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Parties Involved:
Board of Trustees
Appellant
Teresa Lee Myers
Appellee

Document Text:

FILED 1 Uoited States Co~rt ~f Appca s 

Tenth Cu:cu1t 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

M~R .. 2 1990 

ROBERT L. HOECKER 

Clerk 

TERESA LEE MYERS, for herself and as 

next friend of Shannon Leljedal, 

Plaintiff-Appellee, 

v. 

BOARD OF TRUSTEES, for the Rocky 

Mountain UFCW Unions & Employers 

Health Benefit Plan, 

Defendant-Appellant. 

) 

) 

) 

) 

) 

) No. 89-1079 

) (D.C. No. 87-C-1388) 

) (D. Colo.) 

) 

) 

) 

) 

ORDER AND JUDGMENT* 

Before LOGAN, MOORE, Circuit Judges, and THOMPSON,** Chief Judge. 

**The Honorable Ralph G. Thompson, Chief Judge, United States 

District Court for the Western District of Oklahoma, sitting by 

designation. 

Defendant-appellant Board of Trustees for the Rocky Mountain 

UFCW Unions & Employers Health Benefit Plan (Board) appeals from 

the district court's grant of summary judgment to 

plaintiff-appellee Teresa Lee Myers in her suit to recover health 

benefits pursuant to section 1132(a)(l)(B) of the Employment 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 89-1079 Document: 01019965785 Date Filed: 03/02/1990 Page: 1 
Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. 

We affirm. 

Facts 

Unless otherwise noted, the following facts are undisputed by 

the parties: 

The Rocky Mountain UFCW Unions and Employers Health Benefit 

Plan (Plan) is an employee welfare benefit plan as defined in 

ERISA § 3(1), 29 u.s.c. § 1002(1). The Plan, administered by the 

Board, is a self-insured health benefit plan created to receive 

contributions under a collective bargaining agreement between 

participating employers and local unions to provide health and 

disability benefits to participants. 

Martin Leljedal was an eligible employee under the Plan at 

all times relevant here. On October 24, 1983, he married Myers, 

who was then pregnant. On February 10, 1984, Myers gave birth to 

a daughter, Shannon. Leljedal caused his name to be placed on the 

birth certificate as Shannon's father. Upon Leljedal's claim, the 

Plan paid for Shannon's birth expenses. 

On August 27, 1984, Leljedal admitted Shannon to the hospital 

for treatment resulting from a fall. At or near that time, he 

signed Shannon's parental consent form and claims to have signed a 

document obligating him to pay for her medical expenses. Neither 

the hospital nor the Plan have located the latter document, 

however. The emergency department insurance form of the attending 

hospital lists Leljedal as the payment guarantor of Shannon's 

medical expenses. 

2 

Appellate Case: 89-1079 Document: 01019965785 Date Filed: 03/02/1990 Page: 2 
Shannon remained hospitalized or otherwise under medical 

treatment until September 19, 1984. The cost 

hospitalization and treatment exceeded $6,000.00. 

for this 

Leljedal 

submitted a claim to the Plan on behalf of Shannon to recover 

these medical expenses. 

On August 29, 1984, while Shannon was hospitalized, a hearing 

was held in divorce proceedings between Leljedal and Myers. The 

Board claims that evidence presented at that hearing demonstrated 

that Leljedal was not Shannon's natural father. When Leljedal and 

Myers were divorced on October 5, 1984, approximately two weeks 

after the last of the medical expenses at issue here were 

incurred, the divorce decree included a finding that there were no 

children born as issue of the marriage. Leljedal and Myers 

acknowledge that this finding is correct and that Shannon is not 

Leljedal's daughter. Both also acknowledge that Leljedal was 

aware of his lack of paternity prior to his marriage to Myers. 

On June 13, 1985, the Board denied Myers' claim for Shannon's 

medical expenses on the ground that Shannon was not a "Dependent" 

under the Plan. According to the parties' stipulation, the Plan 

defines a "Dependent" as "the Eligible Employee-'s unmarried 

children, including stepchildren, ... provided that the child is 

dependent upon the Eligible Employee for support and maintenance 

and the Eligible Employee is legally responsible for payment of 

the incurred expenses .... " 

Myers filed this action for herself and as next friend for 

Shannon on August 26, 1988. On cross-motions for summary 

judgment, Myers argued that Shannon qualified as a "Dependent" 

3 

Appellate Case: 89-1079 Document: 01019965785 Date Filed: 03/02/1990 Page: 3 
under the Plan because, at the time the subject medical costs were 

incurred: (1) Leljedal was presumed to be Shannon's father under 

Colorado law; and (2) in the alternative, Shannon was eligible for 

Plan benefits as Leljedal's stepchild. The Board responded by 

arguing that Myers had failed to show that Leljedal was ever 

"legally responsible" for Shannon's expenses as required by the 

Plan. The Board also objected to Myers' motion on the ground that 

it included evidence that had not been submitted to the Board. 

Pursuant to this objection, the district court remanded the matter 

to the Board for reconsideration. 

After reviewing the new evidence, as well as all of the legal 

documents filed in the district court, the Board again denied 

payment of Shannon's medical expenses. The parties then filed 

renewed cross-motions for summary judgment. On January 6, 1989, 

the district court entered summary judgment for Myers, holding 

that she was entitled to judgment as a matter of law because the 

Board's decision to deny Shannon benefits was "arbitrary, 

capricious and not based on substantial evidence." Order at 5. 

In particular, the court found that Leljedal was legally 

responsible for Shannon's medical expenses at the time they were 

incurred and that he had assumed responsibility for that 

obligation. Id. After awarding Myers prejudgment interest and 

reasonable attorneys' fees and costs, the district court entered 

final judgment on March 15, 1989. This appeal followed. 

4 

Appellate Case: 89-1079 Document: 01019965785 Date Filed: 03/02/1990 Page: 4 
Discussion 

A. Standard of Review 

We must affirm a grant of summary judgment if there are no 

genuine issues as to any material fact and the moving party is 

entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). 

In this case, as described above, the material facts are 

undisputed. Accordingly, we must affirm the district court's 

judgment if we agree with its determination that Myers was 

entitled as a matter of law to recover health benefits on behalf 

of Shannon. 

Under the law as it existed at the time the district court 

ruled, Myers was only entitled to the claimed benefits if she 

could show that the Board's denial of these benefits was arbitrary 

or capricious, not supported by substantial evidence or erroneous 

as a matter of law. Peckham v. Board of Trustees of Int'l Bhd. of 

Painters & Allied Trades Union, 653 F.2d 424, 426 (10th Cir. 

1981). Approximately six weeks after the district court entered 

judgment, however, the Supreme Court rejected this standard, 

deciding instead that "a denial of benefits challenged under 

(29 U.S.C ~l § 1132(a)(l)(B) is to be reviewed under a de novo 

standard unless the benefit plan gives the administrator or 

fiduciary discretionary authority to determine eligibility for 

benefits or to construe the terms of the plan." Firestone Tire & 

Rubber Co. v. Bruch, 

If the plan does grant 

U.S. 

the 

, 109 S. Ct. 948, 956 (1989). 

administrator the necessary 

discretionary authority, then the administrator's decision is 

reviewed under the abuse of discretion standard. See id. at 955, 

5 

Appellate Case: 89-1079 Document: 01019965785 Date Filed: 03/02/1990 Page: 5 
956; see also Boyd v. Trustees of the United Mine Workers Health & 

Retirement Funds, 873 F.2d 57, 59 (4th Cir. 1989)(applying abuse 

of discretion standard); Lowry v. Bankers Life & Casualty 

Retirement Plan, 871 F.2d 522, 525 (5th Cir.)(same), cert. denied, 

110 S. Ct. 152 (1989); but see Guy v. Southeastern Iron Workers' 

Welfare Fund, 877 F.2d 37, 38 (11th Cir. 1989)(continuing to apply 

arbitrary and capricious standard); Bali v. Blue Cross & Blue 

Shield Ass'n, 873 F.2d 1043, 1048 (7th Cir. 1989) (same). The 

initial issue before this court, therefore, is the proper standard 

for reviewing the Board's determination under the new Firestone 

test. 

According to the Rocky Mountain UFCW Unions & Employers 

Health Benefit Plan Trust Agreement (Trust Agreement), 1 the Board 

has "full and complete authority and control over the Plan," Trust 

Agreement at§ 7.2, including authority to "[d]etermine the right 

of any person to a benefit," id. at§ 7.2(b), "[t]o determine, 

from time to time, who shall be ... eligible for benefits under 

the Plan," id. at§ 7.3(b), and "[t]o construe and interpret the 

Agreement and any group insurance policy." Id . at § 7.3(h). 

These provisions grant the Board the necessary discretionary 

authority to determine eligibility for benefits under the Plan. 

Accordingly, the Board's denial of benefits to Shannon must be 

sustained unless we find that the Board abused its discretion in 

finding that Shannon was not eligible for Plan benefits. 2 We will 

1 This document was added to the appellate record 

Board's post-Firestone motion to supplement the record. 

on the 

2 Even if we were to follow the Seventh and Eleventh Circuits 

(continued on next page} 

6 

Appellate Case: 89-1079 Document: 01019965785 Date Filed: 03/02/1990 Page: 6 
only find such an abuse of discretion if we have a definite and 

firm conviction that the Board made a clear error in judgment or 

exceeded the bounds of permissible choice in denying these 

benefits. See United States v. Ortiz, 804 F.2d 1161, 1164 n.2 

(10th Cir. 1986). 

B. Eligibility Determination 

Even under this deferential standard of review, we hold that 

the Board acted improperly in denying Shannon benefits. The Plan 

expressly provides that Leljedal's "unmarried children, including 

a stepchild," are eligible for the Plan's health benefits so long 

as Leljedal is "legally responsible for payment of the incurred 

expense." Doc. 5 at~ 9. As the Board acknowledges in its reply 

brief, this eligibility determination depends on conditions as 

they existed at the time Shannon was injured or her medical 

expenses were incurred. 3 See Reply Brief of Defendant-Appellant 

(continued from previous page) 

in applying the arbitrary and capricious standard in 

situation, see Guy, 877 F.2d at 38 ; Bali, 873 F.2d at 1048, 

result in this case would be unchanged. 

this 

the 

3 Because the Plan document is not ~Iricluded in the case record, 

we have not been able to confirm this basic eligibility standard. 

The point is essentially uncontested by the parties, however, and 

is consistent with the general rule in other benefits programs 

that dependency determinations are made at or before the date of 

the event giving rise to the benefits claim. See,~, McBride 

v. Industrial Comm'n, 97 Colo. 166, 49 P.2d 386, 388 

(1935)(dependents' eligibility for death benefits under worker's 

compensation statute fixed at date of worker's injury); Falcon 

Drilling Co. v. Thompson, 634 P.2d 723, 727 (Okla. 

198l)(dependency status determined by conditions preceding 

worker's death); 20 C.F.R. § 404.361-.365 (1988)(child's 

eligibility for social security benefits determined according to 

conditions existing at the time of the insured's death or 

disability). 

7 

Appellate Case: 89-1079 Document: 01019965785 Date Filed: 03/02/1990 Page: 7 
Board of Trustees for the Rocky Mountain UFCW Unions & Employers 

Health Benefit Plan at 13, 14. It is undisputed that during this 

time period, Leljedal was deemed to be Shannon's natural father 

pursuant to Colorado statute, see Colo. Rev. Stat. § 19-4-105 

(1989 4 Supp.), and hence was "legally responsible" for her 

maintenance and care as a matter of Colorado law. See McQuade v. 

McQuade, 145 Colo. 218, 358 P.2d 470, 472 (1960). Accordingly, 

the Board abused its discretion in finding that Shannon was not 

an eligible dependent under the Plan during the time she was 

hospitalized. See United States v. Ortiz, 804 F.2d at 1164 n.2. 

(abuse of discretion occurs when decisionmaker exceeded the bounds 

of permissible choice in the circumstances). 

The Board challenges this conclusion on two grounds. First, 

it contends that evidence presented at the August 29, 1984, 

divorce hearing, which 

presented 

occurred early in Shannon's 

hospitalization, sufficient "clear and convincing 

evidence" of Leljedal's lack of paternity to rebut the statutory 

presumption and justify the Board's denial of benefits. As the 

statute expressly states, however, the presumption is only 

rebutted upon entry of a court decree establishing paternity of 

the child by another man. Colo. Rev. Stat. § 19-4-105(2)(1989 

4 This statute provides in pertinent part: 

(1) A man is presumed to be the natural father of a 

child if: 

(a) He and the child's natural mother are or have 

been married to each other and the child is born during 

the marriage, .... 

8 

Appellate Case: 89-1079 Document: 01019965785 Date Filed: 03/02/1990 Page: 8 
Supp.). 5 No such decree was entered in this case until October 5, 

1984, two weeks after Shannon was released from the hospital. 

Thus, at the time all of the medical expenses at issue here were 

incurred, Leljedal was still presumed to be Shannon's natural 

father and was thus legally responsible for her medical costs. 

The Board next argues more generally that Leljedal's 

knowledge that Shannon was not his child, coupled with the 

judicial decree declaring this fact, together justified its 

finding that Shannon was not eligible for health benefits under 

the Plan. Leljedal's actual knowledge of his lack of paternity, 

however, does not change the fact that in the eyes of the law, he 

was Shannon's natural father and was legally responsible for her 

care at the time the subject medical expenses were incurred. 

Colo. Rev. Stat. § 19-4-105. The Board has also failed to provide 

us, and we have been unable to locate, any authority supporting 

the Board's apparent claim that a judicial finding of nonpaternity 

may be applied retroactively to strip a child of support or other 

benefits which he or she received or was legally entitled to 

receive while the statutory presumption was in place. In fact, 

such a rule would be inconsistent with the very foundation of the 

statutory presumption, which is to protect the innocent child from 

the potentially dire consequences of its situation, even at the 

risk of imposing support obligations on someone other than the 

5 

tnis 

clear 

by a 

man." 

The statute states in pertinent part: "A presumption under 

section may be rebutted in an appropriate action only by 

and convincing evidence .... the presumption is rebutted 

court decree establishing paternity of the child by another 

9 

Appellate Case: 89-1079 Document: 01019965785 Date Filed: 03/02/1990 Page: 9 
• 

child's natural father. See Lanford v. Lanford, 151 Colo. 211, 

377 P.2d 115, 116 (1962); _P_e_o~p_l_e __ i_n ___ I_n_t_e_r_e_s_t __ o_f ___ s_._L_._H_., 

736 P.2d 1226, 1227-1228 (Colo. App. 1986). 

Accordingly, we find that the Board abused its discretion in 

ignoring Colorado's statutory presumption of paternity as it 

applied to Shannon at the time the subject medical expenses were 

incurred. Because we affirm the district court's grant of summary 

judgment on this basis, we do not reach Myers' additional 

arguments concerning Shannon's eligibility for benefits as 

Leljedal's stepchild or as a result of Leljedal's actions in 

admitting her to the hospital. 

The judgment of the United States District Court for the 

District of Colorado is AFFIRMED. 

ENTERED FOR THE COURT 

PER CURIAM 

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Appellate Case: 89-1079 Document: 01019965785 Date Filed: 03/02/1990 Page: 10