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Time Matters in Benefit Overpayment Suit

Does a participant who made an early retirement decision based on a plan administrator’s errant benefit projection have a cause of action? Well, as a recent decision details, it can depend on what they claim – and when.

In the case of Lebahn v. Owens, No. 14-3244 (10th Cir. 2016), Trent Lebahn, a sales manager for National Farmers Union Insurance Company/Midwest Agency, in 2012 began to consider early retirement. According to the court, he contacted Eloise Owens, a pension consultant for the National Farmers Union Uniform Pension Plan, to confirm the benefits he could expect. Owens calculated Lebahn’s early retirement benefits at $8,444.18 per month.

Questionable Calculations?

Lebahn questioned the accuracy of the calculations, which were “substantially greater” than the amount reflected in the annual statements he received from the plan, but the court said that Owens and “others working in the Plan’s pension department” confirmed that her calculations were correct. So Lebahn retired and, as projected, received $8,444.18 per month in retirement benefits from July 2012 through March 2013. That’s when a representative of the plan contacted Lebahn… and informed him he was being overpaid. According to the plan representatives, Lebahn should only have been receiving $3,653.78 in monthly benefits. Oh, and so he now owed the plan $43,113.60 reimbursement for those overpayments.

Once he learned of the situation, Lebahn attempted to return to work — but his position with Midwest was no longer available, and the only available work would have required him required him to move across state or to spend significant time travelling.

Suits Filed

And so, in early 2014, Lebahn filed an action in the U.S. District Court for the District of Kansas, filing a claim of negligent misrepresentation against Owens for incorrectly calculating his monthly retirement benefit and inducing him to retire early in reliance on that calculation. In turn, Owens moved to dismiss the complaint, arguing that Lebahn’s common-law negligent-misrepresentation claim was preempted by the Employee Retirement Income Security Act (ERISA). Lebahn opposed that motion, contending his claim did not “relate to” an ERISA plan because he sought recovery only from Owens for the economic loss caused by her negligent misrepresentations, not a recovery of additional benefits under the plan.

The district court ruled in favor of Owens, finding that, since Lebahn’s claims related to the plan — specifically that Owens’ allegedly negligent conduct, the miscalculation of benefits, constituted “administration” of the plan, and that, “but for the Plan, plaintiff would have no claim.”

Motion Reconsidered

On July 14, roughly a month after that judgement was handed down, Lebahn filed a “Motion for Reconsideration,” seeking relief under Rule 59(e) of the Federal Rules of Civil Procedure, arguing for the first time that ERISA preemption did not apply because Owens was a third-party consultant, rather than a fiduciary of the Plan.

At this point the district court, concluded Lebahn’s motion was not timely under Rule 59(e), which requires a motion to alter or amend a judgment to be filed within 28 days of judgment — in this case no later than July 11, 2014. The district court therefore construed Lebahn’s untimely Rule 59 motion as a motion for relief from judgment under Rule 60(b), but denied the motion reasoning that Lebahn had failed to demonstrate “exceptional circumstances” that would merit relief under Rule 60, determining that the arguments relating to Owens’ fiduciary status were “raised too late” because Lebahn “failed to bring this issue to the court’s attention until he lost the motion to dismiss,” and that a Rule 60(b) motion was “not the proper time to raise an argument” for the first time.


Following the denial of the motion to reconsider on Oct. 10, 2014, Lebahn appealed the district court’s denial of his motion for reconsideration on Nov. 3, 2014.

At the risk of seeming anti-climactic, the 10th U.S Circuit Court of Appeals concluded that it lacked jurisdiction to consider Lebahn’s challenge to the district court’s underlying judgment, and so its review was limited to the district court’s denial of relief under Rule 60(b).

Upon review, the appeals court found Lebahn did not demonstrate that the district court abused its discretion in denying relief under Rule 60(b), and therefore the district court’s judgment was affirmed.