Opinion
No. 03 Civ. 9656 (SAS).
July 26, 2004
Scott M. Riemer, Esq., New York, NY, For Plaintiff.
Allan M. Marcus, Esq., Steve B. Getzoff, Esq., LESTER, SCHWAB, KATZ DWYER, L.L.P., New York, NY, For Defendant.
OPINION AND ORDER
I. INTRODUCTION
Mark Winkler brings this action against Metropolitan Life Insurance Company ("MetLife") pursuant to section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), alleging that MetLife's determination that Winkler was not "totally disabled" for the purposes of The Jack Morton Company Employee Welfare Plan (the "Plan"), and its consequent denial of long-term disability benefits, were contrary to the terms of the Plan. MetLife now moves for its determination to be reviewed under an "arbitrary and capricious" standard. For the following reasons, MetLife's motion is granted.
II. BACKGROUND
Winkler was employed as Senior Creative Director at The Jack Morton Company. After his last day of work on October 10, 2001, Winkler claimed long-term disability benefits under the Plan. MetLife determined that Winkler was not "totally disabled" for the purposes of the Plan, and denied him benefits. Winkler appealed MetLife's denial, and MetLife upheld its denial on appeal. Winkler has exhausted his administrative remedies under the Plan.
See Complaint ("Compl.") ¶ 8.
See id. ¶ 10; 9/10/03 Letter from Ferne R. Conroy, MetLife Procedure Analyst, to Debra J. Wolfe, Winkler's counsel, regarding MetLife's denial of Winkler's appeal ("Appeal Denial Letter"), Ex. A to Reply Memorandum of Law Supporting the Plan's Grant of Discretionary Authority to MetLife.
See Compl. ¶ 11; Appeal Denial Letter.
See Compl. ¶¶ 12-13; Appeal Denial Letter.
See Compl. ¶ 14; Appeal Denial Letter.
The Plan's Summary Plan Description ("SPD") states that claims for long term disability benefits will be paid if written proof of the claim is submitted on time and is satisfactory to MetLife. It also states that if MetLife initially denies a claim, a Plan participant may request a review of the denial by MetLife, in which case MetLife re-evaluates all the information relevant to the claim, and informs the participant of the result.
See SPD, Ex. B to Memorandum of Law Supporting the Plan's Grant of Discretionary Authority to MetLife at 19.
See SPD at 25.
The SPD designates The Jack Morton Company as the Plan administrator. The SPD also contains the following language, in a section titled "Discretionary Authority of Plan Administrator and Other Plan Fiduciaries":
See id. at 24.
In carrying out their respective responsibilities under the Plan, the Plan administrator and other Plan fiduciaries shall have discretionary authority to interpret the terms of the Plan and to determine eligibility for and entitlement to Plan benefits in accordance with the terms of the Plan. Any interpretation or determination made pursuant to such discretionary authority shall be given full force and effect, unless it can be shown that the interpretation or determination was arbitrary and capricious.
Id. at 26.
III. DISCUSSION
"Consistent with established principles of trust law, . . . a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." "Where the plan reserves such discretionary authority, denials are subject to the more deferential arbitrary and capricious standard, and may be overturned only if the decision is without reason, unsupported by substantial evidence or erroneous as a matter of law." The parties disagree as to whether discretionary authority is reserved to MetLife under the terms of the Plan, and therefore disagree as to whether a de novo or an arbitrary and capricious standard of review should govern.
Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1988).
Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999) (quotation marks and citation omitted).
Winkler notes that the section of the SPD concerning discretionary authority does not mention MetLife by name, and contends that because MetLife is not explicitly labeled a "fiduciary" in the SPD, it is not clear whether MetLife falls under the meaning of the words "other Plan fiduciaries." Winkler correctly observes that ambiguities in an ERISA plan document are construed to the disadvantage of the party who drafted it — in this case MetLife — and argues that "if MetLife had wanted to be a fiduciary and have discretionary authority, it simply could have named itself as a named fiduciary in the SPD." Winkler thus concludes that the SPD's reservation of discretionary authority should be construed not to apply to MetLife, and that a de novo standard of review is therefore required.
See Winkler Mem. at 5-10.
See id. at 2; Kinstler, 181 F.3d at 252.
Winkler Mem. at 9.
See Winkler Mem. at 10. Winkler also relies on district court cases dealing with delegations of discretionary authority to argue that only parties that are "named fiduciaries" under section 402(a)(2) of ERISA, 29 U.S.C. § 1102(a)(2), can be given discretionary authority in a plan document. See Winkler Mem. at 3. However, this court recently held that an insurer can be given discretionary authority regardless of whether it is a "named fiduciary" under section 402(a)(2). See Scannell v. Metropolitan Life Ins. Co., No. 03 Civ. 990 (SAS), 2003 WL 22722954 at *4 (S.D.N.Y. Nov. 18, 2003) (holding that by virtue of language in a summary plan description reserving to the insurer the authority to "make the final decision on all claims," the insurer had discretionary authority and its decisions would be reviewed under an arbitrary and capricious standard).
Notwithstanding Winkler's allegations of ambiguity, however, there is little room for doubt that the SPD's reservation of discretionary authority applies to MetLife. The Eighth Circuit recently considered a reservation of discretionary authority couched in language virtually identical to the language in MetLife's SPD. Like Winkler, the plaintiff in that case argued that such language was not sufficiently clear as to who had discretion. However, the court reasoned as follows:
See Butts v. Continental Cas. Co., 357 F.3d 835, 838 (8th Cir. 2004) (discussing the following plan language: "[t]he Administrator and other Plan fiduciaries have discretionary authority to interpret the terms of the Plan and to determine the eligibility for and entitlement to benefits in accordance with the Plan") (alteration in original).
See id.
The plan is entitled to the deferential standard of review as specified in [ Firestone Tire Rubber Co. v.] Bruch if the plan gives its administrators discretion to interpret and implement it. The plan need not spell out in intricate detail who has the discretion, other than to specify that those charged with implementing it will have such discretion. . . . The purposes of [the insurer]'s plan language can only be to give deference to eligibility determinations and to give those in charge of the plan the power to construe uncertain terms. Thus, the plan contains a sufficiently clear delegation of discretion, and we therefore apply the abuse of discretion standard of review.
Id.
Accordingly, the court held that both the plaintiff's employer and the insurer who reviewed the plaintiff's claim had discretionary authority under the terms of the Plan.
The same conclusion is appropriate in this case. The SPD invests MetLife with authority to evaluate claims and to review participants' appeals. MetLife is thus charged with an important discretionary role in implementing the Plan, and is a fiduciary for ERISA purposes. The SPD's reservation of discretionary authority is worded broadly enough that employees are on notice that all those charged with implementing the Plan, including MetLife, possess discretionary authority to decide questions of eligibility or entitlement and to construe the terms of the Plan.
See SPD at 18-19, 25.
"[A] person is a fiduciary with respect to a plan to the extent . . . he has any discretionary authority or discretionary responsibility in the administration of such plan." ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A). It should be noted that, notwithstanding Winkler's argument to the contrary, see Plaintiff's Memorandum of Law in Opposition to MetLife's Motion for Review Under the Arbitrary and Capricious Standard of Review ("Winkler Mem.") at 7, MetLife effectively has final authority to determine claims, because the SPD provides no procedure by which MetLife's decision with respect to a participant's appeal could be reviewed by any other party. Numerous courts have held that insurance companies that have final authority to review claims are fiduciaries under section 3(21)(A). See, e.g., Vaughn v. Metropolitan Life Ins. Co., 87 F. Supp.2d 421, 426 (E.D. Pa. 2000); Hansen v. North Trident Regional Hosp., Inc., 60 F. Supp.2d 523, 527 (D.S.C. 1999); Sixty-Five Sec. Plan v. Blue Cross and Blue Shield of Greater New York, 583 F. Supp. 380, 386 (S.D.N.Y. 1984) (holding that authority "as a practical matter" to make final claims determinations made the insurer a fiduciary); see generally James Lockhart, Annotation, When Is Insurer Fiduciary [sic] Under § 3(21)(A)(I) or (III) of ERISA ( 29 U.S.C. § 1002(21)(A)(I) or (III)), 181 A.L.R. Fed. 269, §§ 15, 20 (2003-2004) (summarizing cases that hold insurers to be, or not to be, ERISA fiduciaries on the basis of the extent of their authority to determine claims).
In support of his argument to the contrary, Winkler cites to the following language from the Second Circuit decision in Kinstler v. First Reliance Standard Life Ins. Co.:
Since clear language can be readily drafted and included in policies, even in the context of collectively bargained benefit plans when the parties really intend to subject claim denials to judicial review under a deferential standard, courts should require clear language and decline to search in semantic swamps for arguable grants of discretion.
Kinstler, 181 F.3d at 252.
Relying on this passage, Winkler argues that in order to reserve discretionary authority to MetLife, the SPD would have to do so expressly. However, the analogy with Kinstler fails because the language at issue in this case, unlike that in Kinstler, does not invite conflicting interpretations. The Kinstler court was concerned not with ambiguity concerning to whom discretionary authority was reserved, but with ambiguity concerning whether the Plan contained any reservation of discretionary authority at all. The plan document in Kinstler provided that benefits would be paid if proof of a claim was "satisfactory to" the insurer. The insurer in that case argued that this was sufficient to reserve discretionary authority and to assure an arbitrary and capricious standard of review. However, the Second Circuit disagreed, reasoning that "[e]very plan . . . requires submissions of proof that will `satisfy' the administrator. No plan provides benefits when the administrator thinks that benefits should not be paid!" The court therefore concluded that the word "satisfactory" was insufficient to communicate the idea that the decision-maker had final discretionary authority.
See id. at 251-52.
See id. at 252.
Id.
The SPD in this case, unlike the document in Kinstler, unambiguously reserves discretionary authority to all Plan fiduciaries. Moreover, the language in which it does so is so broad that there can be no doubt of the drafters' intention to reserve authority to all parties to whom the SPD gives a role in the administration of the Plan — including MetLife. It is true that if the SPD had explicitly named MetLife a "fiduciary," or if the section on discretionary authority had explicitly mentioned MetLife, the reservation of discretionary authority would have been more clear. However, it is almost impossible to draft a document that prevents a claim from someone, somewhere, of an ambiguity. That possibility does not mean that a document is sufficiently ambiguous to preclude a confident understanding of its meaning. Given the specific language and general structure of the SPD, to adopt Winkler's proposed interpretation would indeed be to undertake an expedition into a "semantic swamp."
V. CONCLUSION
For the reasons set forth above, MetLife's motion for review under an arbitrary and capricious standard is granted. A Conference is scheduled for July 30, 2004 at 10 a.m., in Courtroom 15C.
SO ORDERED: