might have completed a critical "check-off" box on one form at a later time. In addition, given the husband's ill health, the court appeared troubled by the plan representative's alleged failure to explain to the widow the potential downside of her waiver.
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