Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-09-01719/USCOURTS-ca8-09-01719-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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The Honorable Charles B. Kornmann, United States District Judge for the

District of South Dakota, sitting by designation. 

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 09-1719

___________

Thomas E. Jones, Jr., *

*

Appellant, *

* Appeal from the United States

v. * District Court for the 

* Western District of Arkansas. 

ReliaStar Life Insurance Company; *

ING Employee Benefits, *

*

Appellees. * 

___________

Submitted: January 11, 2010

 Filed: August 9, 2010

___________

Before SMITH and COLLOTON, Circuit Judges, and KORNMANN,1

 District Judge.

___________

COLLOTON, Circuit Judge.

Thomas Jones received long-term disability benefits under an employee welfare

benefit plan governed by the Employee Retirement Income Security Act (“ERISA”),

29 U.S.C. §§ 1001-1461. The plan is administered by ReliaStar Life Insurance

Company (“ReliaStar”) through ING Employee Benefits (“ING”), an internal business

division of ReliaStar. Jones sued ReliaStar and ING after ReliaStar began offsetting

the disability benefits he received under the Plan by the amount of disability benefits

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The Honorable Jimm Larry Hendren, Chief Judge, United States District Court

for the Western District of Arkansas.

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he collected from the Department of Veterans Affairs (“VA”). The district court2

denied Jones’s motion for leave to conduct discovery, and determined that ReliaStar

did not abuse its discretion in offsetting Jones’s benefits. We affirm. 

I.

Jones was employed as a trust officer at Hibernia Corporation until 2001. On

August 1, 2001, Jones applied for long term disability benefits under Hibernia’s

ERISA-governed employee welfare benefit plan (the “Plan”), which was administered

by ReliaStar. Jones’s application for benefits listed his disability as gastroparesis.

Jones’s doctor submitted a letter to ReliaStar that explained that Jones’s disability was

caused by numerous conditions, including type II diabetes mellitus, peripheral

neuropathy, and diabetic gastroparesis. ReliaStar approved Jones’s disability claim

effective May 9, 2001.

Prior to the award of benefits from ReliaStar, Jones received disability benefits

from the VA. Beginning in 1971, the VA continuously paid Jones benefits for a

disability caused by a shrapnel wound to his left shoulder. In 1999, Jones applied for

additional disability benefits from the VA based on diabetes. The VA awarded Jones

the additional benefits on December 27, 2001, with an effective date of November 18,

1999.

On April 19, 2005, ReliaStar informed Jones that it had discovered that he was

receiving disability benefits from the VA because of his diabetes, and explained that

his benefits under the ReliaStar plan would be reduced by the amount of his diabetesbased VA benefits pursuant to a provision in the plan. Under the ReliaStar plan,

“Other Income is subtracted from the benefit [a participant] would otherwise receive.”

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(Appellant App. 48). “Other Income” is defined as income that a plan participant is

eligible to receive based on “the same or related disability for which [he is] eligible

to receive benefits under the Group Policy.” (Appellant App. 48). Based on these

provisions, ReliaStar concluded that Jones’s diabetes-based benefits from the VA

were “other income” that should be subtracted from the amount of benefits payable

under the ReliaStar plan. Jones brought an administrative appeal, and ReliaStar’s

ERISA Appeal Committee concluded that the offset of the VA benefits was

appropriate. 

Jones then filed suit in the district court pursuant to ERISA, 29 U.S.C.

§ 1132(a)(1)(B), and sought discovery. The district court denied Jones’s request for

discovery and dismissed the case, concluding that ReliaStar’s decision to offset

Jones’s benefits was not an abuse of discretion.

II.

Jones first contends that the district court erred by rejecting his argument,

presented by way of a motion in the district court, that the court should apply a less

deferential standard of review than “abuse of discretion” when evaluating ReliaStar’s

decision. We review de novo whether the district court applied the correct standard

of review in evaluating the plan administrator’s decision. See Hackett v. Standard Ins.

Co., 559 F.3d 825, 829 (8th Cir. 2009). When an ERISA plan provides a plan

administrator with discretion to construe the terms of the plan, the court should review

the administrator’s interpretation under an abuse of discretion standard. Firestone

Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Jones does not dispute that

the Plan gave ReliaStar discretion to interpret the terms of the Plan, and the district

court thus did not err in applying the abuse of discretion standard. Jones’s contention

that a less deferential standard of review should apply because ReliaStar was

operating under a conflict of interest was rejected in Metropolitan Life Insurance Co.

v. Glenn, 128 S. Ct. 2343, 2350-51 (2008).

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Jones next argues that the district court erred in denying his motion for leave

to conduct discovery. We review the district court’s discovery rulings for abuse of

discretion. LaSalle v. Mercantile Bancorporation, Inc. Long Term Disability Plan,

498 F.3d 805, 811 (8th Cir. 2007). In ERISA cases, the general rule is that review is

limited to evidence that was before the administrator, see id., and Jones presents no

convincing reason why this case should be an exception. He emphasizes that

discovery should be allowed to explore ReliaStar’s conflict of interest, but ReliaStar

concedes that it was both insurer and administrator of the plan, so discovery is

unnecessary to establish the existence of a conflict. See Farley v. Ark. Blue Cross &

Blue Shield, 147 F.3d 774, 776 n.4 (8th Cir. 1998). Jones’s challenge to the merits of

ReliaStar’s decision involves an application of policy language to undisputed facts,

and the administrative record is sufficient to permit a fair evaluation of ReliaStar’s

decision. The district court did not abuse its discretion in denying Jones’s request for

discovery. 

The central issue in the appeal is whether ReliaStar abused its discretion in

deciding to offset Jones’s disability benefits. Our cases identify several factors that

inform our analysis, including whether the administrator’s interpretation is

“inconsistent with the Plan’s goals, whether it renders language of the plan

meaningless, superfluous, or internally inconsistent, whether it conflicts with the

substantive or procedural requirements of ERISA, whether it is inconsistent with prior

interpretations of the same words, and whether it is contrary to the Plan’s clear

language.” Erven v. Blandin Paper Co., 473 F.3d 903, 906 (8th Cir. 2007). The

ultimate question is whether the administrator’s interpretation was reasonable. King

v. Hartford Life & Accident Ins. Co., 414 F.3d 994, 999 (8th Cir. 2005) (en banc).

The Plan directs ReliaStar to offset the payment of disability benefits by the

amount of benefits that a participant receives from other sources because of “the same

or related disability.” There is no dispute that Jones began to receive benefits from

the VA for a related disability (i.e., diabetes) effective November 1999. The Plan,

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however, also provides an exception that benefits will not be reduced by disability

benefits that the participant receives from a past employer, “if these benefits have been

paid continuously to [him] for more than 2 years before [he] become[s] eligible to

receive benefits under the Group Policy.” (Appellant App. 49). 

ReliaStar concluded that the exception did not apply to Jones, because he did

not begin to receive benefits from the VA for a diabetes-related disability more than

two years before he was eligible to receive disability benefits under the Plan.

ReliaStar reasoned that the award of VA benefits that commenced with an effective

date of 1999 based on Jones’s diabetes was “separate and distinct” from the 1971

award of VA benefits based on the shoulder injury. Because the monthly VA benefit

for Jones’s diabetes-related disability had not been paid continuously for more than

two years before Jones was eligible for benefits under the Plan, ReliaStar ruled that

the exception did not apply, and that an offset was appropriate.

Jones argues that ReliaStar abused its discretion, because he had received

disability benefits from the VA continuously since 1971 for his shoulder disability.

He contends that it is irrelevant under the Plan whether the additional VA benefits for

which he became eligible in November 1999 were related to, or a continuation of, the

preexisting shoulder-related benefits. His position is that because he has received VA

benefits continuously for more than two years before he became eligible for benefits

under the Plan, ReliaStar may not reduce his Plan benefits by any of his VA benefits.

We conclude that ReliaStar’s interpretation of the Plan was reasonable. The

Plan requires that “other income” be subtracted from benefits paid under the ReliaStar

policy. The “exceptions” provision then sets forth certain benefits by which the

ReliaStar benefits “will not be reduced.” An “exception” is “one that is excepted or

taken out from others.” Webster’s Third New International Dictionary 791 (2002).

It was reasonable for ReliaStar to construe the “exceptions” provision as a limitation

on the scope of “other income,” given that the exceptions follow immediately after the

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“other income” definitions in the Plan, and there must be some preexisting benefit

reductions from which to make exceptions.

It was also reasonable for ReliaStar to interpret the exception for disability

benefits received continuously for two years from a past employer to mean benefits

received from the employer because of “the same or related disability” for which the

participant is eligible to receive benefits under the Plan. The Plan does not define

“other income” to include disability benefits paid by a former employer because of

unrelated disabilities. There is thus no reason for the plan to except benefits paid for

unrelated disabilities from the definition of “other income,” because those benefits are

not included in the first place. ReliaStar’s resolution of the interplay between “other

income” and the “exceptions” was a reasonable interpretation of the Plan.

The Supreme Court’s decision in Glenn provides that ReliaStar’s admitted

conflict of interest as both insurer and administrator should be considered as a factor

in determining whether the administrator abused its discretion. 128 S. Ct. at 2350-51.

A conflict of interest can “act as a tiebreaker” when the issue is close, id. at 2351, and

can assume “great importance” “where circumstances suggest a higher likelihood that

it affected the benefits decision.” Id. The district court did not expressly weigh the

conflict of interest in its analysis, but our review is de novo, see Norris v. Citibank,

N.A. Disability Plan (501), 308 F.3d 880, 883-84 (8th Cir. 2002), and there is no need

to remand for further consideration. See, e.g., Wakkinen v. Unum Life Ins. Co. of Am.,

531 F.3d 575, 581-82 (8th Cir. 2008). 

This is not a close case in which the conflict of interest likely tipped the

balance. In our view, ReliaStar’s reading of the provisions is not only reasonable, but

plainly the better interpretation of the Plan. We therefore conclude that ReliaStar did

not abuse its discretion in deciding to offset Jones’s disability benefits based on his

receipt of diabetes-related disability benefits from the VA.

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The judgment of the district court is affirmed.

______________________________

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