Bristol-Myers retirees win round in lawsuit over $2B Athene annuity deal

A New York judge is allowing a lawsuit over a Bristol-Myers Squibb pension risk transfer deal to move forward.

By John Hilton

A lawsuit brought by former Bristol-Myers Squibb employees can continue, a New York judge ruled on Monday. Plaintiffs established a case that turning their pensions into Athene annuities pose a risk to their retirement earnings, the judge said.

The case is the second pension risk transfer ruling in as many weeks from New York federal courts. In the first, a judge dismissed a PRT lawsuit filed by former employees of General Electric.

The lawsuit – Doherty v. Bristol-Myers Squibb – by former employee Charles Doherty alleges that Bristol-Myers Squibb, along with its independent fiduciary State Street Global Advisors Trust Co., did not choose the safest insurer available when it entered into a $2 billion PRT deal with Athene Annuity Life Co. Plaintiffs called the insurer “highly risky.”

The complaint was filed in the U.S. District Court for the Southern District of New York last September.

District Judge Margaret M. Garnett denied motions to dismiss filed by Bristol-Myers and State Street.

"Plaintiffs have shown an injury necessary ... at this stage of the case because they have sufficiently alleged that the Athene transaction created a substantial risk that employees will not receive their benefits," Garnett wrote.

Athene rejected the lawsuit as the work of zealous trial lawyers.

“We maintain that these are frivolous claims instigated by predatory trial lawyers at the expense of retirees," the insurer said in a statement. "We believe that the courts in Alcoa and GE got it right by dismissing the cases and rejecting their manufactured allegations.”

A different opinion

In the General Electric decision last week, filed in the Northern District of New York, Judge Glenn T. Suddaby reached a completely different conclusion, even though the claims are the same.

“[F]ar from showing a ‘classic economic injury,’ Plaintiffs fail to explain how the value of their benefits was actually diminished,” the judge wrote. “There is no suggestion that the PRT, or the transfer to Athene specifically, resulted in them being entitled to or receiving any lesser amount of benefits than they were entitled to or receiving when those benefits were administrated by [GE].”

Several industry groups – the ERISA Industry Committee, American Benefits Council and the Committee on Investment of Employee Benefit Assets Inc. – filed a brief in the Bristol-Myers lawsuit. In it, they point out that the plaintiffs “do not cite a single instance in which any of those participants were paid anything less than their [Employee Retirement Income Security Act] plans would have paid them.”

Several other companies, including AT&T Inc., General Electric and Lockheed Martin Corp., have also been sued over PRT deals.

Edward Stone Law of Stamford, Conn., is one of the firms representing Doherty. The circuit split decisions could mean the PRT issue eventually ends up on the Supreme Court docket, Stone said. Not surprisingly, he preferred Judge Garnett's decision.

"She really went through everything," he said.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.