“In addition to the [three] factors, there are some ‘particularized standards’ that apply in evaluating whether the administrator’s interpretation of [the SPD], as opposed to the plan itself, is legally correct.”
How later courts described this case
- “In addition to the [three] factors, there are some ‘particularized standards’ that apply in evaluating whether the administrator’s interpretation of [the SPD], as opposed to the plan itself, is legally correct.”
Written by the judges who cited it.
The opinion
Case: 10-50640 Document: 00511463947 Page: 1 Date Filed: 05/02/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 2, 2011
No. 10-50640 Lyle W. Cayce
Clerk
PAUL D. HORN,
Plaintiff - Appellant
v.
OWENS-ILLINOIS EMPLOYEE BENEFITS COMMITTEE; OWENS-
ILLINOIS, INC. HOURLY EMPLOYEES WELFARE BENEFIT PLAN;
OWENS-ILLINOIS, INC. HOURLY RETIREMENT PLAN,
Defendants - Appellees
Appeal from the United States District Court
for the Western District of Texas
USDC No. 6:09-CV-208
Before JONES, Chief Judge, and KING and BARKSDALE, Circuit Judges.
PER CURIAM:*
Plaintiff–Appellant Paul Horn filed this action against
Defendants–Appellees, claiming that he was denied disability benefits and
retirement benefits to which he was entitled, in violation of the Employee
Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.
Defendants–Appellees moved for summary judgment on all of Horn’s claims,
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
Case: 10-50640 Document: 00511463947 Page: 2 Date Filed: 05/02/2011
No. 10-50640
arguing that Horn’s claim for disability benefits was barred because he had not
timely appealed his denial of benefits. Defendants–Appellees also argued that
Horn was not entitled to retirement benefits because qualifying for disability
benefits was a prerequisite for the retirement benefits he sought. The district
court agreed and granted summary judgment in Defendants–Appellees’ favor.
We AFFIRM the judgment of the district court.
I. FACTUAL & PROCEDURAL BACKGROUND
Paul Horn was an employee of Owens-Illinois, Inc. and received benefits
from his employment. The benefits at issue in this appeal are permanent and
total disability (“PTD”) benefits, administered under a Welfare Benefit Plan, and
disability retirement income (“DRI”) benefits, administered under a Retirement
Plan. The Welfare Benefit Plan and the Retirement Plan were described to
Owens-Illinois employees in a Summary Plan Description (the “Description”).
Horn sustained a serious, non-work related injury on or about August 17,
2004. Horn’s last day worked was August 16, 2004. Horn applied for PTD
benefits on February 17, 2005, and Social Security Disability benefits on
February 18, 2005. The claims administrator, Aetna Life Insurance Company
(“Aetna”), denied Horn’s application for PTD benefits on March 1, 2005. Horn
did not appeal this denial. On July 11, 2006, Horn was notified that his
employment at Owens-Illinois was terminated.
Horn was awarded Social Security Disability benefits on March 5, 2007,
and Horn contacted Owens-Illinois seeking “every benefit to which he [was]
entitled as a result of the determination by Social Security.” Owens-Illinois
denied his request as untimely. In 2008, Horn sent Owens-Illinois a request for
PTD and DRI benefits in light of his entitlement to Social Security Disability
benefits, but this request was rejected as untimely. Owens-Illinois also treated
this second request as an appeal from its November 2007 denial of Horn’s
request for PTD and DRI benefits. The Owens-Illinois Employee Benefits
2
Case: 10-50640 Document: 00511463947 Page: 3 Date Filed: 05/02/2011
No. 10-50640
Committee (the “Committee”), which is the plan administrator for the Welfare
Benefit Plan and the Retirement Plan, denied Horn’s claims, reasoning: (1)
Horn was not eligible for PTD benefits because he had not timely appealed the
2005 denial of those benefits; and (2) Horn was not eligible for DRI benefits
because his application for PTD benefits was not approved.
Horn filed a complaint against Owens-Illinois, the Committee, the Welfare
Benefit Plan, and the Retirement Plan (collectively “Defendants”), as well as
Aetna, in federal court under the Employee Retirement Income Security Act of
1974 (“ERISA”), 29 U.S.C. § 1101 et seq. Horn alleged that the Committee’s
interpretation of the Welfare Benefit Plan and the Retirement Plan was legally
incorrect and sought the benefits due to him under those plans, attorney’s fees,
and costs. See 29 U.S.C. § 1132(a)(1)(B), (g). Defendants filed a motion for
summary judgment, seeking dismissal of all of Horn’s claims. Horn filed a cross-
motion for summary judgment, seeking his PTD and DRI benefits. The district
court granted Defendants’ motion for summary judgment, and denied Horn’s
cross-motion. The district court concluded that Horn’s request for PTD benefits
was barred for failure to exhaust his administrative remedies. With respect to
his request for DRI benefits, the district court concluded that Horn was not
entitled to DRI benefits because DRI eligibility is conditioned on approval for
PTD benefits. The district court therefore held that the Committee’s
interpretation of the Description was legally correct and the denial of PTD and
DRI benefits was not an abuse of discretion. Horn timely appealed.1
1
Aetna is not a party to this appeal because the district court dismissed all claims
against Aetna pursuant to a stipulation of dismissal.
3
Case: 10-50640 Document: 00511463947 Page: 4 Date Filed: 05/02/2011
No. 10-50640
II. LEGAL STANDARDS
ERISA authorizes a civil action by a plan participant to “recover benefits
due to him under the terms of his plan.” 29 U.S.C. § 1132(a)(1)(B). We review
the district court’s grant of summary judgment in an ERISA action de novo.
Stone v. UNOCAL Termination Allowance Plan, 570 F.3d 252, 257 (5th Cir.
2009). When the plan administrator has the authority to interpret the plan, as
it does in this case, we review its decision denying benefits for an abuse of
discretion, using a two-step analysis. Id.
First, we determine whether the administrator’s determination was legally
correct, which is based on three factors: “(1) whether the administrator has
given the plan a uniform construction, (2) whether the interpretation is
consistent with a fair reading of the plan, and (3) any unanticipated costs
resulting from different interpretations of the plan.” Id. at 257–58 (citation and
internal quotation marks omitted). “The most important factor in this three-part
analysis is whether the administrator’s interpretation was consistent with a fair
reading of the plan.” Id. at 258.
In addition to the above factors, there are some “particularized standards”
that apply in evaluating whether the administrator’s interpretation of a
Summary Plan Description, as opposed to the plan itself, is legally correct. See
Rhorer v. Raytheon Eng’rs & Constructors, Inc., 181 F.3d 634, 640 n.7 (5th Cir.
1999). When there is a conflict between the terms of a plan and the Description
for that plan, the Description controls. Id. at 640. Ambiguities in the
Description are resolved in the employee’s favor, and the Description must be
interpreted as a whole. Id. at 640–41. Provisions of the Description “must be
read and interpreted from the perspective of a layperson.” Harris Methodist Fort
Worth v. Sales Support Servs. Inc. Emp. Health Care Plan, 426 F.3d 330, 338
(5th Cir. 2005) (citation omitted).
4
Case: 10-50640 Document: 00511463947 Page: 5 Date Filed: 05/02/2011
No. 10-50640
If the administrator’s determination was legally correct, there was no
abuse of discretion and our inquiry is at an end. See Stone, 570 F.3d at 257. If,
however, we conclude that the administrator’s interpretation was legally
incorrect, we proceed to determine whether the administrator’s decision was an
abuse of discretion. Id. “We reach a finding of abuse of discretion only where
the plan administrator acted arbitrarily or capriciously.” Holland v. Int’l Paper
Co. Ret. Plan, 576 F.3d 240, 246 (5th Cir. 2009) (citation and internal quotation
marks omitted).
III. ANALYSIS
A. Denial of PTD Benefits
The parties’ dispute over Horn’s entitlement to PTD benefits centers on
the language of the Description. The Description states that an employee is
entitled to PTD benefits if he: (1) becomes “permanently and totally disabled
before [he] reach[es] age 65”; (2) files “a claim within 12 months after [he] stop[s]
active work with” Owens-Illinois; and (3) is “unable to work for the rest of [his]
life at any gainful occupation for which [he is] fitted by [his] education, training,
or experience or for which [he] could reasonably become fitted.” Alternatively,
under the Description, an employee may qualify for PTD benefits if
on or after April 1, 1999, [he is] under age 65 and receive[s] an
award for Social Security Disability benefits. That award must be
submitted to the insurance company responsible for making the
PTD award decisions. Claim filing must meet the requirements
described in PTD Benefit Claims and Appeals [on the following
page].
The PTD Benefit Claims and Appeals provision in the Description states that
claims “for PTD benefits must be filed within 12 months from the last day
worked.” The Description also has a longer filing period, which states that an
employee may “apply for PTD within five years from [the] last day worked” if the
employee has a “disabling medical condition that may change dramatically” and
5
Case: 10-50640 Document: 00511463947 Page: 6 Date Filed: 05/02/2011
No. 10-50640
he “document[s] [his] medical condition with [Owens-Illinois] before the
expiration of one year from [his] last day worked.”
The Committee rejected Horn’s 2007 and 2008 claims for PTD benefits
because he failed to timely appeal the rejection of his 2005 claim for PTD
benefits. Horn concedes that he failed to appeal Aetna’s 2005 denial of his
request for PTD benefits, and he does not dispute the correctness of the
Committee’s conclusion that an appeal of the 2005 decision would be untimely.2
This court requires “[c]laimants seeking benefits from an ERISA plan
must first exhaust available administrative remedies under the plan before
bringing suit to recover benefits.” Bourgeois v. Pension Plan for Emps. of Santa
Fe Int’l Corps., 215 F.3d 475, 479 (5th Cir. 2000). Because Horn did not exhaust
the administrative appeals process by appealing the denial of his claim in 2005,
his ERISA claim seeking PTD benefits that were denied to him in 2005 is barred.
See Swanson v. Hearst Corp. Long Term Disability Plan, 586 F.3d 1016, 1018
(5th Cir. 2009) (per curiam).
Nevertheless, Horn argues that the Committee’s determination that his
2007 and 2008 claims for PTD benefits were untimely appeals, rather than new
claims, was legally incorrect. He avers that these requests for PTD benefits
should have been treated as new, timely claims for benefits under “alternate”
provisions of the Description that allow him to file a claim for PTD benefits after
receiving an award for Social Security Disability. We note that the Committee
did not explicitly address Horn’s arguments that his 2007 and 2008 claims for
PTD were separate claims for benefits authorized by the Description.
Regardless, this is not a basis for reversing the district court because Horn’s
2
Horn states that he did not appeal Aetna’s denial of his claim for PTD benefits on the
advice of Owens-Illinois’s personnel representative, who advised him to wait until the Social
Security Administration had ruled on his claim for disability benefits. However, Horn does
not argue that this reliance is a basis for excusing his failure to appeal, or is a basis for
overturning the Committee’s decision.
6
Case: 10-50640 Document: 00511463947 Page: 7 Date Filed: 05/02/2011
No. 10-50640
characterization is contrary to the plain language of the Description. The
Description clearly states that PTD claims must be filed “within 12 months from
the last day worked.” Horn did not make his first request for PTD benefits based
on the Social Security Administration’s determination that he was permanently
disabled until June 7, 2007, which is nearly three years after his last day of
work. Thus, even if Horn’s 2007 and 2008 PTD claims were new claims, rather
than untimely appeals, they could not have been considered because they were
untimely.
Horn disputes this reading of the Description on three grounds, none of
which is correct. First, he argues that this twelve-month filing period does not
apply to his 2007 award of Social Security Disability benefits because the
Description states that “[a]lternatively, you can qualify for PTD benefits
if . . . you are under age 65 and receive an award for Social Security Disability
benefits.” Although this language provides an alternate basis for qualifying for
PTD benefits, this does not excuse Horn from filing his claim within a twelve-
month timeframe. The Description explicitly states that claim filing based on
the award of Social Security Disability benefits must “meet the requirements
described in the PTD Benefit Claims and Appeals . . . .” The PTD Benefit Claims
and Appeals provision states that “[c]laims for PTD benefits must be filed within
12 months from the last day worked.”
Second, Horn argues that his 2007 and 2008 claims were timely because
the Description provides a five-year filing window if the employee has “a
disabling condition that may change dramatically.” The Social Security
Administration’s determination that he was permanently disabled does not
qualify Horn for this provision. There is no evidence that Horn’s injury changed
dramatically, or at all, after he filed his 2005 claim for PTD benefits. Although
Aetna and the Social Security Administration came to contrary conclusions
regarding Horn’s disability, this difference could not have been due to a change
7
Case: 10-50640 Document: 00511463947 Page: 8 Date Filed: 05/02/2011
No. 10-50640
in Horn’s condition because the Social Security Administration concluded Horn
was permanently disabled as of the date of his accident, and Horn filed his claim
for Social Security Disability one day after his request for PTD benefits.
Finally, Horn argues that his claim for PTD benefits is allowed under the
terms of a collective bargaining agreement (the “CBA”), which states that “if the
employee has applied for and is later approved for Social Security disability,
[Owens-Illinois] will qualify the employee for P.T.D.” Like the Description,
however, the CBA also states that an “employee applying for permanent and
total disability must apply for the P.T.D. benefit and Social Security disability
within twelve (12) months from the last day worked.” Horn’s second application
for PTD benefits was well outside the CBA’s twelve month window.
The Committee correctly concluded Horn’s appeal from the denial of his
2005 claim for PTD benefits was untimely, and is now barred. Horn’s arguments
that his 2007 and 2008 requests for PTD benefits should have been treated as
new claims is contrary to the clear language of the Description. Therefore, we
turn to Horn’s remaining claim for DRI benefits.
B. Denial of DRI Benefits
The district court properly concluded that the Committee’s denial of DRI
benefits was legally correct. Under the Retirement Plan and Description, an
employee must receive PTD benefits before he is eligible for DRI benefits.
1. DRI Provisions
The Retirement Plan states that
[i]n any case of Retirement from active employment with an
Employer on account of permanent and total disability, evidenced
by the award of benefits for permanent and total disability under
any group insurance policy provided and administered by an
Employer, if such benefits are provided by any such policy, or
evidenced by proof satisfactory to the Committee, if such benefits
are not provided by any such policy . . . the Committee shall direct
8
Case: 10-50640 Document: 00511463947 Page: 9 Date Filed: 05/02/2011
No. 10-50640
the Trustee to pay, or cause to be paid, to said Participant . . . a
monthly disability Retirement Benefit . . . .
The corresponding Description provision explains that an employee is eligible for
DRI benefits
provided [he has] 10 or more years of credited service with [Owens-
Illinois] . . . and become[s] permanently and totally disabled while
[he is] an active employee. [He] will be considered permanently and
totally disabled for purposes of this benefit if the insurance company
approves [his] claim for permanent and total disability under the
PTD provision of the group insurance program . . . .
The claims provision of the Description states: “If your claim for PTD . . . is
approved by the group insurance company, you may then request a final
disability retirement calculation and submit copies of birth certificates (yours
and your spouse’s) and a completed retirement application to the Retirement
Department.” Under the Description, DRI benefits “cannot become effective
until the Retirement Department . . . receives a signed retirement application.”
2. Horn’s DRI Claim
The parties’ dispute over the correctness of the Committee’s denial of
Horn’s claim for DRI benefits centers on whether the denial was a “fair reading”
of the Retirement Plan and Description, so we do not address the other two
factors, uniformity and unanticipated costs. See Stone, 570 F.3d at 258 n.4.
Horn argues that he has met the eligibility requirements for the Retirement
Plan as enunciated in the Description because he has more than ten years of
service with Owens-Illinois and became permanently and totally disabled while
he was an active employee, as evidenced by his receipt of Social Security
Disability benefits. If the Description’s DRI eligibility provision ended after the
first sentence quoted above, this reading would have considerable merit.
However, the Description’s only expressed definition of being “permanently and
totally disabled” for purposes of DRI eligibility is “if the insurance company
approves [the employee’s] claim for permanent and total disability under the
9
Case: 10-50640 Document: 00511463947 Page: 10 Date Filed: 05/02/2011
No. 10-50640
PTD provision . . . .” Any ambiguity lurking in this statement is expunged when
it is read together with the Description’s explanation of the claims process,
which explicitly requires the employee to receive PTD benefits before submitting
an application for DRI benefits. Cf. Rhorer, 181 F.3d at 641 (“[I]t is well settled
that the summary plan description must be read as a whole.” (citation omitted)).
Therefore, Horn had to do more than be deemed permanently and totally
disabled by the Social Security Administration to qualify as “permanently and
totally disabled” for DRI benefits. According to the Description, Horn had to
convert the Social Security Administration’s determination into an award of PTD
benefits, which he cannot do.
Horn contests this reading of the Description, citing this court’s
unpublished decision in Parker v. Owens-Illinois, Inc. for the proposition that he
need not have been approved for PTD benefits to be eligible for DRI benefits.
275 F.3d 43, 2001 WL 1223704 (5th Cir. 2001) (table case). In Parker, we
evaluated a nearly identical Summary Plan Description provision for DRI
benefits, which stated:
You are eligible for disability [retirement] income benefits if you
have had ten or more years of credited service and become
permanently and totally disabled. You will be considered
permanently and totally disabled for purposes of this benefit if the
insurance company approves your claim for permanent and total
disability benefits.
Id. at *1 (alteration in original). The Parker court held that PTD benefits were
not a prerequisite for DRI benefits, despite the language in the second sentence,
because “the [Description] does not clearly explain that a DRI applicant can only
establish permanent and total disability if the insurance company approves his
PTD claim.” Id. at *4 (emphasis in original).
Parker’s interpretation of the Description is inapplicable to this case. In
Parker, the Description’s claim provision stated that an employee “must first
10
Case: 10-50640 Document: 00511463947 Page: 11 Date Filed: 05/02/2011
No. 10-50640
submit a claim for permanent and total disability benefits” to file a claim for DRI
benefits. Id. at *2 (emphasis added). In the Description under which Horn
sought DRI benefits, an employee may file a claim for DRI benefits if his “claim
for PTD . . . is approved by the group insurance company . . . .” (emphasis
added). The distinction between the submission of a claim and the approval of
a claim is essential when reading the Description’s DRI provision as a whole
because it clearly demonstrates that, in this case, an employee must receive PTD
benefits before he may submit a claim for DRI benefits. Thus, PTD benefits are
a necessary prerequisite to DRI benefits.
Horn also argues that the Committee’s reading of the Retirement Plan is
legally incorrect because he has qualified for DRI benefits under the terms of the
CBA. According to Horn, the CBA recognizes that DRI benefits may be awarded
based on a determination of disability by the Social Security Administration,
without any reference to PTD benefits being awarded by the insurer. If
anything, the CBA suggests just the opposite. The CBA states that, if an
employee is “approved for Social Security disability, the Company will qualify
the employee for P.T.D. In this case the retirement disability benefit . . . will be
effective on the date the Social Security disability is determined to have
commenced . . . .” The CBA further states that an employee “who had ten (10)
or more years of credited service becomes permanently and totally
disabled . . . may be retired on a monthly disability income figured as if he were
age 65 on the date of such disability, and the disability date will be determined
as defined in [the PTD provision of the CBA].” These provisions demonstrate
that, as in the Description, the award of DRI benefits is pegged to a previous
award of PTD benefits. As discussed above, Owens-Illinois has not qualified
Horn for PTD benefits, and thus he cannot qualify for DRI benefits.
The Committee’s conclusion that the Description and the Retirement Plan
require an employee to receive PTD benefits to be eligible for DRI benefits is
11
Case: 10-50640 Document: 00511463947 Page: 12 Date Filed: 05/02/2011
No. 10-50640
legally correct. Accordingly, the Committee did not abuse its discretion in
denying Horn’s claim for DRI benefits.
IV. CONCLUSION
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
12