Tardio v. Boston Scientific Corporation U.S. Severance Plan for Exempt Employees

Background

Robert Tardio was a former Boston Scientific Corporation sales representative and a participant in the company’s unfunded severance benefits plan, which was governed by the Employee Retirement Income Security Act (ERISA). Boston Scientific initially notified Tardio that he would be laid off and that he was initially eligible for severance benefits. The plan required, among other conditions, that a participant receive layoff notice, remain employed and actively at work until the specified last day, continue honoring contractual obligations, and sign a release agreement without revoking it.

Tardio signed and returned the release agreement on May 11, 2016. The agreement stated that Boston Scientific would pay $182,120.27 after the rescission period if he did not revoke it. Before that payment date, Boston Scientific investigated a May 4 incident in which employees reported that Tardio threw or dumped company medical-device products onto the ground while returning them. Tardio later admitted emptying company products from his bins and putting them on the ground. Boston Scientific determined that the conduct caused a total loss valued at $79,500 and terminated Tardio for cause effective May 4, 2016.

The plan then denied Tardio’s severance claim. The plan administrator and, on appeal, the BSC Employee Benefits Committee concluded that Tardio was ineligible because his termination was for cause. Tardio sued the plan under ERISA, seeking payment of the claimed severance benefits.

Legal standard and analysis

The plan gave its administrator discretionary authority to interpret the plan and decide eligibility and benefits issues. The court therefore reviewed the benefits determination for abuse of discretion. Under that standard, the court would uphold the determination if the plan administrator provided a reasonable explanation supported by substantial evidence.

The court concluded that the plan reasonably applied the policy’s provision excluding severance benefits when employment ends for a reason other than a layoff, including misconduct or other cause as determined by the company in its sole discretion. The plan was not required to investigate the underlying conduct because the stated condition was clear, but it did review the investigation. The court found that the record, including the video footage and investigation materials, supported the decision to treat Tardio’s termination as for cause effective May 4, 2016.

The court also rejected Tardio’s argument that signing the release agreement made the benefits due before Boston Scientific reclassified his termination. The plan stated that a participant must continue satisfying all eligibility conditions until benefits are provided and would not receive unpaid benefits if an eligibility condition later failed. The court further observed that, even under Tardio’s contract-based timing argument, the benefits would not have been due until after the reclassification date.

Disposition

The court held that the plan administrator’s denial was supported by a reasonable explanation and substantial evidence. Because no material fact was genuinely disputed, the court granted the Boston Scientific Corporation U.S. Severance Plan for Exempt Employees’ motion for summary judgment and upheld the plan’s benefits determination under ERISA. The order states: “LET JUDGMENT BE ENTERED ACCORDINGLY.”