work schedule — even one hour of assigned work — the only
reasonable inference that a person in Ms. Kosakow's position
could draw was that she had been "terminated" by the Practice.
Defendant apparently relies on Black's because the word
"Termination" is not defined in the Plan. However, Section
III(G) of the Policy Manual, entitled "Termination of
Employment," lists six ways in which someone's employment can be
terminated by the Practice: (1) retirement; (2) voluntary
resignation; (3) termination for cause; (4) death; (5)
termination without notice; and (6) reduction in force. The fair
implication is that, if Plaintiffs enforced departure falls
within one of these categories, her employment was "terminated."
Here, Plaintiff received a letter, dated March 7, 1997, telling
her that her position was being "eliminated" due to
"overstaffing." Cutting staff in response to overstaffing is
just another way of saying that the Practice was carrying out a
reduction in force. Thus, under the terms of the Plan, Plaintiff
In short, I find that Plaintiff was in fact terminated and
that the Plan Administrator's ruling to the contrary was
arbitrary, capricious and unsupported by the evidence.
Kosakow is Not Entitled to Severance Pay
Having found that Kosakow was indeed terminated, I nonetheless
affirm the Plan Administrator's determination that she was not
entitled to severance pay.
The Practice Policy Manual provides for the payment of
severance benefits in two separate provisions. Article III.H.B
provides that severance payments will be made "where
applicable." Article III.G.3 provides that management "may"
elect to give "equivalent severance" in lieu of appropriate
advance notice of termination and states that "[t]erminated
employees shall . . . [r]eceive appropriate severance pay where
applicable." In her Determination Letter, the Plan Administrator
stated that "[t]he P.C. has determined that `where applicable'
requires the payment of severance (i) only in special or
exceptional circumstances; and (ii) only where a shareholder or
other management employee makes the affirmative request to the
other shareholders that severance be paid." She went on to note
that, even if the P.C. had "terminated" her, "it would not have
offered severance to [Kosakow] because, in its opinion, there
were no special exceptional circumstances."
The Plan Administrator cited several reasons supporting her
determination to deny severance payments: (1) Kosakow was a
part-time employee ("The P.C. has not and does not make
severance payments to part-time employees.") (Determination
Letter at 4.); (2) Kosakow was not a supervisor, manager,
administrator or physician employee ("The P.C. would not have
considered it appropriate to make severance payments to
employees not employed in a supervisory, managerial,
administrative, or professional capacity.") (Id.); and (3)
Kosakow was terminated at a time of economic trouble for the
Practice ("the P.C. was operating under abnormal business
conditions . . . the P.C. would have determined that you would
not be entitled to severance benefits.") (Id.)
In response to these findings, Plaintiff argues that, as she
was "terminated" within the meaning of the Plan, she is entitled
to severance pay. Plaintiff contends that, because Section
III(G) explicitly excludes employees terminated for cause from
receiving severance benefits, an employee who has not been
terminated for cause is entitled to severance. Furthermore,
Plaintiff argues that, because the three grounds discussed by
the Administrator do not appear as part of the language of the
Plan, those grounds are impermissible criteria against which to
judge her eligibility for severance pay. According to the
Plaintiff, if the Administrator uses criteria not within the
Plan, the denial of benefits under those criteria violates
ERISA requires that the "circumstances which may result in
disqualification, ineligibility or denial of loss of benefits"
be contained in all plans. 29 U.S.C. § 1022(b). The accompanying
regulations require that benefit plans include:
a statement clearly identifying circumstances which
may result in disqualification, ineligibility, or
denial, loss, forfeiture or suspension of any
benefits that a participant or beneficiary might
otherwise reasonably expect the plan to provide on
the basis of the description of benefits. . . .
29 C.F.R. § 2520.102-3(1).
Plaintiff contends that the Practice Plan does not meet these
requirements. I do not agree.
The Plan itself states in rather broad terms that terminated
employees "shall . . . receive appropriate severance pay where
applicable." (Policy Manual at Section III(G)) (emphasis
added). Because the words "where applicable" are not otherwise
defined, the Administrator has broad discretion to make the
"applicability" decision. Thus, even if the Plan specifically
precludes severance for employees terminated for cause (as it
does), that does not mean that the Plan mandates the payment of
severance to all other employees. Rather, the Plan merely allows
the Practice to determine whether payment would be appropriate
in a particular case.
Plaintiff argues that the Court should find it "inappropriate"
to deny her severance benefits because the Practice paid
severance benefits to Una Howard — another former employee who
fell victim to job-cuts in 1997.
Una Howard was terminated from the Practice sometime after
Kosakow left the Practice.*fn4 Howard had been a full-time
employee of the Practice for almost twenty years. Her position
was eliminated as part of the Practice's overall cost-cutting.
After she had already been separated from employment at the
Practice, she was given a lump-sum payment equivalent to eight
weeks salary. In consideration for the payment, Ms. Howard
signed an agreement in which she released any and all claims
against the Practice. (See Letter and Release, attached to
Defs Motion for Summary Judgment at Exh. 20.).
The Practice maintains that it was under no obligation to
bestow the payment on Ms. Howard. (Determination Letter at 5.)
In her Determination Letter, the Plan Administrator discussed
the payment to Una Howard:
The P.C.'s payment of monies to Ms. Howard were not
severance payments paid pursuant to any alleged Plan
or pursuant to the Manual. Instead, the P.C. made a
one time payment from its operating account to Ms.
Howard expressly contingent on and in consideration
for her releasing any and all claims against the P.C.
While this payment was characterized as severance in
the agreement reached with Ms. Howard, it was not
made pursuant to the Manual, but only in connection
with her executing a General Release.
(Determination Letter at 5.)