Zirbel v. Ford Motor Company – Benefit Overpayment Decision Upheld in the Sixth Circuit

Incompetent Board of Trustees is not a defense.

Benefit overpayment cases having been trending across the country. One of the latest was heard by the Sixth Circuit Court of Appeals in Ohio. In Zirbel v. Ford Motor Company, the appeals court upheld the Ford retirement plan’s decision on a benefit overpayment mistakenly paid to an ex-spouse of a participant. In this case, Donna Zirbel received a $351,000 retirement-benefits payment from Ford Motor Company. The payment was much more than she should have received. Ford attempted to recoup the overpayment, but Zirbel refused to repay it. She then sued Ford, seeking a declaration that she could keep the money. The district court granted summary judgment to Ford, requiring Zirbel to return the $243,000 in overpayments. The Sixth Circuit affirmed that decision.

Case Background

Donna Zirbel’s husband retired from Ford in 1998. They divorced in 2009.  When Ford initially calculated Zirbel’s benefits, they mistakenly went back to 1998 instead of the date of their divorce in 2009. It wasn’t until four years later when Ford discovered the miscalculation after auditing Ms. Zirbel’s benefits. Zirbel received an extra ten years’ worth of monthly payments totaling $351,690 instead of $108, 500.

Ford requested that Zirbel return the overpayment of $243,190. After exhausting her appeals to the fund, Zirbel filed a lawsuit seeking a declaration that she was entitled to keep the money. Ms. Zirbel cited incompetence on Ford’s part as the reason for permitting her to keep the overpayment. The district court found for Ford and granted their summary judgment motion for restitution. Ms. Zirbel appealed.

  1. Sixth Circuit Upholds Decision to Seek Repayment of Overpayment as Reasonable

The Sixth Circuit heard the case and determined that the Board of Trustees decision to seek repayment was reasonable under the arbitrary or capricious standard of review. The plan’s language stated, “In the event of an error that results in an overpayment of benefits to a Member, the amount of the overpayment shall be returned to the Retirement Fund, without limitation, except the [Board] shall have discretionary authority to reduce any repayment amount from a Member.” Because discretionary authority was given to the Board to determine the repayment amount and the Board properly exercised that authority, the court upheld their decision.

  1. Sixth Circuit Rejects Equitable Estoppel Claim of Participant

Ms. Zirbel also argued that Ford should be equitably estopped from recovering the overpayments because she sought confirmation of the amount and the second calculation, they provided remained the same. She asked for this confirmation because she admitted she believed the amount was excessive of what she was actually entitled to receive. The court held that Zirbel failed to meet any of the elements to succeed on her equitable estoppel claim, including:

  • proving that the defendant intentionally made a fraudulent representation, and
  • that she justifiably relied on that misrepresentation to her detriment.

The court reasoned that Zirbel had as much chance as Ford to determine the correct amount, and that she knew the correct value of her monthly pension due to calculating the numbers on her own and reaching an amount close to $112,000. The Court also found that there was no evidence of Ford intentionally defrauding Ms. Zirbel.

Sixth Circuit Upholds Plan’s Counterclaim for Return of the Overpayment as Equitable Relief under ERISA

In order for the Plan to recover the overpayment, the Plan’s ERISA claim had to be considered a claim for “equitable” as opposed to “legal” relief because the only relevant provision permitting recovery of overpayments under ERISA only allows a Plan to “obtain … appropriate equitable relief … to enforce any provisions of this [Act] or the terms of the plan.”  Courts “award equitable restitution when [they] impose a lien on ‘particular funds or property in the defendant’s possession’ but legal restitution when it holds the defendant liable for a sum of money.”

The 6th Circuit found equitable restitution was proper here because Ms. Zirbel was not liable for owing the money; instead, the money was never hers despite commingling it with her other funds or placing it in investment accounts. The lien attached once the overpayment was in her possession. The Sixth Circuit found that commingling funds into accounts and spending the money does not by itself extinguish a lien. Here, the plan’s reimbursement language was very specific, it “gave [the plan] a right to recover. . . the overpayment,” which allowed the Plan to recoup the amount of the $243,190.


Although most of these cases are decided based on the totality of the circumstances, it is wise to have similar language and review policies included in your plan document. It is also wise to make sure your fiduciary liability insurance policies cover benefit overpayments. Most insurance companies are limiting overpayment coverage to $100,000.00. Therefore, it is highly recommended to make sure you have an auditor or TPA calculate the benefits before payments commence. A multi-layered check will prevent the overpayment issues presented in this case.