United States District Court, S.D. Indiana, Indianapolis Division
JENNIFER A. PAYNE, Individually and as Personal Representative of the Estate of Mark R. Payne, Plaintiff,
PENTEGRA DEFINED BENEFIT PLAN FOR FINANCIAL INSTITUTIONS, and PLAN ADMINISTRATOR OF THE PENTEGRA DEFINED BENEFIT PLAN FOR FINANCIAL INSTITUTIONS, Defendants.
ENTRY ON MOTION FOR SUMMARY JUDGMENT
WALTON PRATT, JUDGE
matter is before the Court on a Motion for Summary Judgment
filed pursuant to Federal Rule of Civil Procedure 56 by
Defendants Pentegra Defined Benefit Plan for Financial
Institutions and Plan Administrator of the Pentegra Defined
Benefit Plan for Financial Institutions (collectively,
“Pentegra”) (Filing No. 71). After being
denied retirement benefits on behalf of her late husband,
Mark R. Payne (“Mr. Payne”), Plaintiff Jennifer
A. Payne (“Mrs. Payne”) asserted a claim to
recover benefits under § 502(a)(1)(B) of the Employee
Retirement Income Security Act of 1974, 29 U.S.C. § 1001
et seq., (“ERISA”). After successfully
moving to dismiss all but one of Mrs. Payne's claims,
Pentegra filed a Motion for Summary Judgment on November 9,
2015, asserting that the Board of Directors' denial of
retirement benefits was not arbitrary or capricious and was
in accordance with the Pentegra Defined Benefit Plan
(“Pentegra DB Plan”). For the following reasons,
the Court GRANTS Pentegra's Motion for Summary Judgment.
Payne, the late husband of Plaintiff Mrs. Payne, worked for
more than thirty years for the Federal Home Loan Bank, which
was merged into the Office of the Comptroller of the Currency
(“the OCC”). Mr. Payne worked as a field manager
in the Indianapolis, Indiana office and, as an employee, was
a participant in the Pentegra DB Plan which is a non-profit,
IRS qualified, tax-exempt, pension plan and trust through
which Federal Home Loan Banks, Saving and Loan Associations
and similar institutions, or any other federally insured
financial institution may cooperate in providing for the
retirement of their employees. The OCC engaged or assigned
the Pentegra DB Plan to Pentegra, as the third-party
administrator of the Pentegra DB Plan.
employed by the OCC, Mr. Payne was diagnosed with a brain
tumor in December 2010. After his first surgery on December
27, 2010, the Paynes learned that Mr. Payne's tumor was a
gliablastoma tumor, the deadliest type of brain tumor. Mr.
Payne's physicians informed him that the life expectancy
for this type of tumor was approximately twelve to sixteen
months. During the next fifteen months, Mr. Payne endured two
additional surgeries as well as weeks of radiation and
chemotherapy. Tragically, Mr. Payne also experienced
seizures, memory loss, difficulties in speech and
comprehension, and other neurological deficits prior to his
death on March 5, 2012.
after Mr. Payne's diagnosis in December 2010, the Paynes
began working with Valerie Waller (“Ms. Waller”),
the Lead Expert for Compensation and Benefits at the
OCC's office in Washington, D.C., to discuss Mr.
Payne's life insurance and pension benefits. Mr. Payne
wanted to ensure that his wife and their two children would
be taken care of after his death. The Paynes sought advice
from Ms. Waller regarding the full impact of their options
under the Pentegra DB Plan. The Paynes and Mr. Payne's
supervisor, Jill Hoyle (“Ms. Hoyle”),
communicated with Ms. Waller regularly to discuss questions
and to confirm information related to Mr. Payne's life
insurance and the Pentegra DB Plan.
January 1, 2011, Pentegra sent Mr. Payne a statement of his
annual retirement benefits, explaining that his active
service death benefit, as of January 1, 2011, was $691,
332.00, when expressed as a single payment. In October 2011,
Mr. Payne requested that Ms. Waller provide pension
calculations as of November 1, 2011 and April 1, 2012, so
that the Paynes could understand their various options. Mr.
Payne also requested that all options be explained to him in
detail. The Paynes wanted this information to decide which
option would benefit them the most. In mid-October 2011, Mr.
Payne received an estimate of the pension benefits from
Pentegra and Ms. Waller. The estimated pension benefit for
early retirement on November 1, 2011, was a lump sum payout
of approximately $975, 557.00, or an annuity of approximately
$57, 480.00. The Paynes decided that the annuity was the best
option as it provided a lifetime payout to Mrs. Payne.
January 2012, the Paynes, Ms. Waller, and Ms. Hoyle
participated in a telephone conference call regarding Mr.
Payne's options. During the call, Ms. Waller advised Mr.
Payne to wait 120 days before he filed for a disability
retirement. Ms. Waller explained there was no reason for Mr.
Payne to retire earlier than the 120 days. However, Ms.
Waller failed to advise the Paynes that the pension figures
would differ substantially if Mr. Payne died while in active
service rather than after he retired. When the benefits
calculation was eventually provided by Pentegra, Ms. Waller
admitted that she did not know there would be a significant
difference in benefits based on retirement. Ms. Waller was
incorrect in her understanding when she advised the Paynes in
Payne died on March 5, 2012, while he was still in active
service with the OCC. He did not retire prior to his death.
Because of this, the Pentegra DB Plan never received a
termination form from the OCC indicating that Mr. Payne had
terminated employment prior to the date of his death. On
March 15, 2012, ten days after Mr. Payne died, Mrs. Payne
spoke with Ms. Waller and Damien Samuals (“Mr.
Samuals”), another OCC employee, regarding Mr.
Payne's pension benefits. Ms. Waller explained that the
annuity payout had not been calculated but stated that it
would not be significantly different from the information
that was sent to the Paynes in October 2011. Ms. Waller
specifically stated that it would not be “significantly
less” and that it would be “a little less, but
not significantly” different.
April 2012, Mrs. Payne received the benefits calculation from
Pentegra. The lump sum benefits that would be paid were more
than $200, 000.00 less than the estimate that was provided in
October 2011. After learning that the benefits would be
significantly less than what the Paynes were told in October
2011, Mrs. Payne participated in a conference call with Ms.
Waller, Mr. Samuals, and Lynn Phillips (“Mr.
Phillips”), a representative of Pentegra, to discuss
why there was such a large discrepancy in benefit payments.
Mr. Phillips explained that the discrepancy resulted from the
difference between a retirement benefit versus an active
death benefit. He explained that an active death benefit
yielded a much lower benefit payment than a retirement
benefit. When Mrs. Payne expressed her surprise at the large
difference between the two types of benefits, Ms. Waller also
stated that she was not aware that the two types of benefits
yielded such a significant difference. Mrs. Payne asked
whether the fact that Mr. Payne did not retire, but died in
service, cost her more than $200, 000.00 in lump sum
benefits. Mr. Phillips confirmed that it did. Mr. Payne had
decided not to retire, relying on the faulty advice of Ms.
Paynes frequently talked with Ms. Waller who knew of Mr.
Payne's imminent death and who was the individual most
knowledgeable about benefits at the OCC's office. The
Paynes relied on Ms. Waller's advice regarding Mr.
Payne's retirement and benefits. Additionally, the Paynes
relied on the benefits calculations provided by Pentegra.
Because Mr. Payne died while in active service with the OCC
instead of retiring before his death, Mrs. Payne was entitled
to approximately $205, 000.00 less in lump sum benefits.
beneficiary of Mr. Payne's estate, Mrs. Payne filed a
written claim with the Administrator of the Pentegra DB Plan
on December 27, 2012, pursuant to the disputed claims
procedure in the summary plan description of the Pentegra DB
Plan. She requested the additional $205, 000.00, asserting
that because the Paynes relied on the advice of Ms. Waller,
Mrs. Payne was entitled to retirement benefits rather than
the active service death benefits. This disputed claim was
denied on March 22, 2013. In denying the claim, Pentegra
explained that Mr. Payne was in active service at the time of
his death, rather than retired, because Mr. Payne did not
terminate his employment with the OCC prior to his death, and
thus, he was entitled to active service death benefits, not
retirement benefits. Pentegra also explained that the active
service death benefits had been described to the Paynes in
the January 2011 statement as well as the retirement benefits
in the October 2011 correspondence.
22, 2013, Mrs. Payne requested that the Pentegra DB Plan
Board of Directors (“the Board”) review the
denial of the December 27, 2012 claim. On October 10, 2013,
Pentegra responded to Mrs. Payne and explained that the Board
had reviewed and upheld Pentegra's decision to deny the
claim for retirement benefits. Pentegra explained the reasons
for the Board's denial of the claim and noted ...