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01-3790 Reich v. Ladish Co. Inc.

By: dmc-admin//October 14, 2002//

01-3790 Reich v. Ladish Co. Inc.

By: dmc-admin//October 14, 2002//

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“According to Ladish’s definition of Participant, in addition to reaching his fifteenth year of employment and becoming disabled while employed, Reich was required to receive a finding of disability from the SSA while he was still employed. Ladish insists on this interpretation even though it did not require Reich or any other employee to reach age 60 while still an employee in order to receive deferred vested retirement benefits under an identically worded provision. We expressed our concern at oral argument that the Disability retirement benefit is illusory under this definition because the company is free to terminate a disabled employee long before he or she completes the lengthy process of receiving a finding of disability from the SSA. Ladish dismissed this concern by explaining that it has provided this benefit to 156 disability retirees, each of whom were still employees of Ladish when they met all of the requirements for receiving the benefit. Presumably this means that Ladish was willing to keep these employees on extended medical leave while they pursued a finding of disability from the SSA. Nothing in the Plan required them to do so, however, and as was shown in Reich’s case, the company was able to arbitrarily deny a particular employee disability benefits by terminating him rather than granting extended medical leave while he pursued Social Security disability benefits.

“If a break in service is not relevant to Reich’s status as a Participant for deferred vested retirement benefits, for example, it is not relevant to his status as a Participant for Disability Retirement benefits. Ladish has no explanation for treating identically worded provisions differently. Once a term has been defined by the Plan and interpreted by the administrator to have a particular meaning, the administrator may not change the meaning when the term is used in a different part of the Plan without any basis in the Plan or in ERISA to do so. This is the very definition of arbitrary and capricious. Ladish has not offered a single reason, either in its brief or at oral argument, to give two different meanings to the word ‘Participant’ in two different parts of the Plan. Having conceded that Reich is a Participant for the purposes of the deferred vested retirement benefits, the Plan may not argue that he is not a Participant for the purposes of Disability retirement benefits. Such a decision is therefore clearly unreasonable, and cannot stand. Because Ladish’s sole reason for the denial of benefits rests on an unreasonable interpretation of the Plan, Reich is entitled to summary judgment.”

Reversed and remanded.

Appeal from the United States District Court for the Eastern District of Wisconsin Goodstein, Mag. J., Rovner, J.

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