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finding that Glenn "gives courts broad latitude in evaluating the weight of the effect of that conflict of interest"
Summary of this case from McQueen v. Life Ins. Co. of North AmericaOpinion
Case No. 2:07cv244.
September 29, 2008
OPINION AND ORDER
Before the Court are the following:
1. The October 1, 2007 Motion for Judgment on the Administrative Record of Defendants Glass Rock and Millwood Pension Plan (hereinafter "Plan") and Oglebay Norton Industrial Sands, Inc. (hereinafter "Oglebay") (hereinafter collectively "Defendants") (Doc. 21).
2. The October 1, 2007 Motion for Judgment on the Administrative Record of Plaintiff Steven P. Cline (hereinafter "Plaintiff") (Doc. 22).
3. The July 14, 2008 Supplemental Brief of Plaintiff on the Application of Metropolitan Life Ins. Co. v. Glenn, 128 S.Ct. 2343 (2008) (Doc. 27).
4. The July 28, 2008 Supplemental Brief of Defendants Regarding Application of Metropolitan Life Ins. Co. v. Glenn, 128 S.Ct. 2343 (Doc. 28). Defendant filed another Supplemental Filing on September 12, 2008 (Doc. 29).
These matters are now ripe for review. For the following reasons, Defendants' Motion for Judgment on the Administrative Record is hereby DENIED and Plaintiff's Motion for Judgment on the Administrative Record is hereby GRANTED.
I. FACTS
Plaintiff began working for Olgebay in 1980. In 1989, he sustained an injury while employed with Olgebay. On June 11, 1999, Plaintiff stopped working due to severe low back pain caused by his 1989 injury.
At that time, Plaintiff sought various forms of disability compensation. From June 1999 through February 1, 2000, Plaintiff received 26 weeks of short term disability (hereinafter "STD") payments in accordance within Oglebay's STD Plan. When the STD payments were exhausted, Plaintiff applied for, and began receiving on March 21, 2000, temporary total disability (hereinafter "TTD") payments through the Ohio Bureau of Workers' Compensation (hereinafter "BWC"). Plaintiff received TTD payments until December 2000 when the BWC declared Plaintiff had reached a state of maximum medical improvement (hereinafter "MMI").
MMI is a term which means an injured worker has reached a point of clinical plateau from which no functional or physiological change can reasonably be expected.
On November 10, 2000, during the time Plaintiff was receiving payments from the BWC, the following note was sent via facsimile:
This case is complicated and we want to challenge any type of payment to this individual. If you have any question please call me.
After the BWC determined Plaintiff had reached MMI, Plaintiff was unable to return to his former position with Olgebay and Olgebay did not have a position which met Plaintiff's restrictions. Therefore, Olgebay terminated Plaintiff's employment on May 31, 2000. At the time of his termination, Plaintiff had 18.667 years of credited service.
As a benefit of Plaintiff's employment with Olgebay, he was a participant in the Plan. The Plan provides, inter alia, disability retirement benefits, should an employee become disabled and unable to work. The Plan language which governs Plaintiff's claim for permanent and total disability benefits is found in Article XIV of the Plan and states as follows:
1. Eligibility for Disability Benefits
A Participant who terminates employment as a result of a disability and who has completed at least ten years of Credited Service at the time the disability first commences and who is subsequently deemed to be permanently and totally disabled in accordance with the Federal Social Security Act shall be entitled to Disability Benefits hereunder.
2. Proof of continuing Disability
The Administrator may require proof of continued disability coverage under the Federal Social Security Act. Such proof may be required from time to time but not more frequently than once every six months.
* * *
In addition, the Summary Plan Description, Section X, Disability Benefit, provides:
The Plan offers a disability benefit to provide you with a monthly income should you become disabled before you retire and terminate your employment as a result of your disability.
Eligibility
You must satisfy the following requirements to be eligible for this benefit:
• You must have earned at least 10 years of Credited Service.
• Your disability must occur after the Effective Date of the Plan.
• Your disability must be permanent and total making you eligible for Social Security Benefits.
Continuing proof of your disability may be required by the Plan Administrator but not more frequently than once every 6 months.
The term "disability" is not defined by the Plan. The Plan accords the administrator the discretion in construing the terms of the Plan and reviewing benefit claims. Finally, the Plan is both the decision-maker with respect to an employee's eligibility to participate in the Plan and the payor of the benefits.
In 2001, Plaintiff underwent vocational rehabilitation in order to prepare him for another line of work. Due to Plaintiff's education and physical restrictions, those efforts proved unsuccessful. As such, in January 2002, Plaintiff applied for Social Security disability benefits. On March 24, 2004, the Social Security Administration (hereinafter "SSA") determined Plaintiff had been permanently and totally disabled for the purposes of the SSA as of December 19, 2003, thereby entitling Plaintiff to Social Security disability payments.
In March, 2005, Defendants received a copy of the SSA's order. On March 31, 2005, Defendants notified Plaintiff that he did not meet the requirements to be eligible for disability payments under the Plan. Defendants denied coverage under the Plan because the SSA did not find Plaintiff to have been suffering from a permanent and total disability as of the date of Plaintiff's termination.
Plaintiff subsequently filed a claim for disability payments under the Plan on September 9, 2006. Defendants again denied coverage based upon the same reasoning. Plaintiff appealed the decision. The appeal was handled, at least in part, by Sarah Seaman on behalf of Oglebay. During Ms. Seaman's research of the claim, she contacted Olgebay to inquire whether Plaintiff's employment was terminated due to disability:
Phyllis,
Thank you for your research. He has contacted me 3 times, and sent in a copy of his disability award letter from Social Security. He began receiving social security disability benefits of $988 per month in June 2004, and Social Security determined December 19, 2003 as his date of disability. I am specifically trying to determine if he terminated employment due to disability. This info raises another question, can a person collect from WC and SS at the same time? Sarah.
The response Ms. Seaman received indicated that Plaintiff's employment was terminated because of his disability:
That's a good question. Please let me know for future reference. There aren't any termination papers in his file, but if you could see it, one would think that he did terminate because of disability.
The appeal was denied by Defendants based on the same reasoning.
Accordingly, Plaintiff filed the instant action pursuant to the Employee Retirement Income Security Act (hereinafter "ERISA"), 29 U.S.C. § 1001.
II. ANALYSIS
In deciding claims for ERISA benefits under 29 U.S.C. § 1132(a)(1)(B), such as Plaintiff's claim, this Court may consider only the evidence contained in the administrative record and must issue findings of fact and conclusions of law, rather than applying summary judgment standards. See, e.g., Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609, 619 (6th Cir. 1998). The default rule is that courts review a denial of ERISA benefits under a de novo standard. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). However, if the plan accords discretion to the administrator in construing and interpreting the terms of the plan and reviewing benefits claims, courts must review an administrator's decision to deny benefits under the higher "arbitrary and capricious" standard of review. See, e.g., Spangler v. Lockheed Martin Energy Sys., Inc., 313 F.3d 356, 361 (6th Cir. 2002); Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555 (6th Cir. 1998) (en banc); Admin. Comm. of the Sea Ray Employee's Stock Ownership Profit Sharing Plan v. Robinson, 164 F.3d 981, 986-87 (6th Cir. 1999).
The discussion of the standard of review does not end there, however. The Supreme Court's recent decision in Metro. Life Ins. Co. v. Glenn, 128 S. Ct. 2343, 2348 (2008), holds that where an administrator is both the evaluator and payor of claims a conflict of interest exists. As such, the conflict of interest is a factor to be weighed in determining whether or not an administrator abused its discretion under the arbitrary and capricious standard. Firestone, 489 U.S. at 115; see also Glenn, 128 S. Ct. at 2348. The Glenn court stated that the amount of weight to be given to the conflict of interest will be determined on a case by case basis. While the Court did not clearly define how a Glenn-type conflict of interest is to be weighed, it did make clear that the conflict of interest is to be taken into account as an important factor, perhaps even a tie-breaking factor, in determining whether or not a decision by an administrator was arbitrary or capricious. Glenn, 128 S. Ct. at 2351. Thus where the administrator operates under a conflict of interest, the Court endorsed th Sixth Circuit's "totality of the circumstances" approach in determining whether the administrator abused its discretion, and Glenn gives courts broad latitude in evaluating the weight of the effect of that conflict of interest. Id.
Plaintiff alleges he is entitled to disability benefits under the Plan because he satisfies all of the requirements thereunder. Defendants allege Plaintiff is not entitled to disability benefits because he was not disabled at the time his employment was terminated. Defendants contention rests on the definition of disability, which Defendants tie directly to the date SSA determined Plaintiff to have been permanently and totally disabled, December 19, 2003.
"One of the primary purposes of ERISA is to ensure the integrity and primacy of the written plans. In order to satisfy this objective, the plain language of an ERISA plan must be enforced in accordance with `its literal and natural meaning.'" Smith v. Wal-Mart Assocs. Group Health Plan, 2000 U.S. App. LEXIS 33993 (6th Cir. 2000), quoting Health Cost Controls v. Isbell, 139 F.3d 1070, 1072 (6th Cir. 1997). While Congress intended for the judiciary to develop a federal common law for ERISA claims, the "federal courts may not apply common law theories to alter the express terms of written benefit plans." Health Cost Controls, 139 F.3d at 1072. Thus, to the extent the Plan's language is clear and unambiguous, this Court must enforce the Plan. However, where the express terms of the Plan are not clear, this Court is to apply common law principles to resolve conflicts, keeping in mind that the administrator's discretion controls unless it was expressed in a way which was arbitrary and capricious.
Currently, the administrator's sole basis for denying liability was that the Plan requires a participant be declared permanently and totally disabled by the SSA on the date of termination. Even though this requirement is not expressly mandated in the terms of the Plan, the administrator claims it is inherent in the requirement the participant's employment terminated as a result of a disability. The administrator argues the undefined term "disability" equates to permanently and totally disabled under the terms of the Plan. As such, the crux of this case lies in the definition of the term "disability."
Upon consideration, the Court concludes Defendant's definition of the term "disability" was arbitrary and capricious. First, the Plan language contradicts the very interpretation which the administrator asks the Court to accept. Pursuant to Sec. 1 of Article XIV, to be eligible a participant must meet the following three elements:
1. the participant's employment was terminated as a result of a disability,
2. the participant completed ten years of credited service at the time the disability first commences, and
3. the participant is subsequently deemed to be permanently and totally disabled in accordance with the Federal Social Security Act.
The parties do not dispute that Plaintiff satisfies this element.
In order for "disability" in the first element to be defined as permanently and totally disabled, as interpreted by Defendants, the Court must rewrite the third element to state that the participant "subsequently be deemed to have been permanently and totally disabled." However, this is not what the language of the Plan requires. Instead, it clearly states the participant, at some time after the termination of employment, be deemed permanently and totally disabled. The language of the third element does not relate the permanent and total disability back in time to the date the participant's employment was terminated. As such, the Plan language does not bear out that the disability which resulted in the termination of the participant's employment be permanent and total.
Moreover, there is strong evidence the administrator's conflict of interest resulted in a flawed interpretation of the Plan. The administrator stated to a third party during the processing of Plaintiff's workers' compensation claim that it "wanted to challenge any type of payment to [the Plaintiff]." This statement demonstrates the administrator may have had an improper motive, as the Plan's fiduciary, in determining Plaintiff's eligibility to receive disability benefits.
Therefore, having concluded the administrator's definition of "disability" in the first element is arbitrary and capricious, the Court must apply common law principles to determine the definition which applies to "disability" in the first element. Disability is defined as "[t]he inability to perform some function." BLACK'S LAW DICTIONARY 494 (8th ed. 2004). Moreover, MERRIAM-WEBSTER defines disability, inter alia, as the "inability to pursue an occupation because of a physical or mental impairment" Http://www.merriam-webster.com/dictionary/disability. Accordingly, for application only to the facts before the Court currently, the Court determines the definition of disability in Sec. 1 of Article XIV is the "inability to pursue employment with Oglebay because of a physical or mental impairment."
An application to Plaintiff's claim results in the conclusion he fulfills the requirements of Sec. 1, Article XIV. Plaintiff ceased working in June, 1999 due to his inability to perform his, or any job, at Oglebay because of his physical impairments. He continued to be unable to perform his job and he was compensated by various entities due to inability to work, including Olgebay's STD Plan from June 1999 through February 2000. In March, 2000, Plaintiff sought, and was awarded, TTD compensation through the BWC. In May 2000, while still receiving TTD through the BWC, Oglebay terminated Plaintiff's employment because he was unable to perform his or any other job at Oglebay. This is supported by the correspondence between Ms. Seaman and Oglebay. As such, Plaintiff was terminated from his employment with Oglebay "as a result of a disability."
III. CONCLUSION
IT IS SO ORDERED.
DENIED GRANTED.