Court Opinion

ID: 4252569
Source: CourtListenerOpinion
Date Created: 2018-03-07 21:00:39.293551+00
Date Added: 2024-06-11T13:26:57.554490
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            MAR 07 2018
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

HOWARD LYLE ABRAMS,                              No.   16-55858

              Plaintiff-Appellant,               D.C. No.
                                                 2:15-cv-00056-BRO-AS
 v.

LIFE INSURANCE COMPANY OF                        MEMORANDUM*
NORTH AMERICA; UBS FINANCIAL
SERVICES INC. LONG TERM
DISABILITY PLAN; DOES, 1 through
10, inclusive,

              Defendants-Appellees.

                   Appeal from the United States District Court
                       for the Central District of California
                 Beverly Reid O’Connell, District Judge, Presiding

                          Submitted February 12, 2018**
                              Pasadena, California

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: BERZON and BYBEE, Circuit Judges, and WOODCOCK,*** District
Judge.

      Howard Abrams sued Life Insurance Company of North America (LINA)

and UBS Financial Services Inc. Long Term Disability Plan (the Plan),

respectively the claims administrator and plan sponsor of a long-term disability

(LTD) plan in which Abrams was enrolled, for violations of the Employee

Retirement Income Security Act of 1974 (ERISA). Abrams alleged that the Plan

breached the terms of the LTD plan by offsetting his monthly benefit by 50% of

his monthly wages pursuant to the “Work Incentive Benefit” (the Benefit), a term

in the summary plan description (SPD) and LINA Policy. According to Abrams,

he is entitled to the maximum monthly benefit for the life of the insurance policy

without any offsets.

      After permitting Abrams several opportunities to amend his pleadings, the

district court dismissed in its entirety his Third Amended Complaint without leave

to amend. We affirm.

      1. The Work Incentive Benefit contained in the summary plan description

does not violate the disclosure requirements of ERISA and its implementing

      ***
              The Honorable John A. Woodcock, Jr., United States District Judge
for the District of Maine, sitting by designation.
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regulations. See, e.g., Spinedex Physical Therapy USA Inc. v. United Healthcare of

Arizona, Inc. (“Spinedex”), 770 F.3d 1282, 1295–96 (9th Cir. 2014).

      ERISA mandates that an SPD “explain the ‘circumstances which may result

in disqualification, ineligibility, or denial or loss of benefits’ in a manner

‘calculated to be understood by the average plan participant,’ and that information

must be ‘sufficiently accurate and comprehensive to reasonably apprise’ plan

participants of their rights and obligations under the plan.” Scharff v. Raytheon

Co. Short Term Disability Plan, 581 F.3d 899, 904 (9th Cir. 2009) (quoting 29

U.S.C. § 1022(a)–(b)). A Department of Labor regulation further requires that

exceptions to coverage and provisions restricting or limiting benefits “not be

minimized, rendered obscure, or otherwise made to appear unimportant.” 29

C.F.R. § 2520.102-2(b); see Spinedex, 770 F.3d at 1295.

      The Plan’s SPD satisfies these requirements with regard to the Work

Incentive Benefit. The SPD clearly explains how Abrams’s monthly benefit would

be impacted by money he earned while receiving disability benefits:

      If you return to work while disabled, your monthly benefit will not be
      offset for employment earnings during the work incentive benefit
      period. . . . Work Incentive benefits for CIGNA . . . can continue for
      24 months and apply only once to each period of disability. . . . After
      24 months of disability, CIGNA will reduce your monthly benefit by
      50% of your current earnings.

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The “circumstances . . . result[ing] in . . . [a] loss of benefits” are apparent from the

language of the Benefit: after 24 months, the monthly benefit will be reduced by

50% of the beneficiary’s monthly income. Such language would “reasonably

apprise” an “average plan participant” of her rights and obligations under the Plan

and the circumstances under which her monthly benefit would be offset. 29 U.S.C.

§ 1022(a); Scharff, 581 F.3d at 904.

        That conclusion is not undermined by the SPD’s statement that “[t]he total

of your group and individual policy coverage . . . will never be less than 60% of

your LTD Benefits Base Salary.” While Abrams’s policy coverage would never be

less than $300,000—60% of the policy’s maximum covered salary—the SPD does

not state that his monthly benefit would never fall below the policy maximum. To

the contrary, the SPD outlines a litany of circumstances under which a plan

participant’s benefits would be reduced, limited, or offset.

      Nor does the SPD “minimize[], render[] obscure,” or otherwise make to

seem unimportant the Work Incentive Benefit offset. 29 C.F.R. § 2520.102-2(b).

The Benefit and its offset are described in the same style, typeface, and type size as

the rest of the SPD and are located “in close conjunction with” the description of

the plan’s benefits. Id.; compare Arnold v. Arrow Transp. Co. of Del., 926 F.2d
782, 786 (9th Cir. 1991) (concluding that limited liability provision “within a few

                                            4
pages [of the benefits section] in a short document” satisfied ERISA), with

Spinedex, 770 F.3d at 1295 (provision limiting benefits inadequate where the

provision is separated from the benefits section by fifteen unrelated sections

covering more than thirty pages of text). Abrams’s remaining arguments—that the

Benefit is not given special emphasis or mentioned more than once in the

SPD—are unavailing because they have no grounding in ERISA’s requirements.

The Work Incentive Benefit does not violate ERISA and is valid and enforceable.

      2. For largely the same reasons, the Work Incentive Benefit, as described in

the LINA policy, does not violate the “reasonable expectations doctrine.”1 The

common-law doctrine of reasonable expectations requires that restrictive

provisions in insurance contracts be “clear, plain, and conspicuous.” See Saltarelli

v. Bob Baker Grp. Med. Tr., 35 F.3d 382, 386–87 (9th Cir. 1994). That

requirement supplements ERISA’s express disclosure requirements. Scharff, 581
F.3d at 904.

      Abrams concedes that the words of the Benefit are clear, and—as we

concluded above—the Benefit plainly describes how monthly benefits are offset by

      1
        Abrams conceded in his operative complaint that he was not entitled to
benefits “under the literal terms of the LINA policy,” as opposed to the SPD,
raising serious questions about whether he may challenge the adequacy of the
policy. Because we conclude the policy does not violate the reasonable
expectations doctrine in any event, we do not address the waiver issue.
                                          5
income after 24 months of disability. The Benefit and its limitations are also

sufficiently conspicuous in the policy: it is described in two different places,

including in the “Schedule of Benefits” on pages 3 and 4 of the policy, which a

beneficiary must read to understand how his benefits are calculated. Contrast

Saltarelli, 35 F.3d at 385 (exclusion “bur[ied] . . . amidst definitions, rather than

forthrightly stat[ed] . . . in the operative clauses of the plan description,” was not

conspicuous). Because the Benefit was clear, plain, and conspicuous, it does not

run afoul of the reasonable expectations doctrine, and is not thereby unenforceable.

See id. at 387.

      3. Abrams’s remaining claims are derivative of his breach of plan claim.

Because Abrams did not adequately allege his entitlement to additional benefits

under the Plan or any violation of ERISA, his claims for declaratory relief under 29

U.S.C. § 1132(a)(1)(B), and for injunctive and equitable relief under § 1132(a)(3),

were properly dismissed. See Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945,

954 (9th Cir. 2014).

      The judgment of the district court is AFFIRMED.

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