As minority counsel for pensions of the Senate Labor and Public Welfare Committee in the early 1970s, Michael S. Gordon heard countless horror stories about workers being denied pension benefits. Twenty years later, as a pension lawyer in Washington, Mr. Gordon still hears such stories.
A case in point, he says, is Ruth Haberern vs. Kaupp Vascular Surgeons Ltd. Defined Benefit Pension Plan et. al. In that case, the 3rd U.S. Circuit Court of Appeals narrowly interpreted ERISA's non-discrimination provisions so participants have little recourse if employers choose to lower compensation and thereby reduce their pension liabilities or eliminate promised benefits to employees nearing retirement age.
"This is very reminiscent of the type of abuses before ERISA that I thought we had put an end to," he said.
If participants can prove their employers cut back salaries to trim pension obligations, Mr. Gordon says that would constitute a violation of Section 510 of ERISA. Similarly, taking away insurance coverage from workers older than, say 56, also should be considered "impermissible discrimination" under ERISA, he says.
"We have to broaden the statute to protect participants from (such) situations," he said.
In other instances, courts have ruled participants may not rely entirely on the information employers give them in the summary plan descriptions, but must check the plan itself if there are any conflicts.
"The courts have basically gutted the summary plan description requirements, (and) canceled out the employers' responsibility to fair and meaningful communication," he contends.
"If the courts are going to say you can't rely on the summary plan description, only the plan ... then we are led into a situation prior to ERISA where you have uneducated, unsophisticated participants trying to figure out highly complex, legal terminology in plan documents that even lawyers can't figure out."
Mr. Gordon said the Labor Department has failed to impose penalties on employers for giving participants inaccurate plan information in the summary documents. Instead, he said, the Labor Department relies on participants' suits against employers to point up such inaccuracies, but the courts tend to uphold employers' rights to amend their plans at will.
He suggests reinforcing participants' rights to rely on summary plan descriptions.
"If there was a serious omission in the SPD or a clear conflict between the SPD and the plan ... the participant would be entitled to (the benefits outlined) in the SPD," Mr. Gordon said. "This is the only way of making sure (employers) take the time to write SPDs that are accurate and illuminating and not just a regurgitation of what is in the plan," he said.
Mr. Gordon said he also would revise ERISA to make it easier for workers to have greater legal recourse, by allowing workers to collect lawyers' fees and extraordinary damages for egregious denial of benefits or discrimination.