Lardo v. Building Service 32BJ Pension Fund

Background

Michael Lardo alleged that he became unable to work after developing serious health conditions in December 2014. He applied for a disability pension from the Building Service 32BJ Pension Fund in April 2015. The Pension Plan allowed a disability pension for a participant who was permanently and totally disabled, had at least 120 months of service credits, and became disabled while working in covered employment. The Plan stated that permanent disability could be established through a Social Security Administration certification showing that the participant’s disability began while the participant was working in covered employment.

The Fund denied Lardo’s application because he did not provide a Social Security Administration notice of award showing permanent disability. The Social Security Administration later awarded him disability benefits and stated that his disability began on December 18, 2014, but the Fund continued to deny the pension because the award documents indicated that his eligibility would be reviewed every three years or did not involve a medical review. Lardo later submitted a Social Security Administration letter stating that the agency does not make determinations regarding “permanent disability.”

Lardo’s amended complaint asserted two claims under the Employee Retirement Income Security Act, a federal law governing employee benefit plans. First, he alleged improper denial of benefits against the Pension Fund and the Board of Trustees. Second, he alleged that the Board and individual trustees breached their fiduciary duties by failing to investigate the apparent inconsistency between the Plan’s reliance on Social Security Administration determinations of permanent disability and the agency’s statement that it does not make such determinations. He sought relief for himself and proposed class members.

Benefits claim

The court treated the defendants’ motion as a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint adequately alleges a legally plausible claim. The defendants had also requested summary judgment, but the court did not treat the motion as one for summary judgment because the defendants had not filed the required statement of material facts. The court considered the Pension Plan and correspondence referenced in the complaint.

The court dismissed Lardo’s benefits claim under ERISA section 502(a)(1)(B). The Plan required a claimant to appeal an adverse benefits decision to the Appeals Committee within 180 days. Lardo’s claim was denied in July 2015, but he never sought review by the Appeals Committee. The Plan also required a lawsuit to be filed within three years after the Appeals Committee’s denial or the expiration of the period for a decision. Because Lardo never initiated the internal appeal, the court concluded that his lawsuit also did not satisfy the Plan’s judicial-review requirements.

The court rejected Lardo’s argument that the Fund had waived these deadlines by continuing to respond to his later inquiries. The Fund’s communications repeatedly referred to the deadlines, and the court found no indication that it intentionally gave up those defenses. The court also rejected equitable tolling, which can extend a deadline in appropriate circumstances, because the communications informed Lardo of the deadlines and therefore did not show that he lacked knowledge of them or acted diligently despite that lack of knowledge.

Fiduciary-duty claim

The court denied dismissal of Lardo’s fiduciary-duty claim under ERISA section 502(a)(3). That provision allows an ERISA participant to seek appropriate equitable relief for violations of fiduciary duties. The court concluded that the claim was not necessarily duplicative of the benefits claim because Lardo sought remedies including an injunction and constructive trust, rather than only benefits or money damages.

The court also found that Lardo plausibly alleged a breach. The Board and individual trustees were fiduciaries, and the allegations concerned their conduct while deciding disability-pension eligibility. Lardo alleged that the trustees failed to investigate the apparent conflict between the Plan’s requirement for proof of permanent disability from the Social Security Administration and the agency’s statement that it does not make permanent-disability determinations. The court noted that the Plan did not necessarily require the trustees to demand the particular form of Social Security Administration proof they demanded from Lardo and included safety-valve provisions for participants who could not satisfy Social Security Administration documentation requirements for reasons unrelated to their conditions.

At the motion-to-dismiss stage, the court concluded that the alleged conflict and the trustees’ failure to investigate it made a breach more than merely possible. The court did not determine that the trustees ultimately breached their duties or that Lardo was entitled to relief. It held only that this claim could proceed, and any relief would have to be appropriate equitable relief.

Disposition

The opinion’s opening states that the defendants’ motion was granted in part, denied in part, and that Lardo’s wrongful-denial-of-benefits claim was dismissed. The conclusion contains apparent claim-numbering errors: it refers to a “section 502(a)(1)(3)” claim and a “section 503(a)(3)” claim, while the body identifies the claims as section 502(a)(1)(B) and section 502(a)(3). Reading the conclusion together with the opinion’s claim-by-claim analysis, the benefits claim was dismissed and the fiduciary-duty claim was not dismissed. The court also denied Lardo’s motion for oral argument.