Ex-Chase Worker Wins Legal Round in LTD Dispute

US District Judge R. Barclay Surrick of the US District Court for the Eastern District of Pennsylvania ruled that plaintiff Joseph Hussey could also present evidence that a large number of Chase employees were eligible to participate in a long-term disability (LTD) plan but many did not become a part of the program. Hussey joined Chase Manhattan Mortgage Corporation   in June 1997 as an executive sales manager and loan officer.

Surrick’s ruling came as part of Hussey’s lawsuit over allegations that Chase breached its fiduciary duty by not giving him accurate information about LTD plan eligibility – specifically, by not telling Hussey that he would have to enroll in the plan after his salary reached certain levels.

Denying Chase Manhattan’s request to exclude the evidence about organizational problems with its HR operation, the court said such evidence was relevant to the issue of whether Chase breached its fiduciary duties. In so ruling, the court rejected Chase Manhattan’s contention that under ERISA’s statutory disclosure requirements, Chase Manhattan’s fiduciary duty was limited to the distribution of a summary plan description.

According to the court, while ERISA requires that an SPD be provided within 90 days from the time an employee becomes eligible to participate in a plan, satisfaction of this requirement does not discharge other fiduciary duty obligations under ERISA.

According to Surrick’s ruling, the standard LTD plan provided employees with benefits ranging from 50% to 70% of their salary if they became disabled. The benefits under the plan were capped at incomes up to $150,000, according to the court. Employees with annual compensation exceeding $150,000 were provided the option of enrolling in the excess plan, which provided benefits ranging from 50% to 70% percent of salary, to a maximum salary of $600,000.

Hussey originally was enrolled in the standard plan because at the time he became eligible to participate in the plan his income was below $150,000. According to Surrick, Hussey would have become eligible to enroll in the excess plan in 1999, yet he did not enroll.

Hussey suffered a stroke in October 1999 and filed a claim for benefits. The plan administrator initially informed Hussey he would be eligible for $9,333 per month, which was 70% of the maximum allowed under the standard plan. Hussey contested this amount, arguing that 70% of his total salary for 1999 would equate to $18,305 per month.

According to Surrick, Chase Manhattan informed the plan administrator that Hussey should receive payments of $18,305 per month but later changed its mind and informed the administrator that Hussey was not enrolled in the excess plan and thus could receive only $9,333 per month under the standard plan.

The case is Hussey v. Chase Manhattan Bank, E.D. Pa., No. 02-7099, 7/29/05.