In Lipker v. AK Steel Corp., 2012 WL 5346325 (6th Cir. Oct. 31, 2012), the plaintiff applied for surviving spouse benefits under the pension benefits plan administered by her husband’s former employer. The administrator approved her claim, but she disputed the amount of the benefit. The discrepancy between her expectation and the actual award hinged on “the interpretation of plan language that both parties argue is unambiguous, yet each party interprets differently.” Though the district court had held in favor of the plaintiff’s interpretation, the Sixth Circuit reversed, finding that the administrator’s proposed interpretation of the plan language to be truer to its plain meaning when read with reference to the law it expressly refers to.
The dispute centered around the calculation of an offset, under which the plan benefit would be reduced by 50% of the “widow’s benefit” to which the plaintiff was entitled under the Social Security Act, “without regard to any offset or suspension imposed by such law.” Difficulties began when the Social Security Administration provided different and corrected statements of plaintiff’s widow’s benefit, though the total benefit she received from the Administration was not in dispute.
The court stated that neither of the above-quoted terms “can be said to have a ‘plain meaning.’ Yet neither term is used in such a way as to be understood in a vacuum.” The court held that, because the provision expressly referred to the Social Security Act, the meaning of the terms should be determined with reference to the Act. Consulting the Act, the court determined that the offset provision was clear, and entitled the plan administrator to offset plaintiff’s entire Social Security benefit, even though the Social Security Administration considered that the portion attributable to the “widow’s benefit” was less than the whole (essentially an internal offset by the SSA, in which a widow’s benefit is reduced by the primary benefit otherwise payable). The court specifically faulted the district court for not looking to the Social Security Act to understand the plan terms.
The court also rejected an argument that the offset provision in the plan was not enforceable because it was not also set forth in the SPD. The court held that the SPD’s silence regarding a term that the plan defines more explicitly is not a conflict, and, therefore, the SPD would not govern. The court also noted in a footnote that, even if its analysis resulted in a conclusion that the SPD should govern over the plan, the Supreme Court’s decision in Cigna v. Amara would prevent the court from so ruling.