No, 03 C 1018 @ 6 Page 4

The language in Washington’s benefit plan does not suffer from such an ambiguity.
The wording of the modifier, “satisfactory to Prudential,” and its placement immediately
following the noun modified, “proof of continuing disability,” makes it clear that the proof of
disability must be satisfactory to Prudential. Unlike the language in Perugini-Christen, this
language cannot be interpreted otherwise.

CONCLUSION

For the foregoing reasons, defendant’s motion in limine is granted.

JAMES B. MORAN

Settior Judge, U. S. District Court
Seed. I¢__ , 2003.


No. 03 C 1018 @ @ Page 3

Washington’s employee benefits plan contains substantially similar language to the
plan in Donato. In the section on “Long Term Disability - Claim Information,” under the
heading “What Information Is Needed as Proof of Your Claim?” the Washington plan states:
“We may request that you send proof of continuing disability, satisfactory to Prudential,
indicating that you are under the regular care of a doctor.” The phrase “satisfactory to
Prudential” modifies the proof of continuing disability that a claimant may be requested to
submit. This language alerts the claimant that its proof must satisfy Prudential’s discretionary
authority. Although the plan’s wording is not as clear or explicit as the Seventh Circuit’s
proposed safe harbor clause, the court made it clear that it need not be. See Herzberger vy.
Standard Insurance Co., F.3d 327, 331 (7* Cir. 2000).

Plaintiff argues that the holding in Perugini-Christen_y. Homestead Mortgage
Company, 287 F.3d 624 (7" Cir, 2002), renders the language of Washington’s benefits plan
insufficient to reserve discretionary authority. In Perugini-Christen, the Seventh Circuit
affirmed the district court’s ruling that a benefits plan provided by Reliance Standard Life
Insurance Company did not clearly grant discretionary authority to the administrator. The
plan required claimants to submit “satisfactory proof of Total Disability to [Reliance].” Id.
at 626. The court noted that this language was “gpen to two reasonable interpretations: (1)
that Perugini submit to Rellance satisfactory proof or (2) that she submit proof which is
satisfactory to Reliance.” Id. The first interpretation does not specify whom the proof must
satisfy, while the second interpretation indicates that the proof must satisfy Reliance. The
court held that Reliance failed to reserve authority because of this ambiguity in its language.

Id, at 627.


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F Mie 01. ones (0897) e (
United sf; District Court, Northern District of Illinois ”)
Name of Assigned Judge ; Sitting Judge if Other
or Magistrate Sudye James B. Moran than Assigned Judge
CASE NUMBER 03 C 1018 DATE 9/16/2003 |
CASE Frank DiPietro vs. The Prudential Ins, Co. of America
TITLE
{ln the following bax (a) indicate the party filing the motion, e.g, plaintiff, defendant, 3¢d patty plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.}
Memorandum Opinion and Order
DOCKET ENTRY:
(6p) a Filed motion of { use listing in “Motion” box above.] |
(2) Oo Brief in support of motion due _
3) qi Answer brief to motion duc_____. Reply to answer briefdue__
(4) oO Ruling/Hearingon___—_esetfor_ ss at_
(8) Qo Status hearing{held/continued to] (set for/re-set for]on___ set for att.
(6) a Prewial conference[held/continued to] [set for/re-set for] on _setfor_ at
(7) 0 Trial[set for/re-sct foron at
(8) oO [Bench/Jury trial) [Hearing] held/continucd to at
(9) oO This casc is dismissed [with/without] prejudice and without costs[by/agreement/pursuant 10]
OFRCP4(m) O Local Rule 41.1 CFRCP4)({a)(1) OO FRCP41(a)(2),
qo) «ll [Other docket entry) Enter Memorandum Opinion and Order. For the foregoing reasons,
defendant’s motion in limine is granted, Status hearing set for October 9, 2003 at 9:15am.
ay @ |For further detail see order attached to the original minute order.]
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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
FRANK DiPIETRO, )
Plaintiff, }
vs. } No, 03 C 1018
THE PRUDENTIAL JNSURANCE COMPANY }
OF AMERICA, )
Defendant. }

MEMORANDUM OPINION AND ORDER

Plaintiff Frank DiPietro, a former employee of Washington Group International, Inc.
(Washington), brought this action for reinstatement of disability insurance benefits against the
plan administrator, The Prudential Insurance Company of America (Prudential), pursuant
to 29 U.S.C. §1132(a)(1)(B). The parties are in discovery and defendant now brings a motion
in limine seeking a declaration that the benefits plan at issue conferred discretionary authority
on the plan’s administrator rendering its decision to deny benefits subject to review only under
an arbitrary and capricious standard, The defendant’s motion is granted.

The proper standard of review for a denial of benefits challenged under § 1132(a)(1)(B)
is de novo “unless the benefit plan gives the administrator or fiduciary discretionary authority
to determine eligibility for benefits or to construe the terms of the pian.” Firestone Tire &
Rubber y. Bruch, 489 U.S. 101, 115 (1989). When the plan gives the administrator
discretionary authority, the arbitrary and capricious standard of review applies. Wilczynski
y. Kemper Nat. Ins. Cos,, 178 F.3d 933, 934 (7" Cir, 1999). The courts look to the language of

the pJan to determine whether the administrator has discretionary authority. Postma v. Pan)

v4



La

No. 03 C 1018 @ Page 2

Reyere Life Ins. Co., 223 F.3d 533, $38 (7" Cir. 2000).

In Herzherger v. Standard Insurance Co., the Seventh Circuit formulated a general
rule to determine whether or not the language of a benefits plan conferred discretionary
authority, 205 F.3d 327, 330 (7 Cir. 2000), The court stated that “the mere fact that a plan
requires a determination of eligibility or entitlement by the administrator, or requires proof
or satisfactory proof of the applicant’s claim, or requires both a determination and proof (or
satisfactory proof) does not give the employee adequate notice that the plan administrator is
to make a judgment largely insulated from judicial review by reason of being discretionary.”
Id, at 332. The court suggested that employers seeking to reserve discretionary authority for
the administrator of their benefits plan, include a safe harbor clause stating that “[bJenefits
under this plan will be paid only if the plan administrator decides in his discretion that the
applicantis entitled to them.” This clause would put employees on notice of an administrator’s
discretion and guarantee plan providers that their decisions would be reviewed under the
“arbitrary and capricious” standard. Id, at 331. However, the court did not require this
clause to reserve discretionary authority, recognizing that less explicit language may still have
the “requisite if minimum clarity” to confer discretionary authority to the administrator. Id.
As an example, the court highlighted the language of the benefits plan in Donato _y.

Metropolitan Life Insurance Co., 19 F.3d 375 (7" Cir. 1994), which required submission of

proof “satisfactory to us” (the plan administrator), The court held that this language reserved
discretionary authority to the administrator, explaining “the ‘to us’ signaled the subjective,
discretionary character of the judgment that was to be made.” Herzberger, 205 F.3d at 331

citing Donato, 19 F.3d at 379.