Ever Wanted to Modify Your Benefits Plan and the Make the Effective Date Retroactive?
by Michael Fox
I am not a benefits lawyer, but have enough exposure to it to know that not infrequently an employer will adopt a plan amendment and make it retroactive, say to the first of the calendar year. I assume that in a large number of cases that may have no consequence and be entirely appropriate. But if you suspect that it might work to someone's disadvantage, such as providing a less desirable benefit for them, you should check out today's ruling in Depenbrock v. CIGNA Corp. (3rd Cir. 11/10/04) [pdf]. The court holds simply that a plan amendment that was actually signed on December 21, 1998 was not retroactive in the case of Mr. Depenbrock, even though the effective date specified in the agreement was January 1, 1998. CIGNA argued for an earlier date based on theories of ratification, going back to the date of the announcement of the plan change, the date a board committee authorized the CEO to make the formal adoption, the date the CEO approved a summary of the changes that were ultimately made, but all to no avail. The date it was signed is the effective date, at least as applied to this plaintiff.
The word of advice -- don't tarry in getting your formal documents done. Sometimes, or at least one time, it made a real difference.