Source: https://law.justia.com/cases/federal/appellate-courts/F3/137/510/606032/
Timestamp: 2020-02-26 23:33:21
Document Index: 282975278

Matched Legal Cases: ['§ 502', '§ 1132', '§ 502', '§ 1132', '§ 1132', '§ 1022', '§ 1022', '§ 2520']

Pamela Hertel Mers, Plaintiff-appellant, v. Marriott International Group Accidental Death Anddismemberment Plan, Defendant-appellee, 137 F.3d 510 (7th Cir. 1998) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Seventh Circuit › 1998 › Pamela Hertel Mers, Plaintiff-appellant, v. Marriott International Group Accidental Death Anddismemb...
Pamela Hertel Mers, Plaintiff-appellant, v. Marriott International Group Accidental Death Anddismemberment Plan, Defendant-appellee, 137 F.3d 510 (7th Cir. 1998)
US Court of Appeals for the Seventh Circuit - 137 F.3d 510 (7th Cir. 1998) Argued Oct. 20, 1997. Decided Feb. 24, 1998. Order Vacating Opinion April 15, 1998
Mers filed a complaint on December 22, 1995 asserting that Marriott wrongfully denied her claim for benefits in violation of ERISA § 502(a) (1) (B), 29 U.S.C. § 1132(a) (1) (B). When the parties filed cross-motions for summary judgment, they realized that Mers could have asserted two claims, one under each policy. The court allowed Mers to amend her complaint. Both parties agreed that Mers never submitted a claim under the BTA policy for administrative review. The Plan offered to waive any timeliness defense, but Mers refused to proceed administratively, arguing that it would be futile. The district court agreed, reasoning that it would be extraordinarily wasteful and grossly inefficient to impose this requirement because the policies contain identical coverage and exclusion language. The court then addressed the merits of both claims.
We review a district court's decision to grant summary judgment de novo. See Buckley Dement, Inc. v. Travelers Plan Adm'rs, Inc., 39 F.3d 784, 787 (7th Cir. 1994) (citing Tolle v. Carroll Touch, Inc., 23 F.3d 174, 178 (7th Cir. 1994)). In performing this review, we analyze the record and controlling law under the same standard as the district court. See Anweiler v. American Elec. Power Serv. Corp., 3 F.3d 986, 990 (7th Cir. 1993) (citing Soo Line R. Co. v. Overton, 992 F.2d 640, 643 (7th Cir. 1993)). Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986). A fact is material only if it might affect the outcome of the case under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2510-11, 91 L. Ed. 2d 202 (1986). To determine whether summary judgment is appropriate, we view the evidence and draw all reasonable inferences therefrom in a light favorable to the non-moving party. See id.
In reviewing a denial of benefits under ERISA § 502(a) (1) (B), 29 U.S.C. § 1132(a) (1) (B), we look for guidance to the Supreme Court's decision in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S. Ct. 948, 103 L. Ed. 2d 80 (1989). Analogizing ERISA's provisions to traditional rules of trust law, the Supreme Court held that "a denial of benefits challenged under § 1132(a) (1) (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." Id. at 115, 109 S. Ct. at 956-57. Where a plan confers power on the administrator to exercise discretion, the appropriate standard of review is the deferential "arbitrary and capricious" one. See id. at 111, 109 S. Ct. at 954-55; see also Donato v. Metropolitan Life Ins. Co., 19 F.3d 375, 379-80 (7th Cir. 1994).
In this case, we agree with the district court that the Plan gives AIG discretionary authority. In making that determination, we review the language of the Plan de novo, just as we would review the language of any contract. See Bechtold v. Physicians Health Plan, Inc., 19 F.3d 322, 325 (7th Cir. 1994). The Plan names Marriott and AIG as fiduciaries with authority to control and manage the operation and administration of the Plan. The SPD, which sets forth the terms of both the BTA policy and the 24-Hour policy, gives Marriott sole, absolute, and final discretion to determine eligibility for benefits and to resolve any factual issues relevant to benefit eligibility or benefit enrollment. It also grants AIG sole, absolute, and final discretion to construe the terms of the Plan. No magic words are required to confer discretion. See Donato, 19 F.3d at 379. The terms of the Plan provide the fiduciaries with discretionary authority. See Chojnacki v. Georgia-Pacific Corp., 108 F.3d 810, 815 (7th Cir. 1997). As a result, we review Marriott's resolution of factual issues and AIG's construction of the terms of Plan under the arbitrary and capricious standard of review.
Mers argues that we should apply a more strict version of the arbitrary and capricious standard when an ERISA plan affords deference to a fiduciary that has a conflict of interest in awarding benefits.1 Her theory is that an inherent conflict of interest exists when a company-sponsored plan allows an insurance company to interpret its own policies. She suggests that since an insurance company pays benefit claims out of its own assets, "its fiduciary role lies in perpetual conflict with its profit-making role as a business." Brown v. Blue Cross & Blue Shield, Inc., 898 F.2d 1556, 1561 (11th Cir. 1990).
While some courts have found that a denial of benefits is presumptively void and must be reviewed de novo where a similar conflict may exist, see Brown, 898 F.2d at 1561, we have not. See Chalmers v. Quaker Oats Co., 61 F.3d 1340, 1344 (7th Cir. 1995); Van Boxel, 836 F.2d at 1048. We presume that a fiduciary is acting neutrally unless a claimant shows by providing specific evidence of actual bias that there is a significant conflict. See Cuddington v. Northern Ind. Public Serv. Co., 33 F.3d 813, 816 (7th Cir. 1994); Van Boxel, 836 F.2d at 1051, 1053. The existence of a potential conflict is not enough. See Cuddington, 33 F.3d at 816. Mers has not established an actual conflict or a significant one. In fact, she offers no evidence that a conflict exists other than her theory of an inherent conflict. This production is not enough to show an actual bias.
Under the arbitrary and capricious standard, it is not our function to decide whether we would reach the same conclusion as the Plan or even rely on the same authority. See Cvelbar v. CBI Illinois Inc., 106 F.3d 1368, 1379 (7th Cir. 1997). We also will not set aside a plan's denial of benefits if the denial was based on a reasonable interpretation of the plan documents. See Loyola Univ. v. Humana Ins. Co., 996 F.2d 895, 898 (7th Cir. 1993). Our role is to determine whether the decision was completely unreasonable. See Chojnacki, 108 F.3d at 816; Van Boxel, 836 F.2d at 1053.
ERISA requires that a summary be "written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan." 29 U.S.C. § 1022(a) (1). In particular, a summary must list the circumstances in which disqualification, ineligibility, denial, or loss of benefits may occur. See 29 U.S.C. § 1022(b); 29 C.F.R. § 2520.102-3.
Mers claims the Plan acted arbitrarily and capriciously by relying on a definition of injury that is in the underlying policy but not in the SPD.3 The existence of an SPD, however, does not preclude the use of every term in the underlying policy. ERISA entitles Mers to rely on the SPD and estop the Plan from denying coverage because of terms not included in the SPD only if there is a contradiction between the SPD and the underlying policy. See Senkier v. Hartford Life & Acc. Ins. Co., 948 F.2d 1050, 1051 (7th Cir. 1991). A plan is not estopped from incorporating terms from the underlying policy where they clarify rather than contradict the summary. See id. at 1051. An SPD's silence on an issue or ambiguity of its terms does not estop a plan from relying on more detailed plan terms when no direct conflict exists. See Herrmann v. Cencom Cable Assocs., Inc., 978 F.2d 978, 983 (7th Cir. 1992) (allowing plan to enforce 45-day time limit contained in plan, despite its omission from the SPD, because an SPD does not prevail over the plan itself when the SPD is merely silent); Senkier, 948 F.2d at 1051 (allowing estoppel "only if there is a contradiction"); Gaspar v. Linvatec Corp., 952 F. Supp. 1274, 1280 (N.D. Ill. 1997) (requiring actual conflicts between a plan and the plan's SPD); Kyles v. Northwestern Univ., No. 91 C 7860, 1993 WL 369342, at * 7 (N.D. Ill. 1993) ("A summary that does not make any reference to a matter covered in the underlying policy cannot be said to conflict with or contradict the policy.").
In this matter, the definition of injury in the policies clarifies the terms of the SPD. The BTA policy provides coverage for accidents. It also has an exclusion for a disease of any kind. Thus, it is undisputed that the BTA policy does not cover circumstances when a disease is the cause of death.
The problem with this SPD is that it does not explain whether the Plan provides benefits in a situation where there are multiple causes for an accidental death. Both parties agree that multiple reasonable interpretations exist for when an accident triggers coverage; under the language of the SPD, the Plan could require an accident to be the sole cause, the predominant cause, or simply a contributing cause of death. The definition of injury found in the underlying policies resolves this question. The BTA policy defines an injury to mean bodily injury caused by an accident and resulting directly and independently of all other causes. This definition clarifies the ambiguity surrounding accidents with multiple causes. Because the definition clarifies and does not contradict the terms of the SPD, the Plan is not estopped from relying on it. We therefore reject Mers' contention otherwise.
Mers also suggests there is a contradiction because there is coverage if the SPD stands alone, but there is no coverage if the policy and the SPD are read together. We refuse this suggestion as simply a reformulation of the argument that beneficiaries should be able to use only the SPD and never consider whether additional terms exist. This position is counter to the purpose of an SPD. See Herrmann, 978 F.2d at 983-84 (concluding that no document can include every detail and remain a summary); Lorenzen v. Employees Ret. Plan of Sperry & Hutchinson Co., 896 F.2d 228, 236 (7th Cir. 1990) (" [A] plan summary is not required to anticipate every possible idiosyncratic contingency that might affect a particular participant's or beneficiary's status.... If it were, the summaries would be choked with detail and hopelessly confusing."). Clarity and completeness are competing goods. See Lorenzen, 896 F.2d at 236. We have accounted for these dueling considerations by allowing claimants to rely on an SPD when the policy terms contradict. Because they do not here, Mers cannot estop the Plan from denying coverage based on the clarifying terms of the underlying policies.
Finally, we hold that AIC construed the definition of injury reasonably. All the medical evidence available suggests that Dale Mers' death did not result directly and independently from his physical exertion. Although none of the doctors could state definitively whether it was an aneurysm or arteriosclerosis that assisted in causing the massive cerebral hemorrhaging, they all agreed that Dale Mers' physical exertion was not the only cause of death. Given this uncontroverted basis of factual support, it was reasonable for AIC to construe the definition of injury to prevent Mers from recovering benefits. The district court did not err in affirming the Plan's denial of benefits.
The court, on its own motion, hereby VACATES the opinion in this case issued on February 24, 1998. The Petition for Rehearing and Suggestion for Rehearing En Banc filed herein is rendered moot.
This case is now being submitted for circulation pursuant to Rule 40(e).
The arbitrary and capricious standard does not pose an all-or-nothing choice between full deference or none. Courts may vary the deference incrementally to account for the strength or weakness of a specific conflict of interest. See Van Boxel v. Journal Co. Employees' Pension Trust, 836 F.2d 1048, 1049-52 (7th Cir. 1987)