twelve (12) month periods beginning April 1“ and ending March 31"
next succeeding, immediately preceding bis disability has 900 hours
of Employer Contributions” made on his behalf to the Trust Fund and
who is actively secking employment as an Operating Engineer with
a Contributing Employer, shall be eligible to receive “Total and
Permanent Disability Benefits”, provided: (i) That such disability
occurs prior to the time such Employee shall be eligible to receive
other Retirement Benefits hereunder, and (ii) Such Employee shall
have five (5) “Years of Service.”
(Def,’s 56,1(a)(3) Statement J 6).

Part JI, Article XT, Section 4(a) of the Plan, provides, in part, that:

Pension Benefits shall be payable commencing with the month
following the month in which the Employee has fulfilled all the
conditions for entitlement to benefits. Prior to “Normal Retirement
Age’, the filing of an application with the Trustees is required for
entitlement to benefits. The first day of such month is what is meant
by the Effective Date of the Pension.

(Def.’s 56.1(a)(3) Statement {| 7).

Midwest actuaries determined the level of funding needed to provide disability and pension
benefits under the Plan. (Def.’s Supp. 56.1(a)(3) Statement {| 2). Midwest’s actuaries have
determined the level of funding needed for disability pension based upon when the applicant files
an application. If Part Ul, Article XI, Section 4(a), set out above, were interpreted to allow a
participant to receive benefits retroactive before the date of the application, the calculated funding
levels would not be sufficient to pay those benefits. Furthermore, without the proper funding of the
disability benefits, the financial fund might be put in jeopardy. (Id., | 4).

Part I, Article XJ, Section 5 of the Plan provides, in part, “To be considered retired, an

Employee must have separated from ‘Covered Employment’ and not be engaged in any

‘Disqualifying Employment’ as defined in Section 6.” (Def.’s 56.1(a)(3) Statement 8).



entitled “Applications, Benefit Payments, Retirement And Benefit Suspensions”. The eligibility
requirements for the receipt of benefits for Total and Permanent Disability Benefits are found in Part
IL, Article VI of the Plan, entitled “Total and Permanent Disability Benefits”. It is undisputed that
Dudek met these eligibility requirements. {tis a separate and distinct Article and Section of the Plan,
Part II, Article XJ, Section 4, that discusses payment of benefits and a requirement to apply for such
benefits. Furthermore, as in Conseco, the Plan docs not provide that the failure to submit an
application will result in the retroactive loss of benefits for which the employee was entitled.

In support of his Motion for Summary Judgment, Dudck argues that the retroactive
application of the Plan would further the intent of the Plan by conferring a benefit when grounds to
receive the benefit have occurred, Conversely, if retroactive application did not occur, the Plan
would be unjustly enriched.' Dudek fails to present any factual support for these arguments. In
support of its Motion for Summary Judgment, Midwest argues that any retroactive application of the
Plan benefits would fail to preserve the financial integrity of the Plan and fail to protect the benefits
of all participants, not just Dudek. Midwest has provided the affidavit of an actuary to the Plan who
states that if Part II, Article XI, Scction 4(a) of the Plan was interpreted to allow all participants to
obtain disability benefits retroactive to a time before the date their application was filed, the
calculated levels would not be sufficient to pay those benefits. Other than this conclusory statement,

Midwest does not provide any factual information to support its conclusion,

‘In July 2003, the parties were given the opportunity to file additional facts in support of
these arguments.



the Court’s review is the deferential “arbitrary and capricious” one. Bruch, 489 U.S. at 111; Reich
v, Ladish Co,, 306 F.3d 519, 524 (7th Cir, 2002).

The parties do not dispute that the Plan of the instant case expressly grants the Trustees
discretion and authority to determine eligibility for benefits and to construc and interpret all terms
and provisions of the Plan. Accordingly, the Trustees’ decision will be reversed only if the decision
was arbitrary and capricious.

Under this standard, the Court does not decide whether it would reach the same conclusion
or rely on the same authority. See Mers v. Marriott Inter’n Group Accidental Death &
Dismemberment, 144 F.3d 1014, 1021 (7th Cir. 1997) (Mers). The Court will not set aside the denial
of benefits ifthe denial was based on a reasonable interpretation of the plan documents. The court’s
“role is to determine whether the decision was completely unreasonable.” Mers, 144 F.3d at 1021.
As long as the plan administrator makes an “informed judgment and articulates an explanation for
it that is satisfactory in light of the relevant facts, /.¢., one that makes a ‘rational connection’ between
the issue to be decided, the evidence in the case, the text under consideration, and the conclusion
reached,” the decision of the administrator will be upheld. See Exbom v. Central States, Southeast
& Southwest Areas Health & Welfare Fund, 900 F.2d 1138, 1143 (7th Cir. 1990),

The parties do not dispute that Dudek began receiving benefits under the Plan based on a
finding that he was entitled to receive such benefits under the Total and Permanent Disability
Benefits provisions of the Plan, The primary dispute between the parties is whether the Plan’s
decision that Dudek became eligible for benefits on November 1, 1991, was arbitrary and capricious.
Dudek contends that the date of his disability is the date he became eligible for benefits — the date

he became disabled. Midwest contends that the Plan’s interpretation was correct.


Part IV, Article III, Section 5 of the Plan, states in part:

All questions or controversies of whatever character arising in any
manner or between any parties or persons in connection with the Plan
or Trust Agreement or its operation, whether as to any claim for
benefits, as to the construction of the language of the Plan or Trust
Agreement or any rules and regulations adopted by the Trustees, or
as to any writing, decision, instrument, or account in connection with
the operating of the Plan or otherwise, shall be submitted to the Board
of Trustees for Decision. In the event a claim for benefits has been
denied, no lawsuit or other action against the Fund or its Trustees
may be filed until the matter has been submitted for review under the
ERISA-mandated review procedure set forth in Part [V, Article 1V.
The Decision on revicw shall be binding upon all persons dealing
with the Plan or claiming any benefit hereunder, except to the extent
that such Decision may be determined to be arbitrary and capricious
by a Court or arbitrator having jurisdiction over such matter.

(Def.’s 56.1(a)(3) Statement § 3).

Part Ll, Article V1, Section 3 of the Plan provides, in part, that “If the disability occurs on or
after April 1, 1979, the ‘Monthly Retirement Benefit’ to which such Employce shall be entitled shall
be the sum of $100 or an amount equal to seventy percent (70%) of his ‘Accrued Benefit’ as of the
date he is eligible to receive ‘Total and Permanent Disability Benefits’, which amount shall be the
greater sum, payable during the period of his disability.” (Def.’s 56.1(a)(3) Statement 4 5).

ANALYSIS

The denial of benefits challenged under Section 1132(a)(1)(B) is reviewed de novo unless
the benefit plan gives the fiduciary or administrator discretionary authority to determine eligibility
for benefits or to construe the terms of the plan. See Firestone Tire & Rubber Co. y. Bruch, 489

ULS. 101, 103 (1989) (Bruch), Lf the plan confers power on the administrator to exercise discretion,


November 1, 1991, the month following Dudek’s application. Dudek contends this interpretation
is incorrect because the application is necessary only to start payment of the benefits and that the
eligibility for benefits must be measured from the time the grounds for eligibility, i.e., retirement
occurred.

Under similar facts, the Ninth Circuit found that, while an application was required to initiate
payment of benefits, such procedural requirement did not prevent the loss of benefits retroactively.
See Canseco v. Construction Laborers Pension Trust for Southern Cal., 93 F.3d 600 (9" Cir. 1996)
(Canseco). The benefits plan in that case provided that an employee was entitled to a pension if he
satisfied certain enumerated requirements for eligibility. In a separate section entitled “Payment of
Benefits”, the Conseco plan required that, upon approval of an application, the individual would
“become entitled to Pension Benefits under the Plan.” Conseco, 93 F.3d at 604. The Conseco court
found that the application was not a condition of eligibility under the plan because the application
was not included in the criteria to be eligible for the benefits; the plan did not provide that the failure
to submit an application would result in the retroactive loss of benefits for which the cmployee was
entitled; and the application requirement was in a separate section of the plan which pertained to the
payment of benefits, not the eligibility of benefits. See Conseco, 93 F.3d at 606-07; see also Music
y. Western Conference of Teamsters Pension Trust Fund, 712 F.2d 413, 419 (9" Cir. 1983) (holding
that, once a plan participant has satisfied all of the eligibility requirements for a disability pension,
the participant has the right to receive a disability pension retroactive to the date at which it becomes
vested - when the participant becomes disabled).

In the instant case, as in Conseco, the application requirement is not found in the eligibility

section of the Plan. The application requirement is found in Part IT, Article XI, Section 4 of the Plan,


‘Minute Order Forrn (06/97)

United States District Court, Northern District of Iinois

Name of Assigned Jud Sitting Judge if Othe
-_ Magierate judge John W. Darrah than assigned andge
CASE NUMBER 02 C 1079 DATE 11/19/2003
CASE Dudek vs. Midwest Engineering Pension Fund
TITLE

MOTION:

[ln the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of the motion being presented,

DOCKET ENTRY:

Q)
(2)
@)
(4)
()
(6)
(7)
(8)
(9)

(10)

oo)

Q Filed motion of [ usc listing in “Motion” box above.]
Brief in support of motion due _
Answer brief Lo motion due_ . Reply to answer bricf due_

Ruling/Hearing on _ setfor at

Status hearing[held/continued to] [sct for/re-set for] on __ set for at

Pretrial conference[held/continued to) [set for/re-sct for) on set for _ at |

Trial[sct for/re-set for] on __ at

{Bench/Jury trial] [Hearing] held/continued to at

oacadnukanaanaal

This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) OLocal Rule 41.1 OOFRCP41(a)(1) OO FRCP41(a}(2).

| [Other docket entry} Status hearing held and continued to 12/10/03 at 9:00 a.m. For the reasons
stated in the attached memorandum opinion and order, defendant’s motion for summary judgment is
denied, plaintiffs motion for partial! summary judgment is denied [33-1], Enter Memorandum Opinion

and Order.
i] [For further detail see order attached to the original minute order.]
No notices required, advised in open court P . Hogament. |
2 i Goines

No hotices required, jofumber

umber of notices

Notices muiled by judge’s staff. NOV 20 2003
Notified counsel by telephone.
Docketing to mail notices.

Mail AO 450 form:

Copy to judge/magistrate judge.

coutttoom on ay 9% gan eo
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MF deputy's
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Accordingly, Midwest’s Motion for Summary Judgment based on failure to exhaust administrative
remedies is denied.

Dudek’s Motion for Partial Summary Judgment must also be denied because a question of
material fact exists as to when Dudek met the eligibility requirements of Part II, Article VI. Dudek
asks the Court to infer that the Plan accepted the Department of Health and Human Services Social
Security Office of Hearings and Appeals date of disability of September 6, 1985. However, this
inference is not supported by the materials Dudek has submitted, Accordingly, Dudek’s Motion for
Partial Summary Judgment is also denied.

Lastly, both parties also scek summary judgment on the two other issues regarding additional
monies sought by Dudek. In light of the above findings, both parties’ Motions for Summary
Judgment on these two issues is denied,

CONCLUSION

For the foregoing reasons, Midwest's Motion for Summary Judgment is denied, Dudek’s

. |
if
Lb
JOHN W. DARRAH
United States District Judge

Motion for Partial Summary Judgment is also denied.

c)

Dated: ‘ pth 4, 278° *

11


Based on the above, material questions of fact remain as to whether the denial of benefits was
based on a reasonable interpretation of the Plan documents. Accordingly, summary judgment for
both parties is denied.

Midwest argues that summary judgment should be entered on Dudek’s claims for additional
monthly benefits based on a retirement date prior to November 1, 1991, because Dudek failed to
exhaust his administrative remedies for these claims prior to filing the instant lawsuit,

The court has discretion to require the exhaustion of administrative remedies to redress
violations of ERISA. See Gallegos v. Mount Sinai Medical Center, 210 F.3d 803, 808 (7 Cir. 2000)
(Gallegos). A plaintiff is excused from failing to pursue his administrative remedies where the
administrative remedies are not available or pursuing those remedics would be futile. See Gallegos,
210 F.3d at 808,

The parties do not dispute that Dudek exhausted his administrative remedies as to his claim
that the Plan incorrectly determined his eligibility date for Total and Permanent Disability Benefits.
Based on this incorrect determination, Dudek seeks additional monies. Accordingly, the additional
benefits that Dudek seeks is directly intertwined with the issuc previously presented to the
administrative bodies. Furthermore, the Review Panel’s Decision on Reconsideration states, in
pertinent part, that the issue before it was whether Dudek was entitled to Total and Permanent
Disability Benefits and, if so, the effective date of the payments and the amounts payable. The
amount of additional benefits properly payable based on the eligibility date was intertwined with the
issue of the amounts payable to Dudek, Accordingly, Dudek has effectively exhausted his

administrative remedies as to his claims for additional benefits based on a corrected eligibility date.


Dudek’s eligibility for total and permanent disability benefits was based on Section IL, Article
VL, Sections 1 and 1A of the Plan. By finding Dudek eligible to receive such benefits, the Plan
found that Dudek met the requirements set forth in Scction IT, Article VI, Section 1A as quoted
above. Originally the Plan agreed to start paying Dudek thesc benefits as of April 1, 1992, “based
on the information provided” to the Plan. How the date of April 1, 1992, was determined is not
included in the materials before the Court and is not addressed by the parties. The Plan also stated
that it would review the file to determine if Dudek was entitled to monthly benefits prior to
April 1, 1992. Subsequently, the Pension Review Panel found that Dudek was entitled to disability
benefits payments “commencing November 1, 1991. The members of the Review Panel have
selected November 1, 1991, because it is consistent with the Pension Plan provision that payments
are to begin on the month following the initial application or inquiry.” Based on the date of
November 1, 1991, as the date of eligibility, the Plan paid Dudek certain amounts of benefits as set
forth above.

The Plan based its decision that Dudek became eligible for benefits as of November 1, 1991,
on Part fl, Article XI, Scction 4 of the Plan. Part II, Article X1 is entitled “Applications, Benefit
Payments, Retirement And Benefit Suspensions.” Section 4 states, “Pension Benefits shall be
payable commencing the month following the month in which the Employee has fulfilled all of the
conditions for entitlement to benefits. Prior to ‘Normal Retirement Age’, the filing ofan application
with the Trustces is required for entitlement to benefits. The first day of such month is what is meant
by the Eftective Date of the Pension.”

The Plan considered the application requirement in Part II, Article XI, Section 4 of the Plan

as an eligibility requirement to receive disability benefits under the Plan, which was


letters Dudek received from Midwest stated, in part, “The amount of your Annual Pension
Supplement is based on your retirement date.” (Id., 411).

Midwest paid Dudek monthly pension benefits totaling $19,186.17 ($138.03 per month from
November 1, 1991 through May 31, 2003). (Plaint.’s Supp. 56.1(a)(3) Statement 11). Midwest
paid Dudek an annual pension supplement of $600 for each of the years 1997 and 1998 based on a
retirement date which corresponds with the first day of the month following the date Dudek filed his
application for benefits (November I, 1991). (Plaint.’s 56.1(a)(3) Statement 17). Midwest paid
Dudek an annual pension supplement of $1,000 for each of the years 1999, 2000, and 2001 based
on a retirement date which corresponds with the first day of the month following the date he filed
his application of benefits. (Id., { 18).

Part II, Article Tl, Section] of the Plan defines total and permanent disability as: “A physical
or mental condition of an Employee which the Trustecs find on the basis of medical evidence totally
and permanently prevent such Employee from engaging in employment, within or without the
geographical area covered by this Pension Plan, in work described in the ‘Scope of Work’ provisions
contained in the Collective Bargaining Agreement entered into between the Union and the
Employees.” (Def.’s 56.1(a)(3) Statement 4 4).

Part U, Article V1, of the Plan states, in pertinent part:

Section 1, An Employee who, while in “Covered Employment”, shall
suffer “Total and Permanent Disability” within the meaning of such
term, as the same is defined in Article II of this Part Tl, shall be

eligible to reccive “Total and Permanent Disability Benefits”, in
accordance with the following:

ae *
Section 1A. An Employee who on and after January 24, 1985, shall
suffer “Total and Permanent Disability” within the meaning of such
term as the same defined in Article II of this Part II, who in the three


opinion of an administrative law judge, the Department of Health and Human Services Social
Security Office of Hearings and Appeals found that Dudek became disabled on September 6, 1985.
(Plaint.’ 56.1(a)(3) Statement q 5).

Tn October 1991, Dudek inquired of Midwest as to whether he was entitled to receive Total
and Permanent Disability Benefits under the Plan. (Def.’s 56.1(a)(3) Statement { 12). On
March 7, 1992, Dudek filed his application for Total and Permanent Disability Benefits with
Midwest. (Id., J 13). The Administrative Manager denied Dudek’s application, (Id., at 14). On
August 4, 1992, the Pension Fund Review Panel (“Review Panel”) issued its decision affirming the
Administrative Manager. The Review Panel denied Dudek’s request for Total and Permanent
Disability Benefits under the Plan on the grounds that he was not permanently disabled and that he
did not have the required five years of service as required by the Plan. (Id., 15),

Dudek sought reconsideration of the denial of his benefits. On March 3, 1995, the Fund
agreed that Dudek was entitled to reccive a total and permanent disability benefit as of April 1, 1992,
The March 3, 1995 letter from the Fund stated that Dudek’s file would be reviewed to determine if
he was entitled to monthly benefits prior to April 1, 1992. (Def.’s 56. 1(a)(3) Statement J 17). Based
on its reconsideration of the denial of benefits, the Review Panel issued an opinion on July 14, 1995,
in which the Plan found that Dudek was entitled to Total and Permanent Disability Benefits and that
the effective date of the benefit would be November 1, 1999, consistent with Part I, Article XI,
Section 4 of the Plan. (Id., J 18). By letter dated Apri! 18, 2001, the Plan’s Pension Department
Manager stated that the Decision on Reconsideration issued on July 14, 1995, by the Review Panel

was “final, conclusive and binding on Wes Dudek and other persons.” (Id., 19). Each of the


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
WES DUDEK, )
)
Plaintiff, } No. 02 C 1079
)
v. ) Judge John W. Darrah
)
MIDWEST OPERATING ENGINEERS )
PENSION TRUST FUND, ) Xa
) ah
Defendant. ) V v Q

MEMORANDUM OPINION AND ORDER

Plaintiff, Wes Dudek (“Dudek”), filed suit against Defendant, Midwest Operating Engineers
Pension Trust Fund (“Midwest”), pursuant to the Employec Retirement Income Security Act of 1974
(ERISA”), 29 U.S.C. § 1132 et seq. Presently before the Court are Dudek’s Motion for Partial
Summary Judgment and Midwest's Motion for Summary Judgment, At issue is the date from which
Dudek is entitled to benefits under the Plan. Dudek contends he is entitled to benefits beginning
September 6, 1985, when he became disabled, Midwest contends that Dudek is entitled to benefits
beginning November 1, 1991, the first day of the month following Dudck’s filing of an application
for benefits.

BACKGROUND

Midwest is an employee benefit plan (the “Plan”) within the definition of Section 3(2) of
ERISA. (Plaint.’s 56.1(a)(3) Statement { 3). Dudck was a participant in the employee benefit plan
within the definition of Section 3(7) of ERISA. (Id., 4{ 4).

Th October 1991, Dudek applied for disability benefits with the Department of Health and

Human Services Social Security Administration Office. (Def.’s 56.1(a)(3) Statement 16). By