Verizon maintained a long-term disability plan (the “LTD Plan”) insured through MetLife, who had the discretionary authority to interpret the LTD Plan and to adjudicate claims. In 2007, an employee became eligible to receive benefits under both the LTD Plan and a Verizon pension plan due to disability, and the employee elected to take his full pension benefit as a lump sum and then roll it over into an IRA in a direct trustee-to-trustee transfer. The LTD Plan’s summary plan description (the “SPD”) contained language stating that a participant’s long-term disability benefits “may be reduced by other sources of disability income,” including “pension benefits from a Verizon pension plan, if the beneficiary elects to receive them.” MetLife offset the participant’s monthly disability benefit by the amount of the pension benefit he had rolled over into his IRA. The participant appealed countering that because he would not actually receive any of his Verizon pension benefits until he withdrew them from his IRA, he had not elected to receive his pension benefit and the SPD’s offset language did not apply.

After MetLife denied his appeals, he sued for relief under ERISA and was awarded summary judgment in district court, which MetLife appealed to the U.S. Court of Appeals for the Fifth Circuit. Even though MetLife had discretionary authority to interpret the LTD Plan and the SPD was incorporated by reference into the LTD Plan, the Fifth Circuit determined that the SPD was ambiguous about whether the rollover was an election to receive pension benefits and that ambiguity in the SPD should be resolved against the LTD Plan in favor of a participant’s reasonable interpretation. The Fifth Circuit expressly avoided ruling on whether the rollover was an election to receive pension benefits and merely found the participant’s interpretation reasonable in light of the SPD’s ambiguity. The opinion also did not address whether the participant ever asked MetLife or Verizon if his LTD Plan benefits would be affected by his decision to roll over his pension benefit into an IRA.

View the Fifth Circuit’s opinion in Thomason v. Metro. Life Ins. Co.