Overpaid Kaiser Retiree Must Amend Lawsuit

SAN FRANCISCO (CN) - A retiree whom Kaiser wants to return a pension-benefit overpayment of more than a quarter of a million dollars must amend her lawsuit, a federal judge ruled.

It will mark the second time Ramona Groves has had to refile her complaint against sued Kaiser Foundation Health Plan Inc., Kaiser Permanente Retirement Plan and AON, formerly known as Hewitt Associates

Her first amended complaint, as summarized by U.S. District Judge Yvonne Rogers on Monday, alleges that Groves accepted an early retirement option in 2009 based on representations that she was eligible for a lump sum payment of $729,677.05.

Both Kaiser Permanente Retirement Center and Hewitt confirmed that amount more than once, Groves claims.

They also allegedly told her that pending changes in the plan structure would reduce the amount by over $100,000 if she waited another year.

"After significant consideration and in reliance on the information provided by defendants, plaintiff decided to retire early from her 35-year career with Kaiser," Rogers wrote. "In August 2009, plaintiff notified her manager of her intent to retire effective November 30, 2009. Had plaintiff been properly informed by the Plan of the correct calculations, she would have immediately withdrawn her resignation and remained as a full-time employee of Kaiser."

As Groves completed her retirement paperwork over the next few months, the lump sum she was told she would receive allegedly rose to $748,961.97 to include her accrued paid time off and sick leave. Groves ultimately received a check for $766,889.54, according to the complaint.

She said Kaiser or Hewitt informed her 22 months later, however, that she had been overpaid by $257,903.91 and that she had to pay it back with interest. By that time, Groves had allegedly commingled the money with her other funds and had paid taxes on it.

Rogers dismissed the complaint without prejudice after finding that the claim for equitable estoppel against Kaiser under the Employee Retirement Income Security Act did not meet the 9th Circuit's standards.

Hewitt meanwhile must face amended negligence and negligent misrepresentation claims because it "fails to account for a key allegation: plaintiff's negligence claims do not seek damages for the denial of benefits, but rather for lost wages suffered as a result of plaintiff's having abandoned her gainful employment at Kaiser, allegedly in reliance on Hewitt's erroneous representation of the amount of her retirement benefit and the Plan's alleged prohibition on her returning to full-time work at Kaiser."

"In light of these allegations, plaintiff's negligence claims do not appear to seek payment of ERISA benefits, as was the case in the authorities Hewitt cites," the decision states. "Rather, the damage plaintiff pleads in support of her negligence claims is the damage of wage loss. The Court cannot say at this juncture that amendment of plaintiff's negligence claims, which seek damages for lost wages, would be futile."

Groves has until April 22 to move to file a second amended complaint. If she doesn't file the motion by that date, the dismissal will be with prejudice.

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