The U.S. Supreme Court on Monday refused to hear a lawsuit claiming Verizon Communications Inc., New York, was responsible for as much as $1.7 billion in additional pension benefits because of an attorney's mistake in a cash-balance conversion for one of the telecommunications giant's predecessor companies.
Bell Atlantic Cash Balance Plan, when it was converted from a defined benefit plan in 1996, had improperly applied a single transition factor and not the 120% Pension Benefit Guaranty Corp.'s discount rate to calculate the opening cash balance for plaintiff Cynthia N. Young, who filed the original lawsuit in 2005.
In 2009, the U.S. District Court in Chicago ruled that while there had been “a devastating drafting error” at the time the company was calculating the transition factor for employees near retirement, the company should not be forced to give “greater benefits than they expected.” The court affirmed that ERISA's rules “are not so strict as to prevent equitable reformation of a plan that is shown, by clear and convincing evidence, to contain a scrivener's error that is inconsistent with participants' expected benefits.”
That ruling was upheld by the U.S. Court of Appeals in August.
Bell Atlantic, merged with GTE Corp., became Verizon in 2000.
Verizon had no further comment on the case, according to spokesman Bob Varettoni, who said the company disclosed only consolidated pension assets and liabilities and did not break it down by plans. Attorneys for the plaintiff and respondents petitioning the Supreme Court did not return phone calls.
