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Edward W. Reska v. Pension Plan of Bethlehem Steel Corporation and Subsidiary Companies, and Bethlehem Steel Corporation, 848 F.2d 372, 2d Cir. (1988)
Edward W. Reska v. Pension Plan of Bethlehem Steel Corporation and Subsidiary Companies, and Bethlehem Steel Corporation, 848 F.2d 372, 2d Cir. (1988)
Edward W. Reska v. Pension Plan of Bethlehem Steel Corporation and Subsidiary Companies, and Bethlehem Steel Corporation, 848 F.2d 372, 2d Cir. (1988)
2d 372
56 USLW 2736, 9 Employee Benefits Ca 2459
This is an appeal from a judgment of the United States District Court for the
Western District of New York, John T. Curtin, Ch. J., granting appellees'
motion for summary judgment and dismissing appellant's claim of entitlement
to certain pension benefits. Appellant argues that the district court erroneously
relied on Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 101 S.Ct. 1895, 68
L.Ed.2d 402 (1981), in rejecting his claim that the nonforfeiture provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA"), Sec. 203(a),
29 U.S.C. Sec. 1053(a) (1982), prohibit appellees from deducting his workers'
compensation award from his pension benefits. We affirm.
BACKGROUND
2
The district court also rejected appellant's claim that such deductions violated
ERISA's nonforfeiture provisions. According to the district court, appellant's
claim was directly contrary to Alessi v. Raybestos-Manhattan, Inc., 451 U.S.
504, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981), in which the Supreme Court
concluded that Congress, in enacting ERISA, "contemplated and approved the
kind of pension provisions challenged here, which permit offsets of pension
benefits based on workers' compensation awards," 451 U.S. at 526, 101 S.Ct. at
1908. Judge Curtin rejected appellant's claim that his award for partial hearing
loss was distinguishable from the awards at issue in Alessi; according to the
district court, Alessi made no such distinctions between types of workers'
compensation awards. Accordingly, the district court dismissed the complaint
and Reska appealed.
DISCUSSION
5
On appeal, Reska renews his claim that the Supreme Court in Alessi did not
conclude that all workers' compensation awards may be used to offset pension
benefits. He argues that the Alessi Court's holding applies only to workers'
compensation awards "in the nature of wage replacement," and therefore does
not apply to his workers' compensation award, which he alleges was for "bodily
impairment." Consequently, appellant contends that the reduction of his
pension benefits violated ERISA. We note that appellant does not renew his
argument made in district court that the deduction of his award was contrary to
the Plan.
In Alessi, the Supreme Court considered whether "private pension plans [that]
reduce a retiree's pension benefits by the amount of workers' compensation
awards received subsequent to retirement" are lawful under ERISA's
nonforfeiture provisions. 451 U.S. at 507, 101 S.Ct. at 1898. The plaintiffs
therein were retired employees whose pension plans included provisions for
"integration", a practice whereby pension benefit levels "are determined by
combining pension funds with other income streams available to the retired
employees." Id. at 514, 101 S.Ct. at 1901. The Court held that Congress did not
prohibit integration as a permissible method of calculating pension benefits;
rather, in enacting ERISA, "Congress expressly preserved the option of pension
integration with benefits available under both the Social Security Act ... and the
Railroad Retirement Act ...," see 29 U.S.C. Secs. 1054(b)(1)(B)(iv), (b)(1)(C),
(b)(1)(G). Alessi, 451 U.S. at 514, 101 S.Ct. at 1902.
the language in Sec. 3.10 of the Plan herein. It provided in relevant part that
workers' compensation awards were to be deducted from pension benefits
except for "fixed statutory payments for the loss of any bodily member, or
100% loss of use of any bodily member." Id. at 507 n. 1, 101 S.Ct. at 1898 n. 1
(emphasis added). In comparison, Sec. 3.10 of the Plan herein provided in
relevant part that workers' compensation awards were to be deducted from
pension benefits "except fixed statutory payments for the loss of, or 100% loss
of use of, any bodily member " (emphasis added). Appellant apparently
concedes on appeal that the language of Sec. 3.10 permits pension integration
with his award for partial hearing loss, since he does not contest the district
court's conclusion to that effect. Given the nearly identical language of Sec.
3.10 and the offset clause in the General Motors plan in Alessi, it is clear that,
contrary to appellant's contention, the latter provision does not preclude the
deduction of awards for partial hearing loss.
9
Appellant also attempts to distinguish his award for partial hearing loss from
other workers' compensation awards. He notes that the IRS rulings discussed in
Alessi approved the integration of pension and other benefits only when such
benefits "correspond[ed] to benefits available under the pension plan," id. at
520, 101 S.Ct. at 1904. In Alessi, the Court indicated that the IRS had applied
this standard in finding that integration with workers' compensation benefits
was permissible. On the basis of this discussion, appellant asserts that Alessi
did not approve of pension integration with all workers' compensation awards,
but only those that correspond to benefits available under qualified pension
plans. He argues that, whereas most workers' compensation awards provide
payments for income maintenance and, thus, correspond to benefits provided
under the Plan herein, his award for partial hearing loss provided compensation
for "bodily impairment"--a scheduled award allegedly provided in addition to
payments for income maintenance. Since his award allegedly did not
correspond to benefits available under the Plan, appellant claims that
integration of the award was not permissible under the IRS's standard and that
integration violated ERISA.
10
We need not decide whether Alessi or relevant IRS rulings apply to all or only
some workers' compensation awards. Even assuming, arguendo, that Alessi
only applies to workers' compensation awards "in the nature of wage
replacement," appellant has failed to demonstrate that his award for partial
hearing loss was not provided for wage replacement. Contrary to appellant's
contention, New York case law clearly establishes that even schedule awards
under the New York Workmen's Compensation Law are intended to
compensate for loss of presumed or actual earning power. See, e.g., Marhoffer
v. Marhoffer, 220 N.Y. 543, 546-47, 116 N.E. 379 (1917); Barbera v. Chez
Vous Restaurant, Inc., 20 A.D.2d 942, 942, 248 N.Y.S.2d 900, 901 (1964);
Wilkosz v. Symington Gould Corp., 14 A.D.2d 408, 410, 221 N.Y.S.2d 209,
211 (1961), aff'd, 14 N.Y.2d 739, 199 N.E.2d 387, 250 N.Y.S.2d 297 (1964);
see also 2 A. Larson, The Law of Workmen's Compensation Sec. 58.11, at 10323 (1987) (the theory underlying schedule benefits is the same as that
underlying compensation law--"that benefits relate to loss of earning capacity
and not to physical injury as such").
11
Appellant has failed to show any persuasive grounds for distinguishing Alessi
from the facts of this case; we therefore conclude that it is controlling and
dispositive of his claim. Accordingly, the judgment of the district court is
affirmed.