Opinion ID: 169422
Heading Depth: 2
Heading Rank: 2

Heading: The Plan's Rationale For Denying the Claims

Text: 62 In reviewing a plan administrator's decision, we may only consider the evidence and arguments that appear in the administrative record. Sandoval v. Aetna Life and Cas. Ins. Co., 967 F.2d 377, 380 (10th Cir.1992); see also King v. Hartford Life and Accident Ins. Co., 414 F.3d 994, 999 (8th Cir.2005) ([A] reviewing court must focus on the evidence available to the plan administrators at the time of their decision and may not admit new evidence or consider post hoc rationales.). This means that, when reviewing a plan administrator's decision to deny benefits, we consider only the rationale asserted by the plan administrator in the administrative record and determine whether the decision, based on the asserted rationale, was arbitrary and capricious. 63 To determine whether a plan administrator considered and asserted a particular rationale, we look only to those rationales that were specifically articulated in the administrative record as the basis for denying a claim. See 29 U.S.C. § 1133(1) (noting that a claim denial must set[ ] forth the specific reasons for such denial, written in a manner calculated to be understood by the participant) (emphasis added); see also Schadler v. Anthem Life Ins. Co., 147 F.3d 388, 394 (5th Cir.1998); Weaver v. Phoenix Home Life Mut. Ins. Co., 990 F.2d 154, 158 (4th Cir. 1993); White v. Jacobs Eng'g Group Long Term Disability Benefit Plan, 896 F.2d 344, 350 (9th Cir.1990); Richardson v. Cent. States, Se. and Sw. Areas Pension Fund, 645 F.2d 660, 665 (8th Cir.1981). The reason for this rule is apparent [w]e will not permit ERISA claimants denied the timely and specific explanation to which the law entitles them to be sandbagged by after-the-fact plan interpretations devised for purposes of litigation. Marolt v. Alliant Techsystems, Inc., 146 F.3d 617, 620 (8th Cir.1998). This is consistent with the converse rule that a claimant may not urge new grounds outside the administrative record that would support the award of benefits. Sandoval, 967 F.2d at 381. 64 In district court, the Plan argued that Plaintiffs are not participants in the WFSP because the Plan is not arranged by the Company for its employees generally. See Flinders, 2006 WL 641524, at . We have reviewed the record and can find no evidence that this rationale was considered or specifically articulated by the Plan in the administrative proceeding. Had the Plan actually considered this rationale below, the administrative record would likely have contained information and arguments regarding the WFSP's availability, but it does not. See Schadler, 147 F.3d at 397 n. 10 ([I]n many cases the factual development that takes place at the administrative level will differ depending on the plan provisions upon which the administrator relies to deny benefits.). Indeed, the lack of any factual discussion of the Plan's availability indicates that the denial of benefits likely hinged solely on the Plan's interpretation that the WFSP's eligibility language required that it be specifically named in the list of example benefits contained in the CBA. See Aplt.App. at 169 (The Committee does not agree with your interpretation of the language contained in the collective bargaining agreement with respect to inclusion of the Plan.) (emphasis added). 65 The Plan argues that there is evidence that the Plan Administrator and the Plan Committee considered Plaintiffs' argument that the WFSP is arranged by the Company for its employees generally and rejected it. The Plan argues that because Plaintiffs asserted the undisputed fact that the WFSP is arranged by the Company for its employees generally, and the Plan Administrator and Plan Committee denied benefits anyway, the Plan Administrator and Plan Committee must have concluded that the WFSP was not arranged by the Company for its employees generally. 4 66 This conclusion is incorrect. Plaintiffs' statement that there is no dispute that the WFSP is arranged by the Company for its employees generally is only what it purports to be: an assertion of an undisputed fact in support of awarding benefits, not an argument supporting the denial of benefits. The fact that Plaintiffs' undisputed fact was never challenged or rebutted (let alone mentioned) is telling. To be sure, a plan administrator is free to reject an undisputed fact urged by a claimant, but such a rejection must be articulated and have a factual basis. See Caldwell v. Life Ins. Co. of N. Am., 287 F.3d 1276, 1282 (10th Cir.2002) (indicating that a plan administrator's factual determinations must be supported by substantial evidence to survive arbitrary and capricious review). It would be manifestly unfair to hold that Plaintiffs' assertion of an undisputed fact was necessarily considered and rejected by the Plan Administrator and Plan Committee simply because Plaintiffs noted that the fact was undisputed. 67 The district court relied on Gallo v. Amoco Corp., 102 F.3d 918, 922-23 (7th Cir.1996), to hold that the Plan's conclusion that the WFSP was not included in the CBA was sufficient to preserve (for our review) any supporting rationale. See Flinders, 2006 WL 641524, at . Gallo concerned whether an employee's high-three years of earnings used to figure an annuity included payments in lieu of vacation. The plan document was not entirely clear, but since 1939 the company had not treated such payments as earnings. When the employee appealed, the plan administrator stated that the company consistently interpreted the plan to exclude such payments and that the interpretation was necessary to avoid double counting. Id. at 920-21. On appeal, the Seventh Circuit concluded that the denial was adequate. It held that the plan's reason for denying benefits was sufficient explanation to enable Gallo to formulate his further challenge to the denial. Id. at 923. 68 While a plan administrator may not be required to give the reasoning behind the reasons, id. at 922, the plan administrator still must identify the specific reason for denying benefits. Here, the Plan Administrator denied benefits because there is no reference to, or inclusion of, the [WFSP in the CBA]. The phrase there is no reference to sufficiently articulates the Plan's rationale that the WFSP had to be included in the list of example benefits to be included in the CBA. But the phrase there is no . . . inclusion of fails to articulate the rationale that the WFSP was not arranged by the Company for its employees generally. In fact, this phrase merely restates the Plan's general eligibility criteria. See Skretvedt v. E.I. Dupont de Nemours & Co., 268 F.3d 167, 177 n. 8 (3d Cir.2001) (criticizing a denial letter that merely restated the requirements of a benefit plan and then stated summarily that a claimant failed to meet them); VanderKlok v. Provident Life & Accident Ins. Co., 956 F.2d 610, 616 (6th Cir.1992) (same); Wolfe v. J.C. Penney Co., 710 F.2d 388, 393 (7th Cir.1983) (same); see also Richardson, 645 F.2d at 665 (Bald-faced conclusions do not satisfy this requirement.). Only once the case was in district court did the Plan finally articulate the rationale that the WFSP was not arranged by the Company for its employees generally. 69 Consequently, Gallo is inapposite. In that case, the company consistently articulated the same reason for denying benefits from the minute the administrative process began. Furthermore, the plan at issue in Gallo was ambiguous regarding the treatment of pay in lieu of vacation, and the company specifically offered its interpretation. In this case, the WFSP's eligibility language is not at all ambiguous, as discussed infra, and the rationale asserted by the Plan in litigation differs significantly from that which it asserted in the administrative process. Were we to apply Gallo in a case like this, a plan administrator could simply treat the administrative process as a trial run and offer a post hoc rationale in district court. In addition, such a practice would result in an incomplete administrative record. 70 The Plan does cite to a portion of the Plan Administrator's letter denying the Spokane plaintiffs' claims that states [WFSP] . . . is clearly not severance pay that is arranged for employees `as a whole' . . . . Aplt.App. at 468. But that letter was sent on September 24, 2004, after the Woods Cross plaintiffs had already filed suit. Thus, it is not even part of the relevant administrative record. See Kalish v. Liberty Life Assur. Co., 419 F.3d 501, 511 (6th Cir.2005) (noting that the administrative record consists of all information submitted to the fiduciary before the final denial). 5 It was improper for the district court to consider the rationale that the WFSP was not arranged by the Company for its employees generally. Instead, the Plan's decision to deny benefits must stand or fall on its articulated rationale alone. 71