Opinion ID: 474273
Heading Depth: 1
Heading Rank: 5

Heading: retirement committee's decision

Text: 32 Brown asserts that the Committee's decision was arbitrary and capricious because the Committee did not adopt the intermediate view of disability, because the Committee relied upon medical reports of examinations for Brown's worker's compensation claim, because the Committee did not accept the conclusions of Drs. Vinluan and Melvin that Brown is permanently disabled, and because the Committee did not conduct an independent medical examination of Brown. Brown also claims that the Committee did not afford her the process due under ERISA and that the Committee's notice of denial was deficient under the regulations. 33 Brown urges this court to adopt the intermediate view of disability which the Wisconsin state courts apply in insurance disability cases. See Harker v. Paul Revere Life Ins. Co., 28 Wis.2d 537, 137 N.W.2d 395 (1965); Drexler v. All American Life & Casualty Co., 72 Wis.2d 420, 241 N.W.2d 401 (1976). Applying this definition of disability, Brown asserts, the Committee would be forced to conclude that Brown is permanently and totally disabled because she is unable to perform her customary job or any job for which she is suited by her education and training. 34 In Harker the insurance contract in issue defined total disability as the complete inability of the insured to engage in gainful occupations for which he is reasonably fitted by education, training and experience. 137 N.W.2d at 395. The disability insurance contract in Drexler contained a similar provision. 241 N.W.2d at 406. In the third case Brown cites, Carporali v. Washington National Ins. Co., 102 Wis.2d 669, 307 N.W.2d 218 (1981), the definition of total disability was not contested, and the issue was whether the trial court's instruction defining accidental bodily injury was erroneous. Id. at 221, 226. 35 The pension plan here, however, defines disability as [t]otal and permanent disability as determined by the Employer or an affiliated Employer. Moreover, the Retirement Committee was not bound to apply the interpretation of disability that the state courts apply in disability insurance cases. Insurance contract interpretation principles do not govern the determination of disability benefits under a private pension plan. ERISA preempts any and all State laws insofar as they ... relate to any employee benefit plan. 29 U.S.C. Sec. 1144(a) (1985). Congress intended federal courts to develop a body of federal substantive law in interpreting or construing private welfare and pension plans. Shaw v. Kruidenier, 470 F.Supp. 1375 (S.D. Ia. 1979), aff'd, 620 F.2d 307 (1980). See Peckham, 653 F.2d at 426 (In actions to enforce benefit rights of pension plans covered by ERISA federal substantive law controls.). 36 Brown also asks us to construe the disability definition against the Committee as an adhesion contract because Brown herself was not involved in defining disability. But see Harm v. Bay Area Pipe Trades Pension Plan Trust Fund, 701 F.2d 1301, 1304 (9th Cir. 1983) (standard rules of contract interpretation do not apply to pension plan interpretation). Brown may not have personally negotiated the contract, but she was represented in the negotiations by her union. The pension plan -- and therefore the definition of disability--was the product of collective bargaining between Brown's union and Briggs & Stratton. We therefore do not accept Brown's argument that she was not involved in defining disability, that the definition should be construed against Briggs & Stratton, and that we therefore should force Briggs & Stratton to adopt the intermediate view of disability. 37 The Plan gives the employer--represented here by the Retirement Committee--broad power to define disability. When such a power has been conferred, the judicial role is limited to determining whether the ... [Committee's] interpretation was made rationally and in good faith--not whether it was right. Riley v. MEBA Pension Trust, 570 F.2d 406, 410 (2d Cir.1977). See Harm, 701 F.2d at 1304 (definition in pension plan must be upheld if reasonable; to overcome the plan's interpretation, claimant must show that it is arbitrary and capricious or erroneous with respect to a question of law). The defendants filed an affidavit 1 stating in part: 38 The Retirement Committee has consistently interpreted Sec. 2.3(1) of the Retirement Plan, which defines disability, by referring to the work available at Briggs & Stratton. The Committee reviews the available evidence concerning an applicant's functional limitations. Then, with that evidence in mind, the Retirement Committee, in conjunction with the Personnel Department, determines whether work is available at Briggs & Stratton within the applicant's functional limitations. 39 If there is such work available, the claimant is considered not disabled for purposes of the Plan. If there is no work available at Briggs & Stratton, however, the Retirement Committee believes it is reasonable to conclude that the claimant would be unable to find a job anywhere. 40 This interpretation of the Plan, with reference to the work available at Briggs & Stratton, is rational, and Brown does not claim that the interpretation was not made in good faith. We therefore decline to disturb the Committee's interpretation of the Plan. 41 Brown also argues that the Retirement Committee's decision is arbitrary and capricious because the Plan itself is contradictory and structurally defective. Brown claims that the Plan is internally inconsistent because it states that both the employer, Briggs & Stratton, and the Committee shall determine if a claimant is disabled. Brown points out that Briggs & Stratton itself has never determined whether Brown is disabled. Brown therefore concludes that the Committee's decision is arbitrary and capricious because it does not conform to the Plan and because the Plan itself is structurally defective. 42 Brown cites Harm v. Bay Area Pipe Trades Pension Plan Trust Fund, 701 F.2d 1301, 1305 (9th Cir.1983), as support for her argument. In Harm, the Ninth Circuit employed the structural defect test to implement the requirement under section 404 of ERISA that trustees manage pension plans solely for the benefit of plan participants and their beneficiaries. Under the structural defect test, rules that exclude employees from receiving benefits for reasons which are arbitrary and capricious violate section 404. 2 Id. The Harm court stated in a footnote: No claim is made that these rules were adopted in collective bargaining, so the standard of review in United Mine Workers v. Robinson, 455 U.S. 562, 102 S.Ct. 1226, 71 L.Ed.2d 419 (1982), does not apply. Id. at 1305 n. 4. 43 The provisions of the Plan in this case, however, were the product of collective bargaining so Robinson does apply. In Robinson, the Supreme Court rejected the imposition of a reasonableness standard to the provisions of pension plans produced by collective bargaining. The D.C. Circuit had held that 44 the requirement in Sec. 302(c)(5) [of the National Labor-Management Relations Act, 29 U.S.C. Sec. 186, which is similar to section 404 of ERISA,] that an employee benefit trust fund be maintained for the sole and exclusive benefit of the employees ... and their families and dependents means that eligibility rules fixed by a collective-bargaining agreement must meet a reasonableness standard. 45 Id. at 570, 102 S.Ct. at 1231. The Supreme Court did not find any reasonableness requirement in section 302. The Court concluded that when neither the collective-bargaining process nor its end product violates any command of Congress, a federal court has no authority to modify the substantive terms of a collective-bargaining contract. Id. at 576, 102 S.Ct. at 1234 (footnote omitted). Brown does not claim that the collective bargaining process violated any federal statute; and, as we discuss further below, the pension plan does not violate ERISA. Therefore we will not modify the terms of the Plan. 46 Even if the Plan had not been pursuant to collective bargaining and Robinson did not apply, however, neither the Plan nor the Committee's application of the Plan would have run afoul of the Harms structural defect test. Here the rule that excluded Brown from receiving disability benefits is the Committee's definition of disability with reference to work available at Briggs & Stratton. As discussed previously, this definition of disability is not arbitrary or capricious and therefore does not violate ERISA. 47 Furthermore, the Plan itself is not internally inconsistent so as to be structurally defective. Section 2.3 of the Plan defines disability as [t]otal and permanent disability as defined by the Employer or an affiliated Employer. Section 8.2 establishes the Retirement Committee as the Plan's administrator and indicates that Committee members shall be appointed by and serve at the pleasure of Briggs & Stratton's board of directors. Section 8.3 provides that the Committee shall make all determinations as to the right of any person to a benefit. 48 Brown claims that the Plan is structurally deficient because it provides that both the employer and the Committee must determine if a claimant is disabled. We disagree with Brown's interpretation of the Plan. The Plan empowers the employer, Briggs & Stratton, to adopt a definition of disability which the Committee would then apply to individual claimants to determine their eligibility for disability benefits. Although the Plan's language is not as clear as it might be, this arrangement would not violate ERISA. The Committee's actual procedures for determining disability benefits also conform to ERISA requirements. In practice, the Committee has defined disability with reference to the work available at Briggs & Stratton. Briggs & Stratton apparently approves of this definition as it has not adopted a different definition although section 2.3(1) authorizes it to do so. Neither the conceptual arrangement of the Plan nor the actual implementation amounts to a structural defect that would violate ERISA. 49 Brown next asserts that the Committee's decision was not supported by substantial evidence because the Committee relied upon medical examinations made in connection with Brown's worker's compensation claim. Brown argues that the disability test under Wisconsin worker's compensation law differs from that which should be applied to Brown's disability. Brown asserts that the medical examinations not performed specifically for the Committee's determination of disability do not constitute substantial evidence. Brown cites no authority for this position, and we do not find this argument persuasive. The purpose of the medical examination does not detract from the physician's medical findings. Brown implicitly concedes this point by urging this court to overturn the Committee's decision based upon Dr. Vinluan's examinations, two of which were performed in connection with Brown's worker's compensation claim. While the purpose of the medical examination may affect the scope of the exam and thus may affect the weight to be accorded such evidence, the results of the medical examinations were relevant evidence of the nature and extent of Brown's disability. 50 Furthermore, the Committee did not err in considering the medical evaluations obtained in connection with Brown's worker's compensation claim. Brown's argument that these reports do not constitute substantial evidence because the doctors did not take into account the impairment of the claimant's earning capacity in the light of her education and job training is unpersuasive. 3 First, several of these reports do offer conclusions on such impairment. Second, Brown's argument is another attempt to have this court force the Committee to adopt an intermediate definition of disability, instead of determining disability with reference to work available at Briggs & Stratton. As discussed previously, a definition of disability in light of work available at Briggs & Stratton is not arbitrary and capricious, and we decline to impose a different definition of disability. Third, Brown would have this court accept Dr. Vinluan's testimony and reports made in connection with her worker's compensation claims, but disregard medical reports unfavorable to her position. However, as stated before, this court will not review the evidence in this case de novo; and the Committee was not bound to accept only evidence supporting Brown's claim. 51 Brown contends that loss of earning capacity is at issue here because [t]he question to be determined is whether the claimant is totally and permanently disabled from engaging in her regular occupation or any occupation for which she is reasonably fitted by education, training, and experience. We will not, however, make a de novo determination of Brown's entitlement to disability benefits under the Plan. In reviewing a fiduciary's decision, '[a] federal court is to focus on the evidence before the truste[e] at the time of [his] final decision and is not to hold a de novo factual hearing on the question of applicant's eligibility.'  Wolfe v. J.C. Penney Co., 710 F.2d 388, 394 (7th Cir.1983) (quoting Wardle v. Central States, Southeast and Southwest Areas Pension Fund, 627 F.2d 820, 824 (7th Cir.1980), cert. denied, 449 U.S. 1112, 101 S.Ct. 922, 66 L.Ed.2d 841 (1981)). Brown's contention obscures the real inquiry here: whether the Committee's decision to deny benefits is supported by substantial evidence. Wisconsin worker's compensation law and loss of earning capacity are irrelevant to this issue. Contrary to Brown's assertion, loss of earning capacity is not the issue here. The only issue is whether the doctors' reports and the other material considered by the Committee provided substantial evidence for the denial of benefits. 52 The minutes of the February 21, 1984 meeting indicate that the Committee considered numerous doctors' reports, transcripts of Brown's worker's compensation hearings, the worker's compensation examiner's findings and order, and Brown's social security determination. The record contains substantial evidence supporting the Committee's decision. We agree with the district court's assessment of this evidence: 53 Plaintiff's primary challenge is to the sufficiency of the evidence supporting denial of her application as compared to the evidence supporting her application. True, the reports and testimony of Dr. Vinluan, and the reports of Dr. Melvin, support a conclusion that plaintiff has lost all earning capacity and that she is totally and permanently disabled. Countervailing this evidence were the reports of Drs. Haskell, Teasley and Shapiro, which recognized impairments in plaintiff's dexterity but did not conclude that plaintiff was totally disabled. These reports constitute substantial evidence. 54 Moreover, the Retirement Committee could properly discredit Drs. Vinluan's and Melvin's conclusions that plaintiff was permanently and totally disabled, because these conclusions did not account for the fact that Briggs & Stratton had determined that there was work available at its plant that plaintiff was capable of performing. The precise nature of this work has not been disclosed, but presumably it was dissimilar to that plaintiff had performed before the onset of her affliction. The Retirement Committee acted within its authority in considering this factor in determining that plaintiff was not disabled. The plan expressly confers broad authority to determine what constitutes total and permanent disability on the employer, and judicial review of a decision rendered pursuant to such a provision is limited to a determination of whether the decision is arbitrary or capricious. Donaldson v. Hamburg Savings Bank, 568 F.Supp. 897, 899-90 (E.D.N.Y.1983). It is neither arbitrary nor capricious for an employer to consider the availability of work it may have that a disability benefits claimant may perform when determining whether that claimant is totally disabled. 55 No doctor's report indicates that Brown is 100 percent permanently disabled in one or both hands. Dr. Vinluan's reports reflect his opinion that Brown could not get work with her hand condition, but his medical findings only indicate a 50 percent loss of use in the right hand and 15 percent loss in the left. 4 The committee did not act arbitrarily and capriciously in denying disability benefits considering the medical assessments of Brown's condition and the availability of work within her limitations at Briggs & Stratton.