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Fifth Circuit Reverses Award of Benefits to Stepchildren and Rejects Imposition of Equitable Adoption into Plan?ÇÖs Definition of ?Ç£Children?Ç¥

August 17, 2012
In a case involving a thrift plan subject to ERISA, the Fifth Circuit Federal Court of Appeals reversed the district court?ÇÖs decision to award benefits under the plan to a deceased participant?ÇÖs stepchildren. Prior to the challenge by the stepchildren, the plan administrator distributed the participant?ÇÖs benefits to the participant?ÇÖs siblings, based on the priority of distribution set forth in the plan document. Because the plan afforded the plan administrator with discretionary authority to determine the eligibility for benefits, the court determined whether there was an abuse of discretion in the plan administrator?ÇÖs interpretation. The court concluded that because the plan administrator?ÇÖs interpretation of the term ?Ç£children?Ç¥ was ?Ç£legally correct?Ç¥ and there is nothing in the plan or ERISA requiring the plan administrator to incorporate the concept of equitable adoption into the plan?ÇÖs definition of children, there was no abuse of discretion. As a result, the court reversed the district court?ÇÖs decision. Herring v. Campbell, No. 11-40953 (5th Cir. August 7, 2012).
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