Opinion ID: 159453
Heading Depth: 1
Heading Rank: 3

Heading: introduction

Text: This booklet is the Summary Plan Description of your employee benefit plan. This summary tells how you may become and remain a plan member. Your health and dental insurance benefits are paid for mainly by your employer. Massachusetts Mutual Life Insurance Company pays certain amounts above what your employer pays, and has full responsibility for claim funding upon termination of the group policy. The plan’s benefits are described, including any limitations or exclusions that may affect your right to benefits. The procedure to claim plan benefits is also discussed. Plan Sponsor and Plan Administrator Woods Petroleum Corporation 3817 Northwest Expressway Suite 700 Oklahoma City, OK The plan provides medical and dental expense benefits. Should you have any question about the plan, contact the plan administrator’s office. They will explain the benefit plan to you and help you present any claim for benefits. The Insurer The plan benefits are provided through a group insurance policy. That 21 policy was issued to the plan sponsor by Massachusetts Mutual Life Insurance Company, called the “insurer” in this summary. Though the plan is intended to continue, it can be changed or terminated without the consent of the plan members. Your insurance policy rights, in such an event, are shown in this summary. If you wish to review the complete policy, please see the plan sponsor. App. at 274.6 Although defendants contend this language clearly provided them with the right to alter or terminate plaintiffs’ benefits at any time, we disagree. We note that the only reference to changing or terminating the plan is contained under the heading “The Insurer,” which refers exclusively to Massachusetts Mutual. In our view, this language and its placement were simply intended to emphasize that Massachusetts Mutual retained the right to terminate or modify the group policy purchased by Woods for its employees. Had the parties intended for Woods, the plan sponsor, to be able to modify or terminate the plan, we believe the SPD should have said so under the heading “Plan Sponsor and Plan Administrator” (or somewhere other than under the heading “The Insurer”).7 Given the ambiguities in the clause cited by defendants, we turn to extrinsic evidence of the parties’ intent to create vested insurance benefits. For many of the reasons 6 The district court accurately described the language of the SPD as “muddy and baffling.” App. at 1295. 7 In other cases, the SPD’s at issue have more clearly provided the employer/plan sponsor the right to amend or terminate. See, e.g., Sprague v. General Motors Corp., 133 F.3d 388, 401 (6th Cir.) (en banc) (stating SPD specifically provided that General Motors, the employer/plan sponsor, “reserve[d] the right to amend, change or terminate the Plans and Programs described in this booklet”), cert. denied, 524 U.S. 923 (1998). 22 already discussed, we conclude the terms of the October 3 letters demonstrate an intent on the part of defendants to provide plaintiffs with vested insurance benefits. In particular, the letters unequivocally indicated persons taking advantage of the early retirement plan would be provided with health insurance for their lifetimes, at company expense. Although the letters indicated they were for “informational purposes only,” nowhere was there a reference to the SPD, nor was there any other indication that the benefits described in the letters could be unilaterally altered by the company at a later date. We conclude the conduct of the parties also demonstrates an intent to create vested insurance benefits. For example, in July 1986, defendants altered the terms of its plan for existing employees, requiring employees to pay $20 per month for dependent health insurance coverage. Notwithstanding the change to the existing plan, defendants made no attempt to alter the new plan and continued to provide plaintiffs with dependent coverage at company expense. Indeed, for nearly ten years, defendants provided plaintiffs and their spouses with health insurance coverage at company expense. Finally, when defendants attempted to alter the plan in 1995, they did not purport to rely on the above-cited clause in the SPD, or on any other supposed right under ERISA to unilaterally modify the new plan. Instead, defendants relied on a section of the merger agreement between Woods and Sunshine, pursuant to which Sunshine agreed not to terminate or modify, for a period of ten years, any existing Woods’ employee welfare benefit plans. In conclusion, we agree with the district court that defendants intended, at the time 23 they offered early retirement to plaintiffs, to create vested rights to lifetime health insurance coverage. Fee award Although defendants have also challenged the district court’s award of fees in favor of plaintiffs, they argue only that the fee award should be reversed in the event the underlying judgment in favor of plaintiffs is reversed. Because we find no merit to defendants’ appeal, we likewise reject their attack on the fee award. Plaintiffs’ cross-appeals Extent of coverage under new plan Plaintiffs contend the district court erred in determining the relief to which they were entitled under the new plan. In particular, plaintiffs contend the district court erred in failing to order defendants to provide them with the same level and type of health insurance benefits promised them at the time of their retirement (plaintiffs claim defendants are now attempting to provide them with the cheapest health insurance they can purchase). Plaintiffs also contend “[i]t is manifest from the language of the October 1985 letters that dental coverage and life insurance coverage would be provided for the lifetimes of the Rule of 70 Plan participants,” and “[t]here is no basis in the record to support the district court’s refusal to reinstate these coverages along with the medical insurance coverage.” Pls.’ Opening Br., at 37. 24 “A court must review [a] decision denying benefits under an ERISA plan de novo ‘unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.’” Capital Cities, 141 F.3d at 1408 (quoting Firestone, 489 U.S. at 115). Because the documents relating to the new plan do not confer discretionary authority on defendants to determine entitlement to benefits, the district court properly applied a de novo standard in interpreting the plan. See id. In turn, we apply a de novo standard of review to “[q]uestions of law, such as a court’s interpretation of an ERISA plan when the plan’s terms are clear and there is no grant of interpretive authority to a plan administrator – or even the preliminary determination whether an ERISA’s plan language is silent or ambiguous . . . .” Sunbeam-Oster Co. Group Benefits Plan v. Whitehurst, 102 F.3d 1368, 1373 (5th Cir. 1996). Any factual findings made by the district court, “such as the intent of the parties regarding an ERISA plan, are reviewed for clear error.” Id. Turning first to the dental and life insurance coverage, the October 3 letters provided plaintiffs would be “allowed to continue participation in the Group Dental Plan at company expense,” and “would also be covered for $10,000 life insurance on [themselves] and $5,000 on [their] spouse[s] with Security Connecticut, with the premiums for these coverages also paid by the Company.” App. at 116. Nothing in this language suggests an intent on the part of defendants to create vested rights in dental and life insurance coverage. We conclude the district court did not err in refusing to grant 25 relief to plaintiffs on their claims for dental and life insurance coverage. The more difficult issue is what type of health insurance coverage was contemplated by the new plan. The October 3 letters provided: [T]he Plan provides that you and your eligible dependents would be entitled to receive health care under [Woods’] current group hospitalization plan with Massachusetts Mutual, fully paid for at Woods Petroleum Corporation’s expense until the time of your death. At that time, the hospitalization insurance would continue in full force for one year from the anniversary date of the retiree’s death for the retiree’s spouse at no cost to your spouse. However, within the year period from the date of the retiree’s death, should the spouse remarry, all coverage would cease immediately. After the year passes, the spouse may elect to convert to a private plan with Massachusetts Mutual with the cost being borne 100% by the spouse. During your lifetime, you would simply submit your claims for reimbursement to the Company (via the Personnel Department) as you do now. Once converted to a private plan, your premiums and claims would be handled direct with the insurance carrier instead of Woods Petroleum Corporation.