Opinion ID: 25529
Heading Depth: 2
Heading Rank: 1

Heading: Applicability of the Wildbur Two-Step

Text: 13 It should go without saying that eligibility for benefits under any ERISA plan is governed in the first instance by the plain meaning of the plan language. Threadgill, 145 F.3d at 292. However, in this Circuit, we have often applied a two-part test when reviewing a plan administrator's denial of benefits: First, a court must determine the legally correct interpretation of the plan. If the administrator did not give the plan the legally correct interpretation, the court must then determine whether the administrator's decision was an abuse of discretion. In answering the first question, i.e., whether the administrator's interpretation of the plan was legally correct, a court must consider: (1) whether the administrator has given the plan a uniform construction, (2) whether the interpretation is consistent with a fair reading of the plan, and (3) any unanticipated costs resulting from different interpretations of the plan. Wildbur v. ARCO Chemical Co., 974 F.2d 631, 637-638 (citations omitted). 14 If a court concludes that the administrator's interpretation is legally incorrect, the court must then determine whether the administrator abused his discretion. Three factors are important in this analysis: (1) the internal consistency of the plan under the administrator's interpretation, (2) any relevant regulations formulated by the appropriate administrative agencies, and (3) the factual background of the determination and any inferences of lack of good faith. Id. Only if the court determines that the administrator did not give the plan the legally incorrect interpretation, must the court then determine whether the administrator's decision was an abuse of discretion. Tolson, 141 F.3d at 608. 15 Plaintiffs contend that the Defendants' interpretation of the Plan violates the plain meaning of the language governing the calculation of pension benefits for DSRs. As such, Plaintiffs argue that the court should not employ the two-step test as set forth in Wildbur. Plaintiffs suggest that rigid adherence to theWildbur approach could produce the anomalous finding that a Plan administrator's interpretation which directly violates the plain meaning of the plan language is not an abuse of discretion simply because the plan language has always been interpreted in the same manner and there are no inferences of bad faith. 16 We agree with the Plaintiffs that the second step in theWildbur two-step approach is not instructive to our analysis of the instant case. See Duhon v. Texaco, Inc., 15 F.3d 1302, 1307-08 & n.3 (5th Cir. 1994) (recognizing that the reviewing court is not rigidly confined to [Wildbur's] two-step analysis in every case);accord Threadgill, 145 F.3d at 292, n.12. Clearly, if an administrator interprets an ERISA plan in a manner that directly contradicts the plain meaning of the plan language, the administrator has abused his discretion even if there is neither evidence of bad faith nor of a violation of any relevant administrative regulations. However, in the instant case, the flaws in the second step of the Wildbur approach need not concern us because the administrator's interpretation of the plan is legally correct.