Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-09-03276/USCOURTS-ca8-09-03276-0/pdf.json

Parties Involved:
Group Health Plan, Inc.
Not Party
Antoine Khoury
Appellant
Reliastar Life Insurance Company
Appellee

Document Text:

1

The Honorable Raymond C. Clevenger III, United States Circuit Judge for the

Federal Circuit, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 09-3276

___________

Antoine Khoury, *

*

Plaintiff/Appellant, *

*

v. * Appeal from the United States

* District Court for the

Group Health Plan, Inc., * District of Minnesota.

* 

Defendant, *

*

Reliastar Life Insurance Company, *

*

Defendant/Appellee, *

__________

Submitted: June 15, 2010

Filed: August 10, 2010

___________

Before RILEY, Chief Judge, CLEVENGER1

 and COLLOTON, Circuit Judges. 

___________

RILEY, Chief Judge.

Dr. Antoine Khoury sought and obtained residual disability benefits from

ReliaStar Life Insurance Company (ReliaStar), his employer’s long-term disability

provider. After ReliaStar approved Dr. Khoury’s claim, the parties began to dispute

the amount of benefits to which Dr. Khoury was entitled. Dr. Khoury exhausted his

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The Honorable Richard H. Kyle, United States District Judge for the District

of Minnesota. 

3

Khoury stipulated in the district court to the dismissal of Group Health from

this case.

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administrative remedies and filed an action in the United States District Court for the

District of Minnesota claiming ReliaStar’s actions violated the Employee Retirement

Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. The district court2

granted ReliaStar’s motion for summary judgment, and Dr. Khoury appeals. We

affirm. 

I. BACKGROUND

Dr. Khoury, a cardiologist employed by Group Health Plan, Inc. (Group

Health),3

 was injured at work and suffered a partial disability. Group Health

submitted a claim to ReliaStar, its long-term disability insurer. ReliaStar approved the

claim and agreed to pay Dr. Khoury benefits. 

Under the long-term disability insurance policy, ReliaStar agreed to pay

residual disability benefits to a covered person who is “able to perform at least one of

the essential duties of [his] regular occupation on a full-time or part-time basis

but . . . [is] unable to perform all of the essential duties of [his] regular occupation on

a full-time basis,” and is “unable to earn more than 70% of [his] basic monthly

earnings.” The policy set forth a formula for determining the amount of residual

benefits to be provided, using the employee’s “Basic Monthly Earnings” as a starting

point. The policy defined the term “Basic Monthly Earnings” as an employee’s

“monthly salary or wage on the day before the date [he] became disabled including

commissions, bonuses, and contributions to a 401K Plan or Section 125 Plan.” An

employee’s basic monthly earnings “do[] not include overtime pay.” Under the terms

of the insurance policy, “ReliaStar . . . has final discretionary authority to determine

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all questions of eligibility and status and to interpret and construe the terms of [the

policy] of insurance.” 

Dr. Khoury’s compensation agreement was set forth in his employment contract

with Group Health. Under the terms of the contract, Dr. Khoury received “Base

Department Compensation” in an amount of $500,000 per year. In order to receive

this amount of base compensation, Dr. Khoury was required to participate fully in the

“Equal Call Schedule.” Doctors participating in the “Equal Call Schedule” were

expected to be on-call one weekend every six weeks and two weekdays per month.

Doctors who were on-call additional days, beyond those set forth in the “Equal Call

Schedule,” would be paid $2,500 per day. The amount of money Dr. Khoury actually

earned from being on-call on days beyond those required under the “Equal Call

Schedule” varied from year to year. In 2003, Dr. Khoury’s additional pay was

$92,500. In 2004, Dr. Khoury earned an additional $77,500. 

After ReliaStar approved Dr. Khoury’s request for benefits, Dr. Khoury

questioned how ReliaStar determined the amount of benefits to be paid. Dr. Khoury

asserted he was required to work additional days on-call, and as a result, ReliaStar

should use his total annual income of $580,000 as a starting point to calculate his

“basic monthly earnings.” To support Dr. Khoury’s position, Group Health sent

ReliaStar a seven-page facsimile, consisting of one cover page; one page of copied

emails from Group Health’s manager of physician services and the manager

responsible for the physician’s pay program (first email or missing email); and five

pages of Dr. Khoury’s employment contract. 

ReliaStar responded by explaining Dr. Khoury’s basic monthly earnings did not

include the additional amounts he earned for being on-call, but instead, Dr. Khoury’s

basic monthly earnings would be determined by using his “Base Department

Compensation,” which was $500,000 per year. ReliaStar also informed Dr. Khoury

that he had the right to appeal its decision. 

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Dr. Khoury appealed ReliaStar’s decision, claiming “his base salary [was]

$580,000,” and attaching an email from Group Health in support of his position

(second email). A Regions Hospital vice president stated in the second email that Dr.

Khoury’s “base pay plus call[,] both of which were required by the [cardiology]

department,” should be used in calculating his disability benefits. 

ReliaStar’s appeals committee considered the appeal and requested Dr.

Khoury’s entire employment contract. After the appeals committee obtained and

reviewed Dr. Khoury’s entire employment contract, it denied the appeal, stating:

Although Dr. Khoury may have been required to perform [additional]

[c]all shifts due to staffing issues, he received extra pay for the additional

[on-c]all shifts worked over and above his $500,000 base pay. Extra pay

received for extra time worked is generally considered “overtime” and

is certainly considered “overtime” by the insurance industry. It doesn’t

matter whether this additional [on-c]all time was required by Dr.

Khoury’s employer as the fact remains that he received extra pay over

and above his base salary for the extra hours worked which is consistent

with the industry definition of overtime. 

“Based on a thorough review of Dr. Khoury’s entire claim file, and taking into

consideration the policy language,” the committee “uph[e]ld the claim department’s

determination that Dr. Khoury’s” basic monthly earnings should be calculated using

Dr. Khoury’s $500,000 annual base pay. The committee notified Dr. Khoury of his

right to file a suit under ERISA. 

Dr. Khoury filed suit in Minnesota state court, alleging, as relevant here,

ReliaStar denied Dr. Khoury disability benefits in breach of a fiduciary duty.

ReliaStar removed the action to the United States District Court for the District of

Minnesota, and moved for summary judgment. Dr. Khoury opposed the motion for

summary judgment, arguing ReliaStar had a conflict of interest, and the ReliaStar

employee who made the initial determination to use the $500,000 figure, instead of

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Courts have struggled with the use of summary judgment to dispose of ERISA

cases. Cf. Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 619 (6th Cir. 1998)

(Gilman, J., concurring in the judgment and delivering the opinion of the court on the

summary judgment issue). We decline to decide the propriety of the use of summary

judgment procedures in this case because the issue was not raised by the parties. See

also id. (finding, when the district court concurs with the administrator “no harm is

done by entering summary judgment in favor of the administrator,” however,

“[i]f . . . a district court rejects the ruling of the administrator, the district court would

then have to independently weigh the evidence in the administrative record and render

de novo factual determinations,” contrary to the summary judgment standard of

review); Wages v. Sandler O’Neill & Partners, L.P., 37 F. App’x 108, 111 n.2 (6th

Cir. 2002) (“As long as the district court applied the proper standard of

review . . . ‘reliance on summary judgment standards does not warrant reversal . . . .’”

(quoting Univ. Hosp. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 845 n.2 (6th

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$580,000, to calculate Dr. Khoury’s benefits, engaged in malfeasance by excluding

the first email in support of Dr. Khoury’s position from the administrative record. 

The district court first considered “whether Relia[S]tar reasonably concluded

that money earned for additional-call time should be omitted from [Dr.] Khoury’s

‘Basic Monthly Earnings.’” The district court found ReliaStar’s interpretation of the

language in the insurance policy and the employment contract was reasonable. The

district court then considered Dr. Khoury’s claims, and found, although Dr. Khoury

cited cases discussing the conflict-of-interest issue in ERISA cases, Dr. Khoury failed

to explain how any conflict applies in this case. The district court recognized the

matter of the missing email, and noted there was “no evidence in the record indicating

that the ‘disappearance’ of this e-mail was anything other than a clerical error.” The

district court found Dr. Khoury’s argument was largely irrelevant because

“Relia[S]tar’s initial claim decision . . . is not at issue here. Rather, the decision

before this Court is Relia[S]tar’s denial of [Dr.] Khoury’s appeal, i.e., Relia[S]tar’s

final decision.” The district court then held, “even if [Dr. Khoury] were correct that

the e-mail went ‘missing’ for nefarious reasons, the Court’s analysis would not

change,” and granted ReliaStar’s motion for summary judgment.4

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Cir. 2000))).

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Dr. Khoury appeals the district court’s judgment, claiming the district court:

(1) made inferences and found disputed facts against Dr. Khoury, the non-moving

party; (2) did not give sufficient weight to ReliaStar’s conflict of interest; and

(3) erred in finding ReliaStar’s interpretation of the insurance contract was reasonable.

II. DISCUSSION

A. Standards of Review

“We review a district court’s grant of summary judgment de novo.” Duffy v.

McPhillips, 276 F.3d 988, 991 (8th Cir. 2002). “Summary judgment is appropriate

when the evidence, viewed in the light most favorable to the nonmoving party,

demonstrates that there is no genuine issue of material fact, and the moving party is

entitled to judgment as a matter of law.” Anderson v. Larson, 327 F.3d 762, 767 (8th

Cir. 2003) (quoting Duffy, 276 F.3d at 991); see Fed. R. Civ. P. 56(c)(2). The

evidence presented, and all reasonable inferences which may be drawn from the

evidence must be viewed in the light most favorable to the nonmoving party. See

Calvit v. Minneapolis Pub. Schs., 122 F.3d 1112, 1116 (8th Cir. 1997). The moving

party bears the burden of showing there are no genuine issues of material fact. See

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “[A] party opposing a properly

supported motion for summary judgment ‘may not rest upon the mere allegations or

denials of his pleading, but must set forth specific facts showing that there is a genuine

issue for trial.’” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (quoting

First Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288 (1968)) (internal

marks omitted). 

When an ERISA plan grants the administrator “discretionary authority to

determine eligibility for benefits or to construe the terms of the plan,” courts review

the administrator’s benefit decisions for an abuse of that discretion. Firestone Tire &

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Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). “This highly deferential standard

reflects the fact that courts are hesitant to interfere with the administration of [an

ERISA] plan.” Maune v. Int’l Bhd. of Elec. Workers, Local No. 1 Health & Welfare

Fund, 83 F.3d 959, 962-63 (8th Cir. 1996) (quoting Cox v. Mid-Am. Dairymen, Inc.,

13 F.3d 272, 274 (8th Cir. 1993)) (internal marks omitted). “Thus, we will uphold the

[administrator’s] decision to deny benefits if it is reasonable.” Id. at 963. “We

measure reasonableness by whether substantial evidence exists to support the decision,

meaning ‘more than a scintilla but less than a preponderance.’” Wakkinen v. UNUM

Life Ins. Co. of Am., 531 F.3d 575, 583 (8th Cir. 2008) (quoting Woo v. Deluxe

Corp., 144 F.3d 1157, 1162 (8th Cir. 1998), abrogated on other grounds by Metro.

Life Ins. Co. v. Glenn, 554 U.S. 105 (2008)). Courts reviewing a plan administrator’s

decision to deny benefits will review only the final claims decision, Galman v.

Prudential Ins. Co. of Am., 254 F.3d 768, 770-71 (8th Cir. 2001), and not the “initial,

often succinct denial letters,” in order to ensure the development of a complete record,

Wert v. Liberty Life Assur. Co. of Boston, 447 F.3d 1060, 1066 (8th Cir. 2006). 

B. District Court’s Inferences and Findings of Fact

Dr. Khoury argues the district court, in considering ReliaStar’s motion for

summary judgment, made inferences and findings of fact in the light most favorable

to ReliaStar, contrary to the required standard of review. In particular, Dr. Khoury

claims the district court made findings of fact against him regarding what happened

to the missing email. Dr. Khoury’s argument is not supported by the record. The

district court determined, “even if [Dr. Khoury] were correct that the e-mail went

‘missing’ for nefarious reasons, the Court’s analysis would not change.” Thus, the

district court decided ReliaStar’s interpretation of the relevant contract provisions was

reasonable, even assuming all of Dr. Khoury’s allegations of malfeasance were true.

Next, Dr. Khoury attacks the district court’s finding that the missing email was

irrelevant because the appeals committee was in possession of a second email which

provided substantially the same information as the first email. Dr. Khoury alleges the

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Although the first email contained more information, Dr. Khoury’s counsel at

oral argument acknowledged the two emails set forth the same position. The first

email described some uncertainty, stating, “We have batted around the questions of

‘additional call’ pay for quite some time.” A telephone call to ReliaStar also

conveyed Group Health’s position, but the record does not reflect the content of the

call.

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author of the second email was “not directly in the pay chain for Dr. Khoury,” and the

explanations of the emails were not the same. Although Dr. Khoury asserts the author

of the second email was not “directly in the pay chain,” he has not presented any

argument as to why the appeals committee would have given greater weight to

someone in Dr. Khoury’s pay chain than to the person he refers to as the “Vice

President of Operations at Regions Hospital.” We decline to accept Dr. Khoury’s

invitation to find a material issue of fact where there is none. See Anderson, 477 U.S.

at 248 (“Only disputes over facts that might affect the outcome of the suit under the

governing law will properly preclude the entry of summary judgment.”). Further, both

the first email and the second email essentially contained the same argument5

—Dr.

Khoury’s additional on-call duties were required, and not optional, and therefore, the

additional pay for on-call time should be included in the calculation of basic monthly

earnings. As a result, the district court did not err in finding the appeals committee

“had before it the very same information that [Dr.] Khoury now contends Relia[S]tar

intentionally hid.” 

C. Conflict of Interest

It is undisputed by the parties that “ReliaStar . . . has final discretionary

authority to determine all questions of eligibility and status and to interpret and

construe the terms of [the policy] of insurance.” We therefore review the

administrator’s eligibility determination for an abuse of discretion. See Glenn, 554

U.S. at ___, 128 S. Ct. at 2350; Wakkinen, 531 F.3d at 580-81. The Supreme Court

has held, “for ERISA purposes a conflict exists” when the “plan administrator both

evaluates claims for benefits and pays benefits claims.” Glenn, 554 U.S. at ___, 128

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S. Ct. at 2348-49. Dr. Khoury argues the district court gave insufficient weight to this

conflict of interest when it considered whether the plan administrator abused its

discretion by denying Dr. Khoury an increase in benefits. Dr. Khoury points to the

missing email as evidence of the conflict of interest. 

In Glenn, the Supreme Court clarified that the existence of a conflict of interest

is “one factor among many that a reviewing judge must take into account” when

determining whether a plan administrator has abused its discretion in denying benefits.

Id. at 2351. The Court acknowledged the existence of a conflict should be weighed

more heavily “where circumstances suggest a higher likelihood that it affected the

benefits decision, including, but not limited to, cases where an insurance company

administrator has a history of biased claims administration.” Id. The conflict should

be given less weight “(perhaps to the vanishing point) where the administrator has

taken active steps to reduce potential bias and to promote accuracy, for example, by

walling off claims administrators from those interested in firm finances, or by

imposing management checks that penalize inaccurate decisionmaking irrespective

of whom the inaccuracy benefits.” Id. 

Aside from the history of the claim at issue here, the record contains no

evidence of ReliaStar’s claims administration history or its efforts “to reduce potential

bias and to promote accuracy.” Id. Thus, the district court was required to give the

conflict some weight, but the existence of the conflict alone is not determinative. Cf.

id. at 2351-52. As recognized by the district court, Dr. Khoury was unable to state

how the existence of a conflict of interest impacted the claims decision. The district

court observed, even if the initial claims processor had maliciously destroyed the

missing email, the appeals committee was in possession of a second email containing

substantially the same information. Even if each of Dr. Khoury’s allegations are true,

neither the existence of the conflict alone, nor the intentional destruction of the email,

on this record, impacted the ultimate determination of the appeals committee. Cf. id.

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at 2351-52. We conclude the district court properly considered the existence of the

conflict of interest.

D. Reasonableness of ReliaStar’s Decision

Lastly, Dr. Khoury argues the district court erred in finding ReliaStar’s

interpretation of the relevant contract provisions was reasonable because there was no

evidence the additional call pay was overtime. “Under the abuse of discretion

standard, this court must defer to [ReliaStar’s] interpretation of the plan so long as it

is ‘reasonable,’ even if the court would interpret the language differently as an original

matter.” Darvell v. Life Ins. Co. of N. Am., 597 F.3d 929, 935 (8th Cir. 2010). In

Finley v. Special Agents Mut. Benefit Assoc., Inc., 957 F.2d 617, 621 (8th Cir. 1992),

this court set forth five-factors to assist courts in determining whether a plan

administrator’s interpretation of a policy is reasonable. Under this Finley test, we

determine whether the plan administrator’s interpretation (1) is consistent with the

plan’s goals; (2) renders any of the plan language meaningless or internally

inconsistent; (3) conflicts with the substantive or procedural requirements of ERISA;

(4) has been followed similarly in the past; and (5) is contrary to the clear language

of the policy. See id. 

The district court considered each of the Finley factors, and found they

supported ReliaStar’s decision. Dr. Khoury argued, both before the district court and

on appeal, that ReliaStar improperly interpreted the term “overtime,” which was left

undefined in the policy. ReliaStar’s appeals committee found:

Although Dr. Khoury may have been required to perform [additional oncall] shifts due to staffing issues, he received extra pay for the additional

[on-call] shifts worked over and above his $500,000 base pay. Extra pay

received for extra time worked is generally considered “overtime” and

is certainly considered “overtime” by the insurance industry.

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The appeals committee determined the additional call pay was overtime, and as such,

could not be included in the calculation of Dr. Khoury’s “Basic Monthly Earnings”

for purposes of his benefits calculation. Dr. Khoury contends his additional on-call

time is not overtime. 

The district court accurately recognized “[r]ecourse to the ordinary, dictionary

definition of words is not only reasonable, but may be necessary.” Id. at 622 (quoting

Central States v. Indep. Fruit & Produce Co., 919 F.2d 1343, 1350 (8th Cir. 1990)).

The district court set forth the dictionary definition of the term “overtime,” and found

ReliaStar employed such a definition when it denied Dr. Khoury’s appeal. We agree

with the district court that the appeals committee, in finding “[e]xtra pay received for

extra time worked is generally considered ‘overtime,’” applied a reasonable,

dictionary definition of the term which does not conflict with the clear language of the

policy. See, e.g., Black’s Law Dictionary 1137 (8th ed. 2004) (defining “overtime”

as “[t]he extra wages paid for excess hours worked”). We agree with the district

court’s finding that ReliaStar’s interpretation of the insurance plan was reasonable.

See Hutchins v. Champion Int’l Corp., 110 F.3d 1341, 1344 (8th Cir. 1997) (“Under

an abuse of discretion standard we do not search for the best or preferable

interpretation of a plan term: it is sufficient if the [administrator’s] interpretation is

consistent with a commonly accepted definition.”).

III. CONCLUSION

We affirm the judgment of the district court.

______________________________

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