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Sixth Circuit Limits Reach of Yard-Man Inference on Vesting of Welfare Benefits

The U.S. Court of Appeals for the Sixth Circuit recently addressed the enforceability of a plan amendment limiting to a period of two years the duration of collectively-bargained occupational disability benefits under a pension plan. The opinion is notable because it distinguishes existing case law on the vesting of welfare benefits cited by both the participant and the plan. The plaintiff, a participant who was already receiving the disability benefits at issue, argued that the amendment violated ERISA because his benefits were vested as a matter of law. The district court agreed, relying on Int?ÇÖl Union, United Auto., Aerospace, & Agric. Implement Workers of Am. v. Yard-Man, Inc., 716 F.2d 1476, 1482 (6th Cir. 1983), under which an inference in favor of vesting is used to determine whether a right to retiree health benefits continues beyond the expiration of a collective bargaining agreement. The Sixth Circuit vacated the district court decision, holding that retiree health benefits were sufficiently different from disability benefits to make Yard-Man inapplicable. But, the Court of Appeals also declined to apply a line of cases under which, when a welfare benefit is unilaterally provided by an employer, the benefit is vested only if the plan document contains a clear and express statement of intent to vest. The court reasoned that those cases involved a unilateral offer by the employer, whereas the disability benefits at issue here had been collectively bargained. Finally, the Court of Appeals determined that the district court should have applied a deferential standard of review in determining whether the elimination of disability benefits was a permissible amendment and remanded the case to the district court for proper review of the decision. Price v. Board of Trustees of the Indiana Laborer’s Pension Fund, Nos. 09-3897/4204 (6th Cir. 2011).

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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January 2011