## Facts

- An employer offered a Voluntary Special Retirement Program (VSRP) to eligible employees that included a monthly Health Care Allowance (HCA) for early retirees.
- The HCA was a retiree health-related welfare benefit and differed from the benefit offered to regular retirees.
- Company communications described the HCA as a “lifetime” benefit, including oral and written statements made to employees considering early retirement.
- The plaintiffs accepted early retirement and began receiving HCA payments.
- After a corporate acquisition, the new parent company notified early retirees that the HCA would be terminated effective a future date.
- The plan administrator denied the retirees’ administrative challenge and upheld termination.
- The retirees sued under ERISA for wrongful denial of benefits and breach of fiduciary duty, and also asserted state-law theories such as breach of contract and equitable estoppel.
- The district court granted summary judgment to defendants and limited discovery on the denial-of-benefits claim to the administrative record.

## Issues

1. Whether the HCA was vested under ERISA or contract principles, preventing termination.
2. Whether “lifetime” statements created enforceable rights or supported equitable estoppel despite plan terms.
3. Whether reservation-of-rights language in plan documents applied to the VSRP HCA and authorized termination.
4. Whether defendants breached ERISA fiduciary duties by misrepresenting the duration or security of the HCA.
5. Whether limiting discovery to the administrative record on the ERISA benefits claim was an abuse of discretion.

## Decision

- The court affirmed summary judgment for defendants on all claims.
- The court held the HCA was an ERISA welfare benefit that did not vest absent clear, express plan language promising vesting.
- The court concluded reservation-of-rights provisions authorizing amendment or termination applied to the VSRP HCA and permitted termination.
- The court rejected contract and estoppel theories because reliance on “lifetime” phrasing was unreasonable in light of unambiguous reservation-of-rights terms.
- The court rejected the fiduciary-duty claim for lack of evidence of knowing or materially misleading misrepresentations.
- The court upheld the limitation of discovery to the administrative record for the denial-of-benefits claim under a deferential standard of review.

## Legal Principles

- Welfare benefits under ERISA generally do not vest; vesting requires clear and express language in governing plan documents.
- An employer may amend or terminate welfare benefits when plan documents reserve that right, unless the sponsor clearly relinquishes it.
- General “lifetime” descriptions in communications do not override unambiguous reservation-of-rights clauses and typically cannot establish vested welfare benefits.
- Equitable estoppel and contract-based claims tied to benefit duration fail where the plan’s written terms clearly reserve the employer’s amendment/termination authority and reliance on contrary statements is not reasonable.
- ERISA fiduciary-misrepresentation liability requires proof of materially misleading statements or omissions made with the requisite culpability; ambiguity or imprecise descriptions, without more, is insufficient.
- When a plan grants discretionary authority, judicial review of a benefits denial is deferential and commonly confined to the administrative record absent a specific showing justifying expanded discovery.

## Conclusion

The court held that the early retirees’ health care allowance was a nonvested ERISA welfare benefit subject to plan reservation-of-rights clauses, so the employer could terminate the benefit despite “lifetime” descriptions, and it affirmed summary judgment and the district court’s discovery limits.


Vallone v. CNA Fin. Corp., 375 F.3d 623 (7th Cir. 2004)