Means Industries Wins Benefit Dispute in Split 6th Cir.

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By Carmen Castro-Pagan

Aug. 22 — A machine operator at Means Industries Inc. won’t recover disability retirement benefits after the plan administrator applied a $220,000 offset against the benefit amount he was owed ( Kennard v. Means Indus., Inc. , 2016 BL 269680, 6th Cir., No. 15-1872, unpublished 8/19/16 ).

A divided U.S. Court of Appeals for the Sixth Circuit held Aug. 19 that a lower court decision to remand the case to the administrator to determine the amount of benefits the participant was owed didn’t contravene a previous appeals court order to award him benefits. In its 2014 decision, the appeals court instructed the district court to enter judgment in the participant’s favor, which it did. Remanding the case to the administrator to resolve the amount of benefits owed was within the appeals court “mandate’s purview,” two judges said.

After being denied disability benefits, Kyle Kennard sued Means Industries. The district court affirmed the denial, but the appeals court reversed, ordering the lower court to award him benefits. The district court did so, but unable to determine the amount of benefits, it remanded the case to the administrator.

Administrator’s Offset

The administrator offset Kennard’s $220,000 workers’ compensation award against his disability benefits payable under the plan, and it found Kennard was entitled to zero dollars. The district court affirmed.

On appeal, Kennard argued that the district court violated the appeals court’s prior mandate by remanding the case to the administrator. Judges Deborah L. Cook and Karen Nelson Moore disagreed.

In the unpublished decision, they said that the appeals court had instructed the lower court to enter judgment in Kennard’s favor. Allowing the administrator to decide the amount of benefits due, and nothing else, didn’t contravene the appeals court’s command to award Kennard benefits, Cook wrote for the majority.

The judges also rejected Kennard’s argument that Means Industry failed to timely raise the offset defense.

Dissent: Lower Court ‘Abused Its Discretion.’

Judge James Gwin, sitting by designation, dissented. The lower court “failed to follow the mandate rule and abused its discretion” when it remanded the benefit determination to the administrator following the appeals court’s 2014 decision, he said. The appeals court “expressly forbade the district court” from remanding to the administrator, Gwin said.

The district court “disregarded” the appeals court mandate when it remanded the damage determination to the administrator, Gwin said.

When a reviewing court concludes that an administrator erroneously denied benefits, the lower court may either award benefits or remand to the plan administrator, Gwin said. When applying either remedy, Gwin said, the court can’t remand the claim to the administrator to consider new defenses not previously raised.

“A binding circuit court decision ordering benefit payments stops a further remand to the plan administrator,” Gwin said.

Hurlburt, Tsiros & Allweil represented the participant. Masud Labor Law Group represented Means Industries.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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