Sixth Circuit Clarifies the Date on Which a Claim for Pension Benefits Under ERISA Accrues

In Gragg v. UPS Pension Plan, 55 F.4th 1059 (6th Cir. 2022), the Sixth Circuit held that the limitations period for an ERISA claim to recover benefits due under a plan did not expire before the alleged underpayment on which the claim was based. Id.  at 1060.

Plaintiff Ralph Gragg was a driver for UPS who gave notice of early retirement in 2010 and selected the “Social Security Leveling Option” benefit under his two UPS pension plans, which the plans described as an option to “increase the beneficiary’s monthly benefit before age 65 and thereafter reduce it by the amount of his Social Security benefit, so as to keep the beneficiary’s total monthly benefits stable (or ‘level’) throughout his retirement.” Id. at 1061. At the time, each plan sent Gragg a letter indicating that, after he turned 65, each plan would reduce his monthly payment by $1754—the anticipated amount of his Social Security benefit. Id.

Eight years later, when Gragg turned 65 and began receiving a Social Security benefit of $1754, each plan reduced his monthly benefit by that amount, with the result that Gragg’s overall monthly income decreased by $1754, instead of remaining stable. Id. When Gragg brought suit, arguing that the reduction in his monthly benefit was not the expressed intent of the Social Security Leveling Option under the pension plans, the district court dismissed his claim as time-barred, “on the ground that each plan had told him ten years before—in July 2010[1]—the amounts that each would pay him after he turned 65.”

In reversing the district court, the Sixth Circuit first noted that, under ERISA common law, a claim accrues “when the plaintiff discovers, or with due diligence should have discovered, the injury that is the basis of the action.” Id. The Gragg Court concluded that, despite the 2010 letters, Gragg had no injury to discover until he first received what he understood as an underpayment in 2018. Id. As such, his claim was timely. Id. at 1061–62.

The Gragg opinion clarifies that a “dispute” about plan benefits is not necessarily equivalent to an “injury” for purposes of when a claim accrues under an ERISA plan. Where an injury does not occur until a plaintiff is allegedly underpaid, that is when the claim accrues. See id. at 1062.