Third Circuit Holds ERISA Plan Fiduciaries Forfeit Deferential Review by Failing to Explain Benefit Suspension

Teresa R. Pofok, Esq., tpofok@tuckerlaw.com, (216) 925-0832
Denise Attar,Esq., dattar@tuckerlaw.com, (412) 594-5513

Rombach v. Plumbers Local Union No. 27 Pension Fund, No. 24-2482, 2025 WL 3110791 (3d Cir. Nov. 6, 2025) (The U.S. Court of Appeals for the Third Circuit reversed the suspension of early-retirement benefits, holding that ERISA plan fiduciaries were not entitled to deferential review because they failed to explain how they exercised discretionary authority granted under the plan.)

BACKGROUND

Rombach, a longtime union plumber, retired early and began receiving pension benefits under a multiemployer plan administered by Plumbers Local Union No. 27. The plan permitted suspension of benefits if a retiree later became re-employed in the “plumbing and pipefitting industry,” defined to include work in any “trade or craft” utilized in the industry at the time benefits commenced. After retirement, Rombach accepted a non-union office-based position as a Senior Project Manager. The plan’s trustees concluded that this position constituted employment in a covered “trade or craft” and suspended his benefits.

Rombach challenged the suspension, arguing that the trustees had not interpreted the disputed plan language or explained why his management role fell within the definition. The district court upheld the trustees’ decision under an abuse of discretion standard, and Rombach appealed.

DISCUSSION

On appeal, the Third Circuit considered whether the trustees were entitled to deferential review at all. Although the plan document granted discretionary authority, the court emphasized that deference applies only when fiduciaries articulate how they exercised that discretion. The appellate court found that neither the initial suspension notice nor the appeal decision identified any interpretation of the phrase “trade or craft,” nor did they analyze Rombach’s actual job duties. Instead, the trustees merely repeated the plan’s language and asserted the Senior Project Manager position “qualified” under the plan.

The appellate court characterized this approach as circular, explaining that restating the plan’s terms without interpretation does not constitute an exercise of discretion. Rather, the appellate court described this reasoning for what it was: a “tautology.” Therefore, the Third Circuit declined to make an abuse of discretion review and instead reviewed the suspension de novo.

Applying de novo review, the appellate court interpreted “trade or craft” according to its ordinary meaning, which it associated with manual or skilled labor rather than managerial or administrative work. On that basis, the court held that Rombach’s position did not fall within the plan’s definition and ordered reinstatement of benefits with full make-whole relief.

PRACTICAL ADVICE

Rombach suggests that discretionary authority under ERISA must be exercised, not assumed. Plan administrators and fiduciaries should review plan terms that invite interpretive judgment, particularly those governing suspension, forfeiture, or disqualifying employment, and ensure those terms are defined with sufficient clarity to support consistent application. Where discretion is reserved, administrators must actively exercise it by explaining how ambiguous provisions are interpreted and why a participant’s actual job duties fall within or outside those definitions. Denial and appeal letters should reflect this reasoning expressly; merely reciting plan language or announcing a conclusion will not suffice to preserve deferential review.

From a governance perspective, Rombach also highlights the value of proactive legal oversight in both plan drafting and administration. Plan administrators and fiduciaries should work with plan counsel to assess whether existing plan language adequately supports discretionary determinations and to align internal claims procedures with current judicial expectations. Counsel can also assist in developing templates, review protocols, and appeal stage safeguards that ensure discretionary judgments are documented contemporaneously and consistently. By integrating legal guidance into day-to-day administration, fiduciaries can document discretionary decisions clearly, reduce disputes, and preserve deference if a claim is challenged.

Please contact Teresa Pofok or Denise Attar for guidance on how this decision may affect your plan or to discuss best practices for handling claims, appeals, and day-to-day plan management.