Opinion ID: 2998293
Heading Depth: 2
Heading Rank: 2

Heading: Consideration of Less Than 10 Years of Credited

Text: Service Of the four qualifying requirements for a disability pension, one is that a participant must have 10 years of credited service. The district court found it “undisputed” that plaintiff had not obtained 10 years of credited service—accruing only 9.839 years. Urbania, however, raises two arguments with respect to this finding. First, he argues that because he had earned 11 “Vesting Service Years” under the plan, it must follow that he also earned over 10 years of credited services. This argument is patently frivolous, as the terms of the plan make 10 No. 04-4267 clear that years of vesting service and credited service are calculated differently. The plan clearly defines Credited Service Years and Vested Service Years, and it defines them quite differently. While it takes only 20 “Vesting Service Weeks” in a calendar year to earn a “Vesting Service Year,” see Plan Sections 3.04(a) & (b)(1), it takes (as of 1976) 35 weeks of plan contributions to earn a “Credited Service Year,” see Plan Section 3.03. Each such year is accrued and calculated to provide distinct and separate entitlements under the plan. Eleven Vested Service Years does not equal eleven Credited Service Years. Nor is the eleven years of the former necessarily greater than ten years of the latter. The plan administrators were neither arbitrary nor capricious in refusing to compare apples to oranges. Though the outcome is ultimately the same, Urbania’s second argument with respect to the 10 Credited Service Years does have more appeal. Here he contends that the district court improperly considered the fact that Urbania had earned less than 10 years of Credited Service in evaluating whether the defendant’s denial of benefits was arbitrary and capricious, because Central States did not cite insufficient credited service as a justification for denying the pension in its final claim denial letter. 29 U.S.C. § 1133(1) requires every employee benefit plan under ERISA to “provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial.” Indeed, in Reich v. Ladish Co., we noted a plan administrator is “required to give [a plan participant] every reason for its denial of benefits at the time of the denial” and that “[i]t may not add new reasons as the litigation proceeds.” 306 F.3d 519, 524 n.1 (7th Cir. 2002) (citations omitted). To the extent that Central States failed in its final decision to mention the credited years deficiency, Urbania argues that the defendant cannot rely on such a reason now. No. 04-4267 11 However, as we held in Perlman v. Swiss Bank Corp. Comprehensive Disability Protection Plan, 195 F.3d 975, 981-82 (7th Cir. 1999), “[d]eferential review of an administrative decision means review on the administrative record.” Looking to the administrative record as a whole, it is abundantly clear here that the plaintiff was clearly on notice of his credited years deficiency and its effect in disqualifying him from a disability pension. Indeed, it would be disingenuous for Urbania to claim here that he was not so apprised. In a letter dated February 17, 1998, soon after his application for the pension was first filed, the defendant rejected Urbania’s claim because, among other reasons, “you do not have 10 years of service credit. You have 9.839 years of contributory service credit.” That this message was received by Urbania loud and clear is evidenced by the Level I appeal that Teamsters Local Union 377 filed on his behalf on July 27, 1998. The appeal states, “Mr. Urbania has 9.839 years of contributory credit through 1981. . . . We feel that he should be allowed to make the necessary payments to get the full 10 years of contributory credit to qualify for the Disability Award.” Urbania was given further notice of this disqualifying ground in an October 5, 1998 letter from Central States, which, in advising him that his appeal to the Benefit Claims Review Committee had been denied, stated, “It is the decision of the committee that you are not eligible for a Disability Pension Benefit because you have not established at least 10 years of Credited Service.” The Benefit Claims Review Committee again noted the 10-year credited service requirement of Plan Section 4.06(a)(2) in a letter to Urbania dated February 11, 1999. And finally, the minutes of Urbania’s Level III appeal before the trustees, which repeatedly note that Urbania had established only 9.839 years of credited service, shows that the insufficient credited service years issue was clearly before that reviewing body. As Urbania rightly points out, Central States’ final claim denial letter issued on July 29, 1999 after the trustees 12 No. 04-4267 review makes no mention of insufficient service credit as a ground for denying the disability pension. Rather, the letter rests on the fact that the onset of Urbania’s disability did not occur until three consecutive one-year breaks in service had passed. This omission, however, is readily explainable. Having been notified initially that he was just short of the required 10-year threshold, Urbania and his union made repeated requests that he be allowed to make additional contributions to the Fund so as to qualify himself. Central States, however, subsequently found an alternative and independently sufficient reason for denying benefits that would render further payments by Urbania wasteful—namely, the three consecutive one-year breaks in service. Rather than tantalize Urbania with a putatively curable disqualification, the defendant in its final decision letter provided the incurable disqualification alone. Thus, Central States, which has consistently maintained insufficient credited service as a justification for denial, did not abandon the ground by omission. It simply put the argument of “cure” to rest by advancing a separate, incurable ground. While it would have been cleaner had the defendant referenced this ground as well in its final decision, the administrative record makes clear that Urbania was on notice of the deficiency. The district court did not err in noticing the disqualification too. C. Section 4.06(a) Does Not Define “Total and Permanent Disability” Urbania next argues that the plan administrators acted arbitrarily and capriciously by not interpreting the Plan such that a person eligible for Social Security benefits would be automatically entitled to benefits under the plan. If that was the proper interpretation, Urbania would have been considered disabled as of June 1982, when he was first entitled to Social Security benefits. No. 04-4267 13 However, Urbania’s interpretation is rendered unreasonable by the plain language of the Plan. As discussed above, there are four requirements to qualify for the disability pension, and eligibility for Social Security benefits is only one of them. See Plan Section 4.06(a)-(d); supra, n.1 and accompanying text. First and foremost among the pension’s prerequisites is that a participant sustain a “total and permanent disability.” Plan Section 4.06(a). And while Section 4.06(a) requires that a “totally and permanently disabled” participant be eligible for Social Security, it does not suggest that eligibility for Social Security renders a participant “totally and permanently disabled.” Rather, Section 4.06(c) defines “total and permanent disability,” and its definition is far more expansive than Social Security eligibility alone.5 Thus, a participant must be both eligible for Social Security as provided by Section 4.06(a) and totally disabled as defined in Section 4.06(c) to qualify for a disability pension. In other words, eligibility for Social Security benefits is necessary, but not sufficient, to secure entitlement to a disability pension under the Central States Plan. Accordingly, Central States did not act arbitrarily and capriciously by failing to interpret the Plan in a manner that would find Urbania absolutely entitled to a disability pension as of the date that he became eligible for Social Security benefits. That’s just not how the Plan reads. 5 We again note the pertinent provisions of Plan Section 4.06(c): Disability, as used herein, shall be deemed to be total and permanent, for purposes of this section, whenever the Participant is wholly disabled by bodily injury or disease, and will as a result be permanently, continuously and wholly prevented for life from engaging in any occupation and performing any work for wage or profit. 14 No. 04-4267 D. Urbania Accrued Three Consecutive One-Year Breaks in Service Another condition to qualify for a disability pension requires that the disability be sustained while the participant is in covered employment or before sustaining three consecutive one-year breaks in service. Plan Section 4.06(a)(2) & (d); see also Plan Section 3.05. It was upon Urbania’s failure to satisfy this condition that the defendant ultimately based its decision to deny him the pension. Urbania argues that this decision too was arbitrary and capricious. He contends that he did not sustain three such years because, though his last year of covered employment was in 1981, he claims to have sustained his disability in June 1982 when he first received Social Security benefits. As we have repeatedly noted, total and permanent disability under the defendant’s Plan requires much more than mere receipt of Social Security Benefits. It requires that the participant be “wholly disabled by bodily injury or disease,” such that he or she is “permanently, continuously and wholly prevented for life from engaging in any occupation and performing any work for wage or profit.” Plan Section 4.06(c). With this proper understanding of the Plan’s terms, the defendant reviewed the facts of Urbania’s case. There they found an applicant who, despite his claimed June 1982 disability onset date, had not only been given medical clearance and encouragement to find employment in the years thereafter, but also had in fact taken on several jobs between 1982 and 1988. Equipped with evidence of the applicant’s post-1982 work history and (albeit limited) capacity, Central States reasonably concluded that Urbania was not so disabled as of June 1982 as to render him “permanently, continuously and wholly prevented for life from engaging in any occupation and performing any work for wage or profit.” And while Central States concedes No. 04-4267 15 that Urbania did ultimately become so disabled, it identified the onset date of that disability as 1988. Urbania nonetheless attempts to halt the accrual of oneyear breaks in service between 1982 and 1988 by citing Plan Section 3.05(g), which credits participants for working during any weeks they are not in covered employment “as a result of sickness, injury, vacation or disability.” He argues that, pursuant to 3.05(g), the disability he suffered in June 1982 should toll the clock on his breaks in service, and thereby insulate his application from breaks-inservice disqualification notwithstanding a 1988 disability onset date. But this section does not apply to Urbania—it only applies to participants not in covered employment “as a result of sickness, injury, vacation or disability.” To be out of covered employment as a result of sickness, injury, vacation or disability, a participant would have to have been in covered employment immediately preceding that sickness, injury, vacation or disability. As of June 1982, Urbania’s absence from covered employment was a result of his being laid off by his last covered employer (Halls Motor Transit) in 1981, not as a result of his injury or disability. Urbania was injured in the course of employment—but it was non-covered employment, suffered while on the job with Page Avjet in Florida. Because the injury occurred in the course of non-covered employment, Section 3.05(g) could not have been triggered to stop the break-in-service clock; and because that injury did not render Urbania totally disabled, his entitlement to a disability pension could not at that time vest. Thus, Urbania’s one-year breaks in service began in 1981 when he was laid off from covered employment. Because defendant was not arbitrary and capricious in finding that the disability did not become permanent and total until June 1988, it is clear that more than three consecutive oneyear breaks in service accrued since his 1981 departure from covered employment. 16 No. 04-4267 E. Judicial Estoppel Does Not Apply Finally, Urbania argues that Central States is judicially estopped from divesting him of his disability pension based on his return to work after June 1982. Judicial estoppel provides that when a party prevails on one legal or factual ground in a lawsuit, that party cannot later repudiate that ground in subsequent litigation based on the underlying facts. Moriarty v. Svec, 233 F.3d 955, 962 (7th Cir. 2000). To apply, (1) the latter position must be clearly inconsistent with the earlier position; (2) the facts at issue must be the same in both cases; and (3) the party to be estopped must have prevailed upon the first court to adopt the position. United States v. Hook, 195 F.3d 299, 306 (7th Cir. 1999). Urbania argues that, in a prior action, Central States retroactively paid Plan disability benefits to another participant (Charles Turner) despite the fact that that participant had previously gone back to work for one month. With this prior action in mind, Urbania insists that the defendant cannot today assert his re-employment as grounds for denying him the pension. However, if the facts at issue in these two cases are related, their relation is tangential at best. In Turner’s case it was undisputed that the participant was entitled to a disability pension, the issue there was how much he was entitled to receive. Here, in contrast, the issue is whether Urbania even qualifies for a disability pension at all. Considering that Turner’s eligibility in the prior matter went uncontested, Central States does not appear to have advanced any position whatsoever in that case with respect to when a disability becomes compensable under the Plan. But even were we to assume an identity of facts and the defendant’s assumption of a contrary position, judicial estoppel cannot be invoked here because Central States never prevailed upon a court to adopt that position— Turner’s case was dismissed for lack of jurisdiction and its merits never reached. Turner v. No. 04-4267 17 Central States Pension Fund, No. C-3-86-384 (S.D. Ohio 1992). Thus, judicial estoppel does not here apply.