Opinion ID: 3033888
Heading Depth: 4
Heading Rank: 1

Heading: Discretion under the policy

Text: Ms. Nally argues at length for the blanket proposition that courts, rather than insurance companies, are entrusted with the responsibility of interpreting insurance contracts. [Blue Br. at 19-22] Although Ms. Nally quotes from Firestone Tire and Rubber Co. v. Bruch, [Blue Br. at 20] she inexplicably overlooks the holding of that case: “[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.” 489 U.S. 101, 115 (1989). The policy as issue provides that “the Insurance Company shall have the authority, in its discretion, to interpret the terms of the Plan documents, to decide questions of 1 The district court’s decision is available as Nally v. Life Insurance Corp. of North America, 43 Empl. Benefits Cas. (BNA) 1712, 2007 WL 4390423, 2007 U.S. Dist. LEXIS 92211 (E.D. Pa. 2007). 3 eligibility for coverage or benefits under the Plan, and to make any related findings of fact.” Here, the district court determined this language was, pursuant to Firestone, a grant of discretion to interpret the plan. [slip op. at 12] However, the summary plan description (“SPD”) states that “[t]he Tyco Benefits Review Committee shall have the discretionary authority to determine eligibility for plan benefits and to construe the terms of the plan, including the making of factual determinations.” Ms. Nally argues that the difference between the policy and the SPD as to what entity has authority to interpret the policy (the insurance company versus the Tyco Benefits Review Committee) means that the SPD controls and LINA therefore lacks authority to construe the policy. 2 “[W]here a summary plan description conflicts with the plan language, it is the summary plan description that will control.” Burstein v. Ret. Account Plan for Employees of Allegheny Health Educ. & Research Found., 334 F.3d 365, 378 (3d Cir. 2003). “If an SPD conflicts with a plan document, then a court should read the terms of the ‘contract’ to include the terms of a plan document, as superseded and modified by conflicting language in the SPD.” Id. at 381. 2 Ms. Nally’s argument rests in large part upon her assertion that Pennsylvania’s reasonable expectations doctrine is applicable. [Blue Br. at 34-40] However, federal common law—not state law—governs the interpretation of a benefit plan in an ERISA suit. Feifer v. Prudential Ins. Co. of Am., 306 F.3d 1202, 1210 (2d Cir. 2002); Hooven v. Exxon Mobil Corp., 465 F.3d 566, 572 (3d Cir. 2006) (“Generally, breach of contract principles, applied as a matter of federal law, govern claims for benefits due under an ERISA plan.” (quotation marks omitted)). 4 The district court determined that because both the policy and the SPD contained an unambiguous grant of discretion to some entity, the discrepancy between the two as to which entity had this discretion was not significant in this instance. [Slip op. at 12] The district court reasoned that the two documents could be read harmoniously as granting the Tyco Benefits Review Committee discretion (as noted by the SPD) which was permissibly delegated to LINA (as noted by the policy). [Id.] We agree with the district court. In Tocker v. Phillip Morris Cos., the Second Circuit determined that a policy vested discretion in an administrator even though the SPD given to the plaintiff was completely silent on the issue. 470 F.3d 481, 488-890 (2006). Other circuits have reached the same conclusion. See Fenton v. John Hancock Mut. Life Ins. Co., 400 F.3d 83, 90 (1st Cir. 2005); Martin v. Blue Cross & Blue Shield of Va., 115 F.3d 1201, 1205 (4th Cir. 1997); Cagle v. Bruner, 112 F.3d 1510, 1517 (11th Cir. 1997); Wald v. S.W. Bell Corp. Customcare Med. Plan, 83 F.3d 1002, 1006 (8th Cir. 1996); Atwood v. Newmont Gold Co., 45 F.3d 1317, 1321-22 (9th Cir. 1995), overruled on other grounds by Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 966-67 (9th Cir. 2006) (en banc). Given these holdings from other circuits, it would be anomalous for us allow the SPD’s statement that the Tyco Benefits Review Committee had discretion to interpret the policy to invalidate the policy’s grant of discretion to LINA. 5