Watersv.Pension Benefit Guaranty Corp.

United States District Court, E.D. Tennessee, at ChattanoogaSep 16, 2002
No. 1:01-CV-270 (E.D. Tenn. Sep. 16, 2002)

No. 1:01-CV-270

September 16, 2002


CURTIS L. COLLIER, United States District Judge

Plaintiff Willard Waters, a former employee of the Tennessee Chemical Company ("TCC"), seeks disability pension benefits denied him by Defendant Pension Benefit Guaranty Corporation ("PBGC"), which assumed administration of a TCC-sponsored pension plan in the wake of TCC's bankruptcy. Because Defendant administers the pension plan pursuant to Title IV of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1301-1461, this Court has jurisdiction under 28 U.S.C. § 1331. Before the Court is Defendant's motion for summary judgment and supporting memorandum (Court File Nos. 11-12). Plaintiff has filed a short, untimely response, in which he disputes neither the law nor the facts recited by Defendant (Court File No. 13). For the following reasons, the Court will GRANT Defendant's motion and DISMISS Plaintiff's lawsuit.


The Administrative Procedure Act ("APA"), 5 U.S.C. § 701-706, controls decisions of the PBGC. See PBGC v. LTV Corp., 496 U.S. 633, 655-56 (1990). The standard of review for PBGC actions is whether the decision was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). This is essentially the same standard of review applied to ERISA benefits denial actions involving discretionary decisions of plan administrators. See Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). As in ERISA actions, review under the APA is limited to the administrative record in existence at the time of the decision under review. Camp v. Pitts, 411 U.S. 138, 142 (1973); see also Florida Power Light Co. v. Lorion, 470 U.S. 729, 744 (1985).

By further analogy to ERISA, the proper procedure for adjudicating a denial of benefits by the PBGC is in the nature of a review of the administrator's decision at issue, not a bench trial or summary judgment action. See Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 619 (6th Cir. 1998) (Gilman, J., concurring and delivering the opinion of the panel as to the applicability of summary judgment proceedings to ERISA cases). A bench trial, during which a court might evaluate evidence not before the plan administrator, would thwart Congress's goal of using ERISA "to provide a method for workers and beneficiaries to resolve disputes over benefits inexpensively and expeditiously" through an administrative procedure. See id. at 618 (quoting Perry v. Simplicity Eng'g, 900 F.2d 963, 967 (6th Cir. 1990)). Likewise, a summary judgment procedure is inapposite because the goal of its analysis would be "to screen out cases not needing a full factual hearing." Id. at 619. Rather, the court should review a benefits denial decision based "solely on the administrative record" and "render findings of fact and conclusions of law accordingly." Id. "The district court may consider evidence outside of the administrative record only if that evidence is offered in support of a procedural challenge to the administrator's decision, such as an alleged lack of due process afforded by the administrator or alleged bias on its part." Id.


Plaintiff began working for TCC on June 27, 1972. In 1982, TCC established the Retirement Plan for Hourly Employees of the Tennessee Chemical Company ("Plan") (Court File No. 15, Administrative Record, at 91). The Plan provides disability retirement benefits for qualifying participants (Id. at 18-19). Plaintiff injured his back at work sometime in Summer 1988. Although he returned to work, he was laid off sometime near the end of 1988. TCC filed for bankruptcy on April 10, 1989. In December 1989, TCC terminated Plaintiff's employment (Id. at 150).

On September 8, 1989, Plaintiff applied for disability pension benefits under the Plan, basing his claim on his back injury (Id. at 130-31). On October 4, 1989, Plaintiff's claim was denied for lack of evidence of disability as required by the Plan (Id. at 137-39). Plaintiff was advised he could reapply for benefits if he qualified for social security disability. Plaintiff's timely request for reconsideration was also denied (Id. at 148).

Under the terms of the Plan, a disability determination by the Social Security Administration constitutes a finding of disability for the purposes of the Plan (Court File No. 15, at 18-19).

On December 28, 1989, TCC announced its intent to terminate the Plan in a distress termination pursuant to 29 U.S.C. § 1341(c) (Id. at 92). On October 18, 1991, by agreement between TCC and the PBGC, Defendant was appointed statutory trustee of the Plan (Id. at 93). The agreement set March 20, 1990 as the termination date of the Plan (Id.).

Defendant filed a new claim for disability pension benefits with Defendant on April 22, 1994 (Id. at 157). On July 28, 1997, Defendant issued an initial determination denying Plaintiff's new claim but stating he was entitled to normal pension payments of $329.31 per month beginning in 2016, the date on which he had been expected to retire (Id. at 172-73). Defendant informed Plaintiff of his right to appeal within forty-five days (Id. at 173). The administrative record contains no record of an appeal.

Plaintiff initially applied for social security disability in Summer 1989 (Id. at 144). The history of Plaintiff's application is unclear from the record. On April 23, 1999, Plaintiff was found to be mentally but not physically disabled under the Social Security Act ("SSA") as of December 13, 1993 (Id. at 190-92).

After Plaintiff was awarded social security disability benefits, he asked Defendant to review his eligibility for disability pension benefits under the Plan (Id. at 201-02). In a letter to Plaintiff dated February 25, 2000, Defendant explained it would not alter its July 28, 1997 benefits decision because Plaintiff was not disabled until December 13, 1993 — three years after the Plan termination date (Id. at 206-07). Defendant's decision rests on a PBGC regulation that provides:

A participant . . . is entitled to a benefit if under the provisions of a plan: . . . (3) . . . before the termination date of the plan the participant had satisfied the conditions of the plan necessary to establish the right to receive the benefit prior to such date other than the application for the benefit, satisfaction of a waiting period described in the plan, or retirement . . . .
29 C.F.R. § 4022.4 (2001) (emphasis added). On June 1, 2001, following correspondence from Plaintiff's counsel, Defendant issued another "formal determination" denying Plaintiff the benefits he sought (Court File No. 15, at 211). Defendant again advised Plaintiff of his appeal rights. The administrative record contains no record of an appeal.

On August 2, 2001, Plaintiff filed this lawsuit in the Circuit Court for Polk County, Tennessee (Court File No. 1, Exh. 1, Complaint). On September 6, 2001, Defendant removed the case to this Court (Court File No. 1). In his complaint, Plaintiff avers "he is entitled to disability benefits dating back to December 1993, the date he was originally found to be disabled" (Id., Exh. 1, ¶ 9).


As an initial matter, the Court notes Plaintiff's response is untimely. According to the Scheduling Order, Plaintiff's response was "due on or before April 29, 2002 (Court File No. 9 ¶ 6(a)). Plaintiff filed his one and a half page response on May 2, 2002 (Court File No. 13). Under both the local rules of this Court and the Federal Rules of Civil Procedure, Plaintiff's tardiness provides grounds for granting the relief Defendant seeks. See Fed.R.Civ.P. 41(b); E.D.TN. LR 7.1-7.2.

Furthermore, dismissal is appropriate due to Plaintiff's failure to exhaust his administrative remedies. "[A] person aggrieved by an initial determination of the PBGC . . . has not exhausted his or her administrative remedies until he or she has filed a request for reconsideration . . . or an appeal . . . and a decision granting or denying the relief requested has been issued." 29 C.F.R. § 4003.7 (2001). Such an appeal must be filed within forty-five days after the determination challenged. Id. § 4003.52. Whether a failure to exhaust should be dispositive lies within the reviewing court's discretion. See Kobleur v. Group Hosp. Group Servs., Inc., 954 F.2d 705, 711 (11th Cir. 1992) (distinguishing between exhaustion requirements created by statute and those created by agency regulation). In exercising this discretion, a court should consider whether requiring exhaustion would further policy goals and whether an exception to the exhaustion requirement exists. Id.

Exhaustion under the PBGC regulations is closely akin to exhaustion under ERISA. In the context of an ERISA action, the failure to exhaust administrative remedies provides grounds for granting summary judgment. See Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 986 (6th Cir. 1991). This rule is grounded in ERISA's goal of the efficient and cost-effective resolution of disputes. See Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 618 (6th Cir. 1998) (discussing Congress's goal of using ERISA "to provide a method for workers and beneficiaries to resolve disputes over benefits inexpensively and expeditiously" through an administrative procedure). The Court finds the same rule should apply in the present context. Because the administrative record contains no evidence Plaintiff filed either a request for reconsideration or an appeal of Defendant's June 1, 2001 decision, and because Plaintiff has failed to argue exhaustion of his administrative remedies would have been futile, Plaintiff's lawsuit should be dismissed for failure to exhaust.

The Court reaches the same conclusion under a consideration of the merits. The plain language of the regulations governing the PBGC entitles Plaintiff to benefits for disability arising prior to the Plan termination date. Plaintiff has pointed to absolutely nothing in the administrative record showing he was disabled prior to the Plan termination date. Indeed, Plaintiff himself avers in his complaint he is entitled to disability benefits dating back only to December 1993 — three years after the Plan termination date. Accordingly, Plaintiff is not entitled to the benefits he seeks.

Plaintiff attempts to sidestep this failing by stating in his response he "may have been suffering from [the] same disabling mental conditions [identified in the social security determination] at the time of his initial claim in 1988" (Court File No. 13, at 2). This assertion does not, of course, come close to proving the denial decision was arbitrary or capricious based on the evidence in the administrative record.


For the foregoing reasons, the Court will GRANT Defendant's motion (Court File No. 11) and DISMISS Plaintiff's lawsuit.



In accordance with the accompanying memorandum, the Court GRANTS Defendant's motion for judgment and DISMISSES Plaintiff's lawsuit.