Court Opinion

ID: 2969292
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:46:06.980457+00
Date Added: 2024-06-11T11:43:19.611703
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
           Pursuant to Sixth Circuit Rule 206
   ELECTRONIC CITATION: 2000 FED App. 0055P (6th Cir.)
               File Name: 00a0055p.06

UNITED STATES COURT OF APPEALS
             FOR THE SIXTH CIRCUIT
               _________________

                            ;
                             
SHELBY COUNTY HEALTH
                             
CARE CORPORATION,
                             
         Plaintiff-Appellee,
                             
                                      No. 99-5191

                             
         v.                   >
                             
                             
                             
SOUTHERN COUNCIL OF

                             
INDUSTRIAL WORKERS
                             
HEALTH AND WELFARE
                             
TRUST FUND,
       Defendant-Appellant, 
                             
                             
                Defendant. 
TRACY MASON,

                             
                            1

      Appeal from the United States District Court
  for the Western District of Tennessee at Memphis.
 No. 98-02394—Julia S. Gibbons, Chief District Judge.
             Argued: December 7, 1999
        Decided and Filed: February 15, 2000
Before: JONES, BATCHELDER, and MOORE, Circuit
                   Judges.

                           1
2    Shelby County Health Care v. Southern No. 99-5191
     Council of Industrial Workers, et al.

                    _________________
                         COUNSEL
ARGUED: Allison A. Madan, SLEVIN & HART,
Washington, D.C., for Appellant. Teresa A. McCullough,
Memphis, Tennessee, for Appellee. ON BRIEF: Allison A.
Madan, Lynn A. Bowers, SLEVIN & HART, Washington,
D.C., Deborah E. Godwin, ALLEN, GODWIN, MORRIS &
LAURENZI, Memphis, Tennessee, for Appellant. Teresa A.
McCullough, Gary C. McCullough, Memphis, Tennessee, for
Appellee.
                    _________________
                        OPINION
                    _________________
   KAREN NELSON MOORE, Circuit Judge. Shelby County
Health Care Corporation (“Shelby”) brought suit in this
employee benefit case against Southern Council of Industrial
Workers Health and Welfare Trust Fund (the “Fund”) for
payment of hospital services rendered to Tracy Mason, a
former participant in the Fund.            The Fund’s plan
administrator, the Board of Trustees, had denied Shelby’s
claim for benefits on the basis of untimeliness of the claim.
The district court denied the Fund’s motion to dismiss and sua
sponte granted summary judgment to Shelby reversing the
Board of Trustees’ denial of benefits. We AFFIRM the
district court’s conclusion on summary judgment that the
Board of Trustees’ interpretation of the Fund’s plan document
(the “Plan”) regarding when a claim is timely filed is arbitrary
and capricious. We REVERSE the district court’s sua sponte
grant of summary judgment to Shelby awarding it the full
amount of damages requested and REMAND to determine
the proper amount of benefits owed under the terms of the
Plan. In addition, we AFFIRM the district court’s denial of
attorney fees to the Fund.
No. 99-5191 Shelby County Health Care v. Southern                       3
               Council of Industrial Workers, et al.

                I. FACTS AND PROCEDURE
   Tracy Mason was struck by a car on June 30, 1995. Mason
was a participant in the Fund at that time. He was taken to
Shelby for medical treatment and signed an assignment of
insurance benefits to Shelby for all hospital charges. Shelby
incurred $31,770.22 for these1services and billed the Fund for
this amount in late July 1995. After receiving this bill and in
accordance with the Fund’s established procedures for claims
involving potentially liable third parties, the Fund sent Mason
a subrogation agreement, which included a questionnaire
about the accident, on August 2, 1995; October 31, 1995;
November 14, 1995; May 22, 1996; and June 12, 1996.
These letters advised Mason that his claims would not be
processed until the Fund received a subrogation agreement
with his signature. On March 6, 1996, Shelby sent a letter to
the Fund, along with a copy of Mason’s assignment of
benefits to Shelby, following up on the bill it had sent to the
Fund and renewing its request for payment. In response, the
Fund sent a letter to Shelby on April 17, 1996, informing
Shelby that it had not received a subrogation agreement from
Mason and that it could not process the claim without this
information. Shelby filed suit seeking payment of this claim
in May 1996; the district court dismissed Shelby’s complaint
for failure to exhaust administrative remedies in May 1997.
As the litigation was pending, the Fund sent Shelby a
subrogation agreement for Mason’s signature on September
12, 1996, in response to Shelby’s request. In this letter, the
Fund warned Shelby that it was sending this agreement
“without prejudice with respect to the Fund’s ability to deny
any claim filed for timeliness or any other reason consistent
with the Fund’s rules.” J.A. at 131. Shelby submitted a
signed subrogation agreement and a copy of the police report
to the Fund on October 16, 1996.

    1
       The Fund disputes the amount of charges and claims that it received
a bill for $31,761.02 from Shelby.
4    Shelby County Health Care v. Southern No. 99-5191           No. 99-5191 Shelby County Health Care v. Southern                       17
     Council of Industrial Workers, et al.                                      Council of Industrial Workers, et al.

   On January 7, 1997, the Fund denied Shelby’s claim on the     attorney fees in its appeal of the district court’s judgment.
ground of untimeliness. The Fund concluded that according        Because we affirm the district court’s conclusion that the
to the Plan, all information necessary to process a claim,       Board of Trustees’ interpretation of the Plan is unreasonable,
including a subrogation agreement where there is a potentially   the Fund is not entitled to attorney fees. Therefore, the
liable third party, must be submitted within its one-year        district court did not abuse its discretion in refusing to grant
deadline for filing claims. Shelby appealed the denial of its    attorney fees to the Fund.
claim to the Board of Trustees and submitted for the Board’s
consideration a copy of Mason’s assignment of benefits to           Shelby also challenges the district court’s denial of attorney
Shelby, a police report for the accident involving Mason, and    fees and prejudgment interest3 claiming that the Fund acted
the subrogation agreement signed by Mason. On April 3,           in bad faith in denying its claim for benefits and unreasonably
1997, the Board of Trustees met and decided to affirm the        interpreted the provisions of the Plan to its detriment. We do
denial of benefits to Shelby on the ground of untimeliness. It   not have jurisdiction to consider this argument because
concluded that a claim for benefits relating to an accident      Shelby did not file a notice of cross-appeal. See Francis v.
involving third party action is not properly filed until all     Clark Equip. Co., 993 F.2d 545, 552 (6th Cir. 1993).
information, including a signed subrogation agreement, is
submitted to the Fund. Under the Plan, a participant must file                           III. CONCLUSION
a claim for benefits within one year of the date on which the
charges were incurred. In this case, Shelby provided medical        For the reasons stated above, we AFFIRM the district
treatment to Mason beginning on June 30, 1995, and the Fund      court’s summary judgment determination that the Fund’s
did not receive a signed subrogation agreement until October     denial of benefits to Shelby based on the Board of Trustees’
21, 1996. The Board of Trustees reasoned that Mason’s            interpretation of the Plan’s one-year time requirement for
failure to submit a timely subrogation agreement had             filing claims is arbitrary and capricious, we REVERSE the
prejudiced the Fund’s ability to pursue damages from the         district court’s grant of summary judgment sua sponte
driver of the car that struck Mason because of Tennessee’s       awarding Shelby the full amount of damages, and we
one-year statute of limitations for personal injury actions.     REMAND for the purpose of determining the amount owed
                                                                 to Shelby under the terms of the Plan. In addition, we
   Shelby filed a complaint in district court challenging this   AFFIRM the district court’s denial of attorney fees to the
conclusion under 29 U.S.C. § 1132(a)(1)(B) of the Employee       Fund.
Retirement Income Security Act of 1974 (“ERISA”) on May
1, 1998. It attached as exhibits a copy of Mason’s assignment
of benefits to Shelby, the subrogation agreement with
Mason’s signature, a letter indicating that the Fund had made
some payments for claims related to Mason’s accident, and an
affidavit stating the amount owed to Shelby. In response, the
Fund filed a motion to dismiss Shelby’s complaint arguing
that the Board of Trustees’ interpretation of the Plan and           3
                                                                       ERISA does not require an award of prejudgment interest to a
denial of benefits is not arbitrary and capricious. The Fund     prevailing plan participant, although a district court has the discretion to
attached as exhibits to its brief excerpts of the Plan, an       grant such an award in accordance with equitable principles. See Ford v.
affidavit describing the Fund’s attempts to contact Mason for    Uniroyal Pension Plan, 154 F.3d 613, 616 (6th Cir. 1998). This
                                                                 determination is reviewed for abuse of discretion. See id.
16     Shelby County Health Care v. Southern No. 99-5191                        No. 99-5191 Shelby County Health Care v. Southern             5
       Council of Industrial Workers, et al.                                                   Council of Industrial Workers, et al.

  C. Attorney Fees                                                              a subrogation agreement, and copies of correspondence
                                                                                between Shelby and the Fund regarding the subrogation
   Under 29 U.S.C. § 1132(g)(1), a “court in its discretion                     agreement and the status of Shelby’s claim. Shelby filed a
may allow a reasonable attorney’s fee and costs of action to                    response to the Fund’s motion to dismiss making the
either party.” A district court must consider the following                     following arguments:         that the Board of Trustees’
factors in deciding whether to award attorney fees,                             interpretation of the Plan is arbitrary and capricious, that the
                                                                                Plan should be estopped from denying payment of the claim,
  (1) the degree of the opposing party’s culpability or bad                     and that the Plan failed to provide Shelby with a copy of the
  faith; (2) the opposing party’s ability to satisfy an award                   Plan in violation of 29 U.S.C. § 1132(c)(1). Shelby also
  of attorney’s fees; (3) the deterrent effect of an award on                   attached several exhibits, including Mason’s assignment of
  other persons under similar circumstances; (4) whether                        benefits, an affidavit describing its outstanding bill for
  the party requesting fees sought to confer a common                           services provided to Mason, correspondence between Shelby
  benefit on all participants and beneficiaries of an ERISA                     and the Fund, and a copy of the police report. Finally, the
  plan or resolve significant legal questions regarding                         Fund filed a reply to Shelby’s response and addressed each of
  ERISA; and (5) the relative merits of the parties’                            Shelby’s arguments. The Fund included as exhibits
  positions.                                                                    correspondence between the Fund and Shelby.
Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir. 1998)                           As the parties were filing these motions, the district court
(quoting Secretary of Dep’t of Labor v. King, 775 F.2d 666,                     entered a scheduling order pursuant to FED. R. CIV. P. 16(b),
669 (6th Cir. 1985)), cert. denied, 119 S. Ct. 1756 (1999).                     establishing the deadline for completing discovery on October
We review a district court’s award or denial of attorney fees                   5, 1998, the deadline for filing potentially dispositive motions
for abuse of discretion. See id.                                                on November 5, 1998, and setting trial for January 25, 1999.
                                                                                On November 5, 1998, the Fund filed a motion for an
  The district court denied requests for attorney fees from the                 extension of time to file dispositive motions until 30 days
Fund and from Shelby. The Fund renews its request for                           after the district court’s order ruling on the Fund’s motion to
                                                                                dismiss. The district court granted this motion. However,
                                                                                two months later the district court sua sponte converted the
reasonable expectations should apply. Shelby also argues that the Fund          Fund’s motion to dismiss into a motion for summary
is estopped from denying benefits because the Fund misrepresented that          judgment and denied the motion in an order entered on
it would pay benefits upon receipt of a signed subrogation agreement            January 5, 1999. The district court concluded that the Board
regardless of the one-year deadline and because the Fund partially
performed by making de minimis payments on claims in connection with            of Trustees’ interpretation of the Plan is arbitrary and
Mason’s accident. Because we affirm the district court’s award of               capricious, sua sponte granted Shelby summary judgment, and
summary judgment based on the determination that the Fund’s denial of           ordered the Fund to pay Shelby $31,770.22, the full amount
Shelby’s claim on the ground of untimeliness is arbitrary and capricious,       of benefits Shelby requested. The district court rejected
we need not address these arguments. In addition, Shelby asserts that the       Shelby’s argument that the Fund should be estopped from
Fund violated ERISA by failing to comply with Shelby’s request for a
copy of the Plan pursuant to 29 U.S.C. § 1132(c)(1). However, the               denying payment and that the Fund violated 29 U.S.C.
district court rejected this claim because Shelby did not raise this issue in   § 1132(c)(1) by refusing to provide Shelby with a copy of the
its complaint, and we do not have jurisdiction to review this determination     Plan. Finally, the district court denied both parties’ requests
because Shelby did not file a notice of cross-appeal. See Francis v. Clark      for attorney fees and Shelby’s request for prejudgment
Equip. Co., 993 F.2d 545, 552 (6th Cir. 1993).
6      Shelby County Health Care v. Southern No. 99-5191           No. 99-5191 Shelby County Health Care v. Southern                     15
       Council of Industrial Workers, et al.                                      Council of Industrial Workers, et al.

interest. The Fund filed a timely notice of appeal of the          interpretation of the Plan is arbitrary and capricious as a
district court’s judgment.                                         matter of law.
                        II. ANALYSIS                                  After determining that the Board of Trustees’ interpretation
                                                                   is unreasonable, the district court concluded that Shelby had
    A. Summary Judgment Sua Sponte                                 filed its claim when it billed the Fund for its services shortly
                                                                   after they were incurred and thus had met the one-year time
   When a district court grants summary judgment sua sponte,       requirement. When the Fund denied Shelby’s claim, the Fund
its decision is subject to two separate standards of review.       reasoned that a complete claim had not been filed until
The substance of the district court’s decision is reviewed de      October 21, 1996, when the Fund received a subrogation
novo under the normal standards for summary judgment. See          agreement signed by Mason. The Fund stated that it had
Salehpour v. University of Tennessee, 159 F.3d 199, 203 (6th       contacted Mason several times to request that he sign a
Cir. 1998), cert. denied, 119 S. Ct. 1763 (1999). The district     subrogation agreement and “advised that the claim would not
court’s procedural decision to enter summary judgment sua          be processed until the fund received the required agreement.”
sponte, however, is reviewed for abuse of discretion. See id.      J.A. at 65. Based on the Fund’s reasoning in denying
We have held that a district court may enter summary               Shelby’s claim, it is clear that the Fund considered Shelby’s
judgment sua sponte in certain limited circumstances, “‘so         request for payment of services to be a claim for benefits.
long as the losing party was on notice that [it] had to come       The Fund simply did not consider the claim complete for
forward with all of [its] evidence.’” Id. at 204 (quoting          processing until it received the subrogation agreement. The
Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986)). More          district court properly concluded that Shelby had filed its
specifically, we have held that FED. R. CIV. P. 56(c) mandates     claim when it billed the Fund a few weeks after the charges
that the losing party must “be afforded notice and reasonable      were incurred and well within the one-year deadline required
opportunity to respond to all the issues to be considered by       by the Plan. Therefore, the district court did not err in
the court.” Employers Ins. of Wausau v. Petroleum                  concluding that the Fund’s denial of benefits to Shelby for
Specialties, Inc., 69 F.3d 98, 105 (6th Cir. 1995). A clear        untimeliness was arbitrary and capricious.
example of the district court’s power to grant summary
judgment sua sponte is found in FED. R. CIV. P. 12(b), which          Having found that Shelby filed a timely claim for benefits,
gives a district court the authority to turn a motion to dismiss   the district court then awarded Shelby $31,770.22 for the
into a motion for summary judgment where the court is              hospital services it provided to Mason. As already discussed
presented with materials outside the pleadings. See FED. R.        in Part II.A supra, the district court abused its discretion in
CIV. P. 12(b); see also Employers Ins., 69 F.3d at104-05.          granting summary judgment sua sponte on the amount owed
This rule expressly states,                                        to Shelby. Therefore, we remand this case to the district court
                                                                   to determine the proper amount of benefits Shelby is entitled
    If, on a motion asserting the defense numbered (6) to          to for the hospital services it2 provided to Mason in accordance
    dismiss for failure of the pleading to state a claim upon      with the terms of the Plan.
    which relied can be granted, matters outside the pleading
    are presented to and not excluded by the court, the
    motion shall be treated as one for summary judgment and            2
                                                                        We note that Shelby also makes a variety of other arguments on its
    disposed of as provided in Rule 56, and all parties shall      behalf. With respect to the Board of Trustees’ interpretation of the Plan,
                                                                   Shelby argues that the rule of contra proferentum and the doctrine of
14    Shelby County Health Care v. Southern No. 99-5191              No. 99-5191 Shelby County Health Care v. Southern              7
      Council of Industrial Workers, et al.                                         Council of Industrial Workers, et al.

Plan states only that benefits may not be paid until a                 be given reasonable opportunity to present all material
subrogation agreement is submitted as part of the proof of             made pertinent to such a motion by Rule 56.
loss for a claim; it does not state that this is necessary to file
a claim and that benefits may be denied altogether if such an        FED. R. CIV. P. 12(b). Whether a district court must provide
agreement is not filed within the one-year deadline for filing       actual notice that it intends to convert a motion to dismiss into
claims.                                                              a motion for summary judgment depends on the facts and
                                                                     circumstances of each case. See Salehpour, 159 F.3d at 204.
   The Fund also points to another provision in the Plan to          However, “[w]here one party is likely to be surprised by the
support the Board of Trustees’ interpretation. The Plan states       proceedings, notice is required.” Id.
that it excludes any “[c]harges which are or may become the
responsibility of any third party. (The plan Administrator has         The Fund argues that the district court abused its discretion
been authorized by the Trustees to pay benefits when the             because it did not provide any notice that it was
beneficiary and legal counsel have executed a subrogation            contemplating entering summary judgment against the Fund.
form which is satisfactory to the plan Administrator.)” J.A.         Instead, the Fund asserts, the district court led the Fund to
at 36. The Fund argues that this provision gives the Trustees        believe that it would have an opportunity to file a motion for
discretionary authority to request documentation for claims,         summary judgment because the district court granted its
including the determination of what documentation is                 motion for an extension of time to file dispositive motions
required in order for a claim to be filed. The Fund cites to         within 30 days of ruling on its motion to dismiss. Therefore,
Bali v. Blue Cross & Blue Shield Ass’n, 873 F.2d 1043, 1047          the Fund claims it was denied the opportunity to present all
(7th Cir. 1989), in which the court determined that a plan           material pertinent to a motion for summary judgment.
administrator had discretionary authority to determine the
documentation required to prove disability based on the                 The district court did not abuse its discretion in sua sponte
language of the plan. Unlike Bali, however, in this case the         converting the Fund’s motion to dismiss into a motion for
language in the Plan giving discretionary authority to the plan      summary judgment pursuant to FED. R. CIV. P. 12(b). The
administrator to require a satisfactory subrogation agreement        Fund submitted substantial extrinsic material to the district
only relates to the plan administrator’s authority to pay            court as exhibits to its motion to dismiss. In response to the
benefits. This provision only requires a satisfactory                Fund’s motion, Shelby also included exhibits extrinsic to the
agreement before the payment of benefits; it does not state          pleadings. The Fund then filed a reply to Shelby’s response
that such documentation is required in order to file a claim.        to the Fund’s motion to dismiss and thus had the opportunity
                                                                     to respond to the arguments and exhibits that Shelby
   Although the language of the Plan regarding when a claim          submitted. In their briefs, both parties comprehensively
is filed is ambiguous, the Board of Trustees’ interpretation         addressed the Fund’s argument that the Board of Trustees’
that all information, including a signed subrogation agreement       interpretation of the Plan is not arbitrary and capricious.
when third party liability may be involved, necessary to             Because the parties both submitted numerous exhibits fully
process a claim must be submitted to file a claim is an              addressing the Fund’s argument for dismissal, they had
unreasonable interpretation. This requirement cannot be              sufficient notice that the district court could consider this
found in the language of the Plan. Therefore, the district           outside material when ruling on the issues presented in the
court did not err in concluding that the Board of Trustees’          Fund’s motion to dismiss and could convert it into a motion
                                                                     for summary judgment under FED. R. CIV. P. 12(b). The
8    Shelby County Health Care v. Southern No. 99-5191             No. 99-5191 Shelby County Health Care v. Southern            13
     Council of Industrial Workers, et al.                                        Council of Industrial Workers, et al.

parties also had a reasonable opportunity to address the Board     possible liability. This allows the Fund to determine whether
of Trustees’ interpretation of the Plan. Thus, the Fund and        or not the claim is covered under the Plan. The Fund also
Shelby had sufficient notice and opportunity to address the        argues that it must have a signed subrogation agreement in
issues presented in the Fund’s motion. See Salehpour, 159          order to pursue any action against a potentially liable third
F.3d at 204 (affirming the district court’s conversion of a        party. In this case, the Fund argues that it could not file suit
defendant’s motion to dismiss into a motion for summary            against the driver of the car that struck Mason because the
judgment where both parties had submitted voluminous               one-year statute of limitations for personal injury suits under
outside material and had the opportunity to respond to the         Tennessee law had already expired once it received a signed
issues and evidence presented). Furthermore, when a district       subrogation agreement from Mason. The Fund claims that
court is reviewing a plan administrator’s denial of benefits,      these are rational purposes behind the Board of Trustees’
the court may only consider those materials that were              interpretation of the Plan.
available to the plan administrator when it made its final
decision. See Miller v. Metropolitan Life Ins. Co., 925 F.2d          The Fund also argues that where there is ambiguity in the
979, 986 (6th Cir. 1991). In this case, the materials Shelby       Plan, the Board of Trustees has the discretion to resolve the
had submitted to the Board of Trustees to review on its appeal     ambiguity. We have stated that “we grant plan administrators
were also submitted to the district court as exhibits to the       who are vested with discretion in determining eligibility for
Fund’s motion to dismiss. Because the district court already       benefits great leeway in interpreting ambiguous terms.” Moos
had all of the material it could examine in conducting its         v. Square D Co., 72 F.3d 39, 42 (6th Cir. 1995). A plan
review of the Board of Trustees’ denial of benefits, the Fund      administrator’s interpretation of ambiguous provisions must,
could not have submitted any additional evidence. Therefore,       however, be reasonable. See Johnson, 970 F.2d at 1574.
the district court did not abuse its discretion when it sua        Although the Fund has provided rational justifications for
sponte converted the Fund’s motion to dismiss into a motion        requiring a subrogation agreement to be submitted within the
for summary judgment and ruled on the Fund’s argument that         one-year time requirement for filing claims, it has not
the Board of Trustees’ denial of benefits based on the Board’s     established the reasonableness of this requirement based on
interpretation of the Plan regarding the requirements for filing   the language of the Plan. As previously discussed, the Plan
a timely claim is not arbitrary and capricious.                    requires that a claim for benefits be filed within one year but
                                                                   does not elaborate on what is required in order properly to file
   Next we must determine whether the district court abused        a claim. The Plan does not state that a participant must
its discretion in granting summary judgment sua sponte to          submit all information that is necessary to process the claim
Shelby, a nonmoving party. We have noted that although “a          in order to file the claim within the deadline. Nor does the
district court should only enter summary judgment in the           Plan give any indication that a signed subrogation agreement
absence of a cross-motion with great caution . . . the fact that   is required to file a claim. It states, “[t]he participant is
the nonmoving party has not filed its own summary judgment         required to submit a signed copy of a Subrogation Agreement
motion does not preclude the entry of summary judgment if          provided by the Fund office as part of proof of loss for a
otherwise appropriate.” K.E. Resources, Ltd. v. BMO Fin.           claim involving third party action. Failure to submit such
Inc. (In re Century Offshore Management Corp.), 119 F.3d           signed agreement may cause payment of the claim to be
409, 412 (6th Cir. 1997) (affirming the district court’s sua       delayed until the third party action is resolved or disallowed
sponte grant of summary judgment to a nonmoving party              due to failure on the part of the participant to provide
where the parties had fully briefed the determinative issue and    adequate proof of loss.” J.A. at 38 (emphasis added). The
12   Shelby County Health Care v. Southern No. 99-5191            No. 99-5191 Shelby County Health Care v. Southern              9
     Council of Industrial Workers, et al.                                       Council of Industrial Workers, et al.

Subrogation Agreement provided by the Fund office as part         had agreed that no factual dispute existed). Shelby had not
of proof of loss for a claim involving a third party action.      filed any dispositive motions which would have put the Fund
Failure to submit such signed agreement may cause payment         on notice that it had to come forward with all of its evidence
of the claim to be delayed until the third party action is        in response to Shelby’s complaint. When the district court
resolved or disallowed due to failure on the part of the          ruled on the Fund’s converted motion for summary judgment,
participant to provide adequate proof of loss.” J.A. at 38.       the court concluded that the Board of Trustees’ interpretation
Based on its interpretation of these provisions, the Board of     of the Plan regarding the requirements for filing a timely
Trustees concluded that a claim is not “filed” until the Fund     claim is arbitrary and capricious as a matter of law. As
receives all information required to process the claim. In        discussed above, the district court did not abuse its discretion
cases involving a potentially liable third party, a participant   in deciding this issue on summary judgment. Because the
must submit a subrogation agreement to process a claim.           Fund had denied Shelby’s benefits for untimeliness, the
Therefore, the Board of Trustees determined that the Fund         district court then sua sponte entered summary judgment on
must receive a subrogation agreement as part of the proof of      behalf of Shelby and awarded the full amount of damages
loss within the one-year deadline for the submission of claims    requested. Neither party, however, had addressed the issue of
for cases involving potential third party liability. Although     the amount of benefits the Fund would have awarded to
Shelby billed the Fund for the services it provided to Mason      Shelby under the terms of the Plan had the Fund determined
soon after the charges were incurred, a subrogation agreement     that Shelby had filed a timely claim. The Fund points out that
with Mason’s signature was not submitted within the one-year      Shelby may not be entitled to the full amount of the claim
deadline. The Fund argues that the Board of Trustees’             under the Plan. For example, the Plan states that it will not
interpretation of the Plan is reasonable and Shelby’s claim       cover “[c]harges which are not ‘Reasonable and Customary’,
should be denied accordingly.                                     or which are excessive.” J.A. at 34. Nor will it pay for
                                                                  “[s]ervices which are not ‘Medically Necessary.’” J.A. at 34.
   The Plan does not explain when a claim will be considered      The Plan also states that it will not cover “[c]harges for
to have been filed for the purpose of the one-year time           benefits that are not payable due to the application of any
requirement for filing claims. The language of a plan is          specified deductible or co-payment provisions contained
ambiguous if it is subject to more than one reasonable            herein.” J.A. at 37. Because the parties had not addressed in
interpretation. See Wulf v. Quantum Chem. Corp., 26 F.3d          their briefs the issue of the amount of benefits due under the
1368, 1376 (6th Cir.), cert. denied, 513 U.S. 1058 (1994). In     Plan and the district court had granted the Fund’s motion for
the absence of any further explanation of when a claim is         an extension to file dispositive motions, it was reasonable for
filed, one could make several different reasonable                the parties to believe that the district court would only rule on
interpretations of this provision. The Fund argues that the       the issues presented in the Fund’s converted motion for
Board of Trustees’ construction of the Plan that a participant    summary judgment. They were not on notice that the district
must submit all information required to process a claim,          court would consider on summary judgment the amount of
including a signed subrogation agreement if there is third        benefits due. Moreover, the Fund and Shelby did not have a
party action, within the one-year deadline for filing claims is   reasonable opportunity to address this issue before the district
reasonable. It claims that this interpretation serves several     court decided it. Therefore, the district court abused its
important purposes. The subrogation agreement includes a          discretion in granting summary judgment sua sponte to
questionnaire about the accident or incident, which informs       Shelby on the amount of benefits due under the terms of the
the Fund about the nature of the third party’s involvement and    Plan.
10    Shelby County Health Care v. Southern No. 99-5191             No. 99-5191 Shelby County Health Care v. Southern             11
      Council of Industrial Workers, et al.                                        Council of Industrial Workers, et al.

  B. Denial of Benefits                                             similar language. See Smith v. Ameritech, 129 F.3d 857, 863
                                                                    (6th Cir. 1997) (finding such a grant where the plan states that
   We now review the merits of the district court’s summary         its administrator is vested with “full discretionary authority to
judgment determination that the Board of Trustees’                  interpret the terms of the Plan and to determine eligibility for
interpretation of the Plan regarding the requirements for filing    and entitlement to Plan benefits in accordance with the terms
a timely claim is arbitrary and capricious. See Salehpour v.        of the Plan.”).        Therefore, the Board of Trustees’
University of Tennessee, 159 F.3d 199, 203 (6th Cir. 1998),         interpretation of the Plan, resulting in the denial of benefits,
cert. denied, 119 S. Ct. 1763 (1999). We review de novo the         must be affirmed unless it is arbitrary and capricious. Under
district court’s decision, applying the same FED. R. CIV. P. 56     this standard of review, “we must decide whether the plan
summary judgment standard used by the district court. See           administrator’s decision was ‘rational in light of the plan’s
Davis v. Sodexho, Cumberland College Cafeteria, 157 F.3d            provisions.’” Id. (quoting Daniel v. Eaton Corp., 839 F.2d
460, 462 (6th Cir. 1998). Summary judgment is appropriate           263, 267 (6th Cir.), cert. denied, 488 U.S. 826 (1988)). A
where there is no genuine issue of material fact and a party is     decision is not arbitrary and capricious if it is based on a
entitled to a judgment as a matter of law. FED. R. CIV. P.          reasonable interpretation of the plan. See Johnson v. Eaton
56(c). In an action challenging the denial of benefits under 29     Corp., 970 F.2d 1569, 1574 (6th Cir. 1992). Congress
U.S.C. § 1132(a)(1)(B), a plan administrator’s decision is          enacted ERISA “to promote the interests of employees and
reviewed “under a de novo standard unless the benefit plan          their beneficiaries in employee benefit plans and to protect
gives the administrator or fiduciary discretionary authority to     contractually defined benefits.” Firestone, 489 U.S. at 113
determine eligibility for benefits or to construe the terms of      (quotations omitted). As part of this goal, Congress intended
the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S.           ERISA plans to “be uniform in their interpretation and simple
101, 115 (1989). If the benefit plan does grant such                in their application.” McMillan v. Parrott, 913 F.2d 310, 312
discretionary authority, the plan administrator’s decision to       (6th Cir. 1990). Thus, a plan administrator must discharge its
deny benefits is reviewed under the “arbitrary and capricious”      duties with respect to the plan “‘in accordance with the
standard of review. See Perez v. Aetna Life Ins. Co., 150 F.3d      documents and instruments governing the plan.’” Id. at 311
550, 555 (6th Cir. 1998) (en banc). This highly deferential         (quoting 29 U.S.C. § 1104(a)(1)(D)). In interpreting the
standard of review is appropriate only if the benefit plan          provisions of a plan, a plan administrator must adhere to the
contains “‘a clear grant of discretion [to the administrator] to    plain meaning of its language, as it would be construed by an
determine benefits or interpret the plan.’” Id. (quoting Wulf       ordinary person. See Callahan v. Rouge Steel Co., 941 F.2d
v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir.), cert.        456, 459-60 (6th Cir. 1991).
denied, 513 U.S. 1058 (1994)).
                                                                      The Board of Trustees denied Shelby’s claim for benefits
  In this case, the administrator of the Plan is the Board of       because it concluded that the claim was not submitted within
Trustees. The Plan states, “This Board has the primary              the Plan’s one-year time limit. The Plan states that no
responsibility for decisions regarding eligibility rules, type of   benefits will be paid for “[a]ny charges incurred more than
benefits, administrative policies, management of Plan assets,       one year prior to the date the claim is filed.” J.A. at 37. Nor
and interpretation of Plan provisions.” J.A. at 39. The parties     will any benefits be paid for “[c]harges which are or may
agree that this language expressly gives the Board of Trustees      become the responsibility of any third party.” J.A. at 36. In
the authority to interpret the Plan. We have found a clear          cases involving a potentially liable third party, the Plan
grant of discretionary authority in a benefit plan containing       requires a participant to “submit a signed copy of a