RTX Corp. Sued for Denying Beneficiary Long-Term Disability Benefits

The aerospace and defense contractor was sued for allegedly failing to pay required long-term disability benefits to a disabled former employee.

A former employee at RTX Corp. sued the aerospace and defense company for allegedly denying her long-term disability benefits provided under the employer’s benefits plan and for violating the Employee Retirement Income Security Act.

Plaintiff Lori Miars worked at the plan sponsor, formerly Raytheon, as a senior telecom technologist, was a participant in the Raytheon Company Disability Plans and was eligible for disability benefits under the plan, according to the complaint.

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“On December 13, 2021, Defendant, through its claim administrator, issued a letter to Plaintiff stating that her long-term disability benefits had been terminated effective December 10, 2021, because, allegedly, she was no longer disabled under the terms of the Plan,” the complaint states.

Miars filed an administrative appeal contesting the termination of her benefits in June 2022, and she received a final decision denying her long-term disability benefits in October 2022, according to the complaint.

“As of this date, Plaintiff continues to be disabled in that as a result of her medical conditions she is unable to perform her own occupation or any occupation,” the complaint adds.

The suit, Miars v. Raytheon Company Disability Plans, was filed on Monday in U.S. District Court for the District of Massachusetts.

Miars became totally disabled in September 2012—during the period within which the plan was in full force and effect—while she was a covered employee, filed an application for long-term-benefits, and began receiving benefits on April 19, 2012, according to the complaint.

The Raytheon Company Disability Plans provide long-term disability benefit payments to covered beneficiaries that have become “totally disabled” as a result of “sickness or injury,” according to  the plan.

“Total Disability or Totally Disabled means that, because of sickness or an injury which is not covered by an applicable workers’ compensation statute, a Participant cannot do the essential elements and substantially all of the duties of his or her job with the employer even with reasonable accommodations,” the plan’s language cited in the complaint says. “Furthermore, after 18 months, the Participant cannot do any other job for which he or she is fit by education, training or experience.”

Miars is seeking a judgment from the court declaring she is totally disabled and requiring Raytheon to pay both back benefits, plus interest, and continue paying her benefits as long as she remains disabled, subject to the applicable benefit period in the plan.

RTX is headquartered in Arlington, Virginia. Requests for comment to RTX were not returned.

The complaint did not identify counsel for RTX.

Miars is represented in the lawsuit by Ivan Ramos and Tere Ramos of Ramos Law LLC, based in Wellesley, Massachusetts.

PBGC Reports Strong Funding

ERISA Industry Committee asks Congress to reexamine plan sponsor premiums.

The Pension Benefit Guaranty Corporation published its Projections Report for Fiscal Year 2022 Wednesday, showing both the single and multiemployer plan programs in strong financial positions and expected to remain solvent through their projection periods.

The PBGC said that “the projections show no scenarios in which the Single-Employer Program runs out of money within the next 10 years,” The net financial position of this program is also expected to improve over the next ten years largely due to improved plan funding which reduce PBGC’s expected liabilities.

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The PBGC expects the single-employer program to have net assets of $63.6 billion in 2033, an improvement on the $53.3 billion it projected for 2032 last year. The single-employer program has 22.3 million participants.

The PBGC reported similarly rosy results for the multiemployer program. The corporation said that the median projected insolvency date for the multiemployer program was 2062, which was the end of the projection period. Prior to the Special Financial Assistance Program included in the American Rescue Plan Act, the projected insolvency date was 2026. The multiemployer program covers 11.2 million participants.

The report also stated that the PBGC expects $79.7 billion to be paid out in total under the SFA program. The estimate is based on the amount already paid out, pending applications, and potentially eligible plans that may apply in the future.

The strong financial status of the two programs drew industry comment concerning the insurance premium rates paid by pensions to the PBGC. A statement from the ERISA Industry Committee said the surplus “should cause Congress to reexamine the premiums paid by companies that sponsor defined benefit pension plans.”

The statement from ERIC also recommends decoupling PBGC funding from general federal budget scoring, which can create perverse incentives that allow the PBGC to go overfunded to “offset” other spending priorities, including those “unrelated to the retirement system.”

John Lowell, a partner at October Three, an actuarial consulting firm, says that “every plausible projection shows that the fund will remain significantly overfunded for the foreseeable future.” Congress should take this opportunity to reduce premium rates, which he says “cause plan sponsors to either terminate their plans or to de-risk through pension risk transfer or lump sum windows.”

Lowell adds that the difference in median and mean projections in the report for multiemployer plans suggests that some projections likely anticipate the insolvency of a small number of large plans and that Congress should assist the PBGC to prepare for this possibility.

Section 349 of SECURE 2.0 capped the premium variable rate for the underfunded portion of single-employer plans at 5.2% of the plan’s unfunded liabilities. The rate had previously been tied to inflation.

All other items that are used to calculate PBGC premiums, however, remain tied to inflation. That includes the amount paid per participant ($96 for single-employer and $35 for multiemployer for 2023) as well as the cap per participant paid on a plan’s unfunded liabilities ($652).

Lowell recommends that Congress “eliminate the annual inflationary increases” and “reduce fixed rate premiums and the percentage of underfunding subject to variable rate premiums.”

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