Court rejects Continental worker’s claim of benefit miscalculation

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in Employee Benefits Program,Human Resources

A federal judge in Texas recently dismissed a lawsuit brought by an employee who sued his former employer under the Employee Retirement Income Security Act (ERISA), alleging that the company had breached its fiduciary duties by miscalculating his pension benefits.

The judge concluded that the employee’s failure to exhaust his administrative remedies precluded his suit.

Sam Shadow was a mechanic for Continental Airlines until he took a medical leave of absence in late 1997. Although Shadow allegedly indicated that he wanted to return to work, the airline terminated him after he missed several appointments that were arranged to allow him to return. Continental determined that his last day of employment was Jan. 23, 1998—a date disputed by Shadow.

Continental argued that Shadow didn’t take the required steps of commencing his pension benefits and then filing an administrative appeal to contest the calculation. The judge agreed, ruling that “until [Shadow] can demonstrate that he has made a good faith effort to comply with the terms of the plan … then [Shadow] has failed to exhaust his administrative remedies.” (Shadow v. Continental Airlines Inc., No. SA-06-CA-619-XR, 2006)  

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