Court Opinion

ID: 9482364
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:47:47.618591+00
Date Added: 2024-06-11T17:48:56.153140
License: Public Domain

FEIKENS, Senior District Judge,
concurring in part and dissenting in part.
I cannot join the majority. In dissent, I hold that the district court applied the appropriate standard of review and correctly found that the United States Steel Pension Fund’s interpretation of the Pension Plan’s offset provisions was neither arbitrary nor capricious. However, I would remand for further proceedings on the Pension Fund’s *1252counterclaim for recoupment of over-payments.
As retirees of United States Steel (“USS”), appellants are covered by a USS pension plan (“the Plan”) which gives them both a contributory and a non-contributory pension, but subjects the latter to a workers’ compensation offset provision1 designed to prevent “double-dipping,” i.e., the receipt of regular pension benefits from USS and the receipt also of employer-financed workers’ compensation benefits for disabling injuries. In 1986, the Pension Fund notified appellants that their non-contributory pensions would be reduced by that portion of appellants’ Special Fund benefits “attributable to appellants’ employment with USS.”
All appellants receive Special Fund benefits in a two-part payment. The first part — comprising twenty-five percent of the total payment — is paid directly by USS. Appellants do not dispute the Pension Fund’s right to offset this part against their pensions. The second part — which comprises seventy-five percent of the total payment — is paid by the Special Fund. At issue here is whether this latter payment is subject to offset under the terms of the Plan, and if so, to what extent.
The Pension Fund interprets the Plan as requiring the reduction of pensions by that percentage of Special Fund benefits attributable to employment with USS. For example, if seventy-five percent of a pensioner’s career was spent at USS, the Pension Fund will offset seventy-five percent of his Special Fund payment against his non-contributory pension, irrespective of USS’ actual contribution to the Special Fund on behalf of that pensioner.
The Pension Fund arrived at its present interpretation of the Plan in 1986, when Anthony Kuchta (“Kuchta”), the Pension Fund’s new case supervisor, learned from the Special Fund Administrator that Kentucky Special Fund benefits were financed by special employer taxes. Kuchta believed that USS’ indirect financing of the Kentucky Special Fund required the Pension Fund to offset some portion of Special Fund payments against the non-contributory pensions of USS retirees. He based this conclusion on two offset provisions contained in the USS Pension Plan — Sections 3.10 and 11 — and on the historical application of those provisions to Federal Black Lung Benefits.
Section 3.10 of the Plan’s Non-Contributory Pension Rules has been in effect since 1976. It provides that:
Any amount paid to or on behalf of any participant on account of injury or occupational disease incurred in the course of his employment by an Employing Company or any other employer causing disability in the nature of a permanent disability that is paid directly or indirectly by an Employing Company2, whether pursuant to workmen’s compensation, occupational disease or similar statutory law ..., shall be deducted from or charged against ... [the participant’s non-contributory pension]_ (emphasis added).
Section 11 of the Plan’s General Provisions has also been in effect since 1976. In its original form, it provided that:
Notwithstanding anything to the contrary contained in this Plan, workers’ compensation, occupational disease benefits and other similar benefits payable with respect to a disability in the nature of a permanent disability will be taken into account in the calculation of pension only if such benefits are paid directly or indirectly by an Employing Company (emphasis added).
For several years the Pension Fund interpreted Sections 3.10 and 11 as requiring the offset of federal Black Lung benefits since those benefits were financed by special employer taxes and thus indirectly financed by USS. Accordingly, the Pension Fund reduced monthly non-contributory pension benefits by the entire amount of Federal Black Lung benefits received by retirees.
*1253In the early 1980’s a USS pensioner . named Harry Teer challenged the offset of Federal Black Lung benefits against his non-contributory pension and filed suit in the United States District Court for the Northern District of Alabama. Teer v. United States Steel and Carnegie Pension Fund, No. CV 82-P-2379-S (N.D.Ala. May 9, 1983). In Teer, Judge Pointer ruled that the Plan required the offset of Federal Black Lung benefits against the pension, but only to the extent that such benefits were attributable to USS employment. He remanded the case to the Pension Fund to determine what percentage of Teer’s career had been spent in USS mines.
The Pension Fund accepted this ruling and amended Section 11 to reflect the same. Since August 1, 1985, Section 11 has contained this additional paragraph:
All such benefits which are financed directly or indirectly by an Employing Company (including benefits paid from the Federal Black Lung Disability Trust Fund or a “second injury fund” established by state law to which an Employing Company is required to contribute by reason of law) shall be taken into account in the calculation of pension; provided, however, that the deduction for such benefits paid from the Federal Black Lung Disability Trust Fund or a “second injury fund” shall be limited to the amount, to the extent reasonably determinable, of such benefits attributable to employment with an Employing Company.
Based on these provisions, Kuchta determined that the Pension Fund was required to offset appellants’ Kentucky Special Fund benefits since these benefits were financed “indirectly” by USS by way of special employer taxes. He also determined that the Pension Fund’s failure to offset these benefits prior to 1986 was mere oversight and not the result of a conscious Fund policy.3 He therefore informed appellants that such offsets would occur in the future, and that the past failure to offset resulted in overpayments of pension benefits which the Pension Fund was required to recoup under Section 8 of the Plan.
Appellants contend that the district court erred in applying the arbitrary and capricious standard of review to the Pension Fund’s interpretation of the Plan. In Davis v. Kentucky Finance Cos. Retirement Plan, 887 F.2d 689, 694 (6th Cir.1989), cert. denied, — U.S. -, 110 S.Ct. 1924, 109 L.Ed.2d 288 (1990), we held that a district court should review a plan administrator’s interpretation of a plan under the arbitrary and capricious standard whenever the plan gives the plan administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan.
In this case, the Plan gives the Pension Fund such discretion. Section 7.1(a) of the Pension Rules provides that the Pension Fund “shall administer these Pension Rules and shall decide all questions arising out of and relating to these Pension Rules.” Section 7.7 states that “The decision of the [Pension Fund] shall be final and conclusive as to all questions of interpretation and application of these Pension Rules and as to all other matters arising in the administration thereof.” In Davis, we held that substantially similar language gave the plan administrator great discretion to interpret the language of the Plan. Id. at 694. Thus, the district court properly applied an arbitrary and capricious standard of review to the Pension Fund’s interpretation of the Plan.
Is the Pension Fund’s interpretation of the Plan’s offset and recoupment provisions arbitrary and capricious? Without a showing of internal inconsistency or bad faith or some other ground for calling the Pension Fund’s determination into question, the arbitrary and capricious standard demands affirmance. Davis, 887 F.2d at 695. Moreover, where both the trustees of a pension fund and a rejected applicant offer rational, though conflicting, interpretations of plan provisions, the trustees’ in*1254terpretation must be allowed to control. Cook v. Pension Plan For Salaried Employees, 801 F.2d 865, 870 (6th Cir.1986). So long as the plan administrator’s interpretation is rationally related to a valid plan purpose and is not contrary to the plain language of the Plan, it will be upheld. Id. Courts apply this limited scope of review in order to avoid “excessive judicial interference with plan administration.” Id.
The precise issue before us is whether the Pension Fund’s interpretation of Sections 3.10 and 11 is rationally related to a valid Plan purpose and not contrary to the plain language of the Plan. I believe it is.
First, the Pension Fund’s interpretation of the Plan is rationally related to the policy against double-dipping. By offsetting that portion of Special Fund benefits attributable to USS employment, the Pension Fund insures that USS retirees do not receive the equivalent of two pensions because of their employment with USS.
The Pension Fund’s interpretation of the Plan does not contravene the plain language of the Plan. Section 3.10 of the Plan provides that pensions shall be reduced by “any amount ... that is paid directly or indirectly” by USS on behalf of pensioners pursuant to workmen’s compensation, occupational disease, or similar statutory law.
In its opinion, the majority states that USS contributes only a small portion of the benefits received by its retirees. The opinion refers to retiree Vernon Asbridge as an example. The majority says Asbridge receives $98.25 per week from the Special Fund, but that USS contributes only $4.91 of that payment. The majority then continues, “An interpretation allowing an offset of $98.25 when only $4.91 was indirectly paid into the Fund by the employer is not reasonable.” It appears that the majority concludes that other than the $4.91 payment, $93.34 came from some source other than USS. It would be unconscionable for USS to offset $93.34 against Asbridge’s retirement if it did not pay this amount into the Fund. The majority does not explain from where this money came. The Special Fund Administrator sought to offset this amount because USS had paid it into the Special Fund. I readily agree that if the source of this amount was not USS, then it would certainly be unreasonable to allow that amount to be taken as an offset. It appears that the majority must conclude that other employers are making payments into the Fund from which Asbridge receives his benefits.
The Pension Fund can also reasonably contend that USS indirectly pays appellants’ Special Fund benefits to the extent those benefits are attributable to employment with USS. Because an appellant’s entitlement to Special Fund benefits is based on his work in Kentucky coal mines, the Pension Fund can rationally claim that a particular appellant’s entitlement is proportionally related to the percentage of his mining career spent at USS.
The Pension Fund’s interpretation of Section 3.10 is supported by Judge Pointer’s decision in Teer, supra, and by the amendment to Section 11 of the Plan. In Teer, Judge Pointer ruled that USS could not reasonably claim to “indirectly” finance all of Teer’s Federal Black Lung benefits because other coal mining companies contributed to the federal trust fund that paid those benefits. Thus, Judge Pointer held that USS’s indirect financing of Teer’s federal benefits was limited to that portion of benefits attributable to Teer’s years of service with USS. That limitation is now explicitly stated in Section 11.
The Pension Fund now seeks to offset Kentucky Special Fund benefits in a manner consistent with Judge Pointer’s ruling and with the amended language of Section 11. As such, the Pension Fund’s interpretation of the Plan seeks to effectuate a valid Plan purpose — the policy against double-dipping — and does not contravene the plain language of the Plan. Accordingly, it must be upheld. Cook, 801 F.2d at 870.
It has been argued, however, that even if the Pension Fund’s interpretation of the Plan is supported by the Pointer decision and the subsequent amendment to Section 11, the Pension Fund’s attempt to recoup overpayments made prior to that amend*1255ment is not justified since Section 3.10 and the pre-amended version of Section 11 do not clearly define the scope of indirect disability benefits subject to offset. This argument attributes too much weight to Section 11.
By its very terms, Section 11 contains language of limitation, not empowerment. As such, it cannot empower the Pension Fund to make offsets it is otherwise unable to make. The Pension Fund’s power to make offsets is found in Section 3.10, a provision that has been on the books since 1976, and that requires the Pension Fund to reduce pensions by amounts that USS “indirectly” pays pensioners through state-sponsored, employer-financed disability benefits. Section 11, in its amended form, merely limits the permissible scope of such offsets to the percentage of benefits attributable to USS employment. Until the amendment of Section 11, the precise scope of the Pension Fund’s offset powers may have been unclear, but they were in no way expanded by the amendment.
Accordingly, I conclude that it is neither arbitrary nor capricious for the Pension Fund to recoup overpayment made to appellants prior to the Section 11 amendment, so long as Section 3.10 or a substantially similar provision was contained in the Plan at the time of the overpayments.
Having found that the Fund’s recoupment rights are not limited by law, I do not foreclose the possibility that they are curtailed by equity. As a trustee of the Plan, the Pension Fund is bound by the equitable principles that govern trusts. Those principles allow a trustee or administrator of a trust to recoup overpayments to a beneficiary even if the excess payment was the product of unilateral mistake on the part of the trustee. Hoff a v. Fitzsimmons, 673 F.2d 1345, 1354 (D.C.Cir.1982); In re Nirdlinger’s Estate, 331 Pa. 135, 200 A. 656, 659 (1938); Foscue v. Lyon, 55 Ala. 440, 457 (1876); Restatement of Trusts, § 254 (1959); III Scott on Trusts, § 254 (3d Ed. 1967). However, recovery is precluded if the beneficiary, in reliance on the correctness of the amounts of benefits, changes his position so that it would be inequitable to compel him to make restitution. Thorn v. United States Steel and Carnegie Pension Fund, CV-P-1829-S, slip op. at 3 n. 6 (M.D.Ala.1983), citing Restatement (Second) of Trusts § 254, comment e.
Because we cannot determine, from the record before us, whether or not each appellant detrimentally relied on the Pension Fund’s past failure to offset Special Fund benefits against his pension, I join the majority in remanding the case to the district court for specific findings on this issue. If the district court finds that a particular appellant did change his position in reliance on the correctness of his pension benefits, the Pension Fund should not be allowed to recoup overpayments from that appellant.

. Although the Plan's offset provisions are not limited to workers’ compensation awards, those are the only offsets at issue here.

. An “Employing Company” is defined in Rule 1.1 as USS, its satellites and subsidiaries.

. The Pension Fund apparently did not discover that the Kentucky Special Fund was financed by way of special employer taxes until 1986 when Kuchta spoke with the Administrator of the Special Fund.