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holding that an express grant of discretionary authority to one entity in the SPD does not conflict with a separate allocation of discretionary authority to another entity in the policy
Summary of this case from Collinsworth v. AIG Life InsuranceOpinion
No. 3:03-CV-0457-M.
June 2, 2004
MEMORANDUM OPINION AND ORDER
On February 27, 2004, the Court referred Plaintiff's Motion to Compel Discovery Responses, filed on February 25, 2004, to United States Magistrate Judge Irma C. Ramirez for hearing, if necessary, and determination, pursuant to 28 U.S.C. § 636(b) and Rule 2(c)(3) of Miscellaneous Order No. 6 of this District. The United States Magistrate Judge denied Plaintiff's Motion on the record at a hearing on March 17, 2004. On March 24, 2004, Plaintiff filed a Motion for Reconsideration and in the Alternative for Clarification of Order. The United States Magistrate Judge reaffirmed her prior ruling in a written order on April 29, 2004. On May 7, 2004, Plaintiff filed Objections to the United States Magistrate Judge's Rulings.
The Court referred Plaintiff's Motion to Compel Discovery Responses to the United States Magistrate Judge for determination and therefore will modify or set aside the United States Magistrate Judge's ruling only if it is found to be "clearly erroneous or contrary to law." 29 U.S.C. § 636(b)(1)(A); FED. R. CIV. P. 72(a). The Court overrules Plaintiff's Objections and affirms the United States Magistrate Judge's ruling denying Plaintiff's Motion to Compel Discovery Responses. In addition to the reasoning contained in the United States Magistrate Judge's April 29, 2004 Order, the Court bases its ruling on the following reasoning.
To the extent the review of Defendant's denial of Plaintiff's claim for long-term disability benefits constitutes a review of Defendant's factual determinations, the Court will review Defendant's determinations for an abuse of discretion, considering only the contents of the administrative record. A plan administrator's factual determinations are reviewed for an abuse of discretion, based on the contents of the administrative record, regardless of whether the policy grants discretionary authority to the administrator. Schadler v. Anthem Life Ins. Co., 147 F.3d 388, 395 (5th Cir. 1998) (holding that an administrator's findings of fact should always be reviewed for an abuse of discretion, based on the record before the administrator). Therefore, to the extent Plaintiff contests Defendant's factual determinations, discovery outside the administrative record is improper.
To the extent the review of Defendant's denial of Plaintiff's claim for long-term disability benefits constitutes a review of Defendant's interpretation of the policy, the Court will review Defendant's interpretation for an abuse of discretion because the policy affords Defendant discretion to interpret the policy. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989) (holding that a plan administrator's policy interpretation should be reviewed de novo unless the policy vests the administrator with discretionary authority). The policy provides: "We have full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions of the Group Insurance Policy." Plaintiff argues that the Summary Plan Description ("SPD") conflicts with this policy language because (1) the SPD does not afford discretionary authority to Defendant, and (2) the SPD affords discretionary authority to the Tyco Benefits Review Committee. Plaintiff further argues that, as a result of this alleged conflict between the SPD and the policy, the policy's grant of discretionary authority to Defendant is ineffective. See Hansen v. Continental Ins. Co., 940 F.2d 971, 982 (5th Cir. 1991) ("[T]his court holds that the summary plan description is binding, and that if there is a conflict between the summary plan description and the terms of the policy, the summary plan description shall govern."). Because the Court finds that the SPD and the policy are not in conflict about the issue of Defendant's discretionary authority, the Court rejects Plaintiff's argument.
The policy defines "we" as "Hartford Life and Accident Insurance Company."
First, the SPD's silence about Defendant's discretionary authority does not create a conflict between the SPD and the policy. Martin v. Blue Cross Blue Shield of Va., 115 F.3d 1201, 1205 (4th Cir. 1997) (finding no conflict between the absence of discretionary language in the SPD and its presence in the policy); Atwood v. Newmont Gold Co., 45 F.3d 1317, 1321 (9th Cir. 1995) (same); Winter v. Hartford Life Accident Ins. Co., 309 F. Supp.2d 409, 414 (E.D.N.Y. 2004) (same); Caraguti v. The Long Term Disability Plan for Salaries Employees, No. 01-C-5863, 2002 WL 441479, at *3 (N.D. Ill. Mar. 21, 2002) (same); Utah Alcoholism Found. v. Battelle Pacific Northwest Labs., 204 F. Supp.2d 1295, 1301 (D. Utah 2002) (same). The Court recognizes that in some instances, silence in the SPD can create a conflict with the policy so as to invoke the Hansen rule. For example, in Rhorer v. Raytheon Eng'rs Constructors, Inc., 181 F.3d 634 (5th Cir. 1999), the policy contained an active work requirement for optional life insurance, and the SPD, although explicitly containing an active work requirement in individual sections detailing particular benefits, did not contain an active work requirement in the individual section detailing optional life insurance. The Fifth Circuit rejected the argument that Hansen is only controlling in cases where there is a positive conflict between the SPD and the policy and held that, because of the ambiguity in the SPD, it was legally incorrect to apply the active work requirement to optional life insurance. The current case is distinguished from Rhorer because, in Rhorer, the ambiguity in the SPD related to the participant's right to benefits under the policy. The SPD must "reasonably apprise such participants and beneficiaries of their rights and obligations under the plan." See 29 U.S.C. § 1022(a). Here, the alleged ambiguity relates to Defendant's discretionary authority under the policy, which does not affect a participant's rights and obligations under the plan. Further, the grant of discretionary authority is not part of the information that must be included in the SPD under 29 U.S.C. § 1022(b). Therefore, unlike Rhorer, the SPD's failure to mention the policy's grant of discretionary authority to Defendant does not create an ambiguity to which the Hansen rule applies.
Second, the SPD's express grant of discretionary authority to the Tyco Benefits Review Committee does not conflict with the policy's grant of discretionary authority to Defendant. The SPD provides: "The Tyco Benefits Review Committee shall have the discretionary authority to determine eligibility for plan benefits and to construe the terms of the plan, including the making of factual determinations." The SPD's language does not preclude Defendant from similarly exercising discretionary authority, and therefore the SPD does not conflict with the policy.
The Court is not addressing whether the Tyco Benefits Review Committee has discretionary authority to interpret the policy when the policy itself is silent but the SPD affords such discretion. Compare Willis v. ITT Educ. Servs., Inc., 254 F. Supp.2d 926, 935 (S.D. Ohio 2003) (holding that the grant of discretion was effective where the grant was contained in the SPD but not in the policy itself) with Coleman v. Aegon Ins. Group, 71 F. Supp.2d 714, 719 (W.D. Ky. 1999) (holding that the grant of discretion was ineffective where the grant was contained in the SPD but not in the policy itself).
Because the SPD does not conflict with the policy's grant of discretionary authority, the Court will review Defendant's interpretation of the policy for an abuse of discretion. Plaintiff concedes that, if the Court reviews Defendant's interpretation of the policy for an abuse of discretion, Plaintiff is not entitled to discovery beyond the administrative record. (Pl.'s Mot. for Reconsideration at 7 ("[I]f we are limited here to an abuse of discretion review standard, then judicial review of Plaintiff's claim is limited to a review of the administrative record with regard to policy interpretation issues.")). Therefore, the Court does not address whether it would be appropriate to allow Plaintiff discovery about, for example, whether Defendant's interpretations of plan provisions have been consistent. See Schadler, 147 F.3d at 394 n. 5.
Because the Court finds that the SPD does not conflict with the policy, the Court does not reach the issue of whether Plaintiff must demonstrate reliance on the SPD in order for the Hansen rule to apply. See Hansen, 940 F.2d at 983 ("[T]he Court leaves for another day the question of whether a plaintiff in an action such as this must demonstrate reliance on the summary plan description."); Jones v. U.S. Fid. Guar. Co., Civ. A. No. 90-5005, 1992 WL 202327, at *6 (E.D. La. Aug. 7, 1992) (Clement, J.) ("This Court is persuaded by the reasoning of those courts that require a showing of reliance or prejudice. . . . Because the purpose of the SPD is to inform the participant, the participant may recover based on the SPD only where he is actually misinformed by the contents thereof.").