The opinion
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0055P (6th Cir.)
File Name: 00a0055p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
;
SHELBY COUNTY HEALTH
CARE CORPORATION,
Plaintiff-Appellee,
No. 99-5191
v. >
SOUTHERN COUNCIL OF
INDUSTRIAL WORKERS
HEALTH AND WELFARE
TRUST FUND,
Defendant-Appellant,
Defendant.
TRACY MASON,
1
Appeal from the United States District Court
for the Western District of Tennessee at Memphis.
No. 98-02394—Julia S. Gibbons, Chief District Judge.
Argued: December 7, 1999
Decided and Filed: February 15, 2000
Before: JONES, BATCHELDER, and MOORE, Circuit
Judges.
1
2 Shelby County Health Care v. Southern No. 99-5191
Council of Industrial Workers, et al.
_________________
COUNSEL
ARGUED: Allison A. Madan, SLEVIN & HART,
Washington, D.C., for Appellant. Teresa A. McCullough,
Memphis, Tennessee, for Appellee. ON BRIEF: Allison A.
Madan, Lynn A. Bowers, SLEVIN & HART, Washington,
D.C., Deborah E. Godwin, ALLEN, GODWIN, MORRIS &
LAURENZI, Memphis, Tennessee, for Appellant. Teresa A.
McCullough, Gary C. McCullough, Memphis, Tennessee, for
Appellee.
_________________
OPINION
_________________
KAREN NELSON MOORE, Circuit Judge. Shelby County
Health Care Corporation (“Shelby”) brought suit in this
employee benefit case against Southern Council of Industrial
Workers Health and Welfare Trust Fund (the “Fund”) for
payment of hospital services rendered to Tracy Mason, a
former participant in the Fund. The Fund’s plan
administrator, the Board of Trustees, had denied Shelby’s
claim for benefits on the basis of untimeliness of the claim.
The district court denied the Fund’s motion to dismiss and sua
sponte granted summary judgment to Shelby reversing the
Board of Trustees’ denial of benefits. We AFFIRM the
district court’s conclusion on summary judgment that the
Board of Trustees’ interpretation of the Fund’s plan document
(the “Plan”) regarding when a claim is timely filed is arbitrary
and capricious. We REVERSE the district court’s sua sponte
grant of summary judgment to Shelby awarding it the full
amount of damages requested and REMAND to determine
the proper amount of benefits owed under the terms of the
Plan. In addition, we AFFIRM the district court’s denial of
attorney fees to the Fund.
No. 99-5191 Shelby County Health Care v. Southern 3
Council of Industrial Workers, et al.
I. FACTS AND PROCEDURE
Tracy Mason was struck by a car on June 30, 1995. Mason
was a participant in the Fund at that time. He was taken to
Shelby for medical treatment and signed an assignment of
insurance benefits to Shelby for all hospital charges. Shelby
incurred $31,770.22 for these1services and billed the Fund for
this amount in late July 1995. After receiving this bill and in
accordance with the Fund’s established procedures for claims
involving potentially liable third parties, the Fund sent Mason
a subrogation agreement, which included a questionnaire
about the accident, on August 2, 1995; October 31, 1995;
November 14, 1995; May 22, 1996; and June 12, 1996.
These letters advised Mason that his claims would not be
processed until the Fund received a subrogation agreement
with his signature. On March 6, 1996, Shelby sent a letter to
the Fund, along with a copy of Mason’s assignment of
benefits to Shelby, following up on the bill it had sent to the
Fund and renewing its request for payment. In response, the
Fund sent a letter to Shelby on April 17, 1996, informing
Shelby that it had not received a subrogation agreement from
Mason and that it could not process the claim without this
information. Shelby filed suit seeking payment of this claim
in May 1996; the district court dismissed Shelby’s complaint
for failure to exhaust administrative remedies in May 1997.
As the litigation was pending, the Fund sent Shelby a
subrogation agreement for Mason’s signature on September
12, 1996, in response to Shelby’s request. In this letter, the
Fund warned Shelby that it was sending this agreement
“without prejudice with respect to the Fund’s ability to deny
any claim filed for timeliness or any other reason consistent
with the Fund’s rules.” J.A. at 131. Shelby submitted a
signed subrogation agreement and a copy of the police report
to the Fund on October 16, 1996.
1
The Fund disputes the amount of charges and claims that it received
a bill for $31,761.02 from Shelby.
4 Shelby County Health Care v. Southern No. 99-5191 No. 99-5191 Shelby County Health Care v. Southern 17
Council of Industrial Workers, et al. Council of Industrial Workers, et al.
On January 7, 1997, the Fund denied Shelby’s claim on the attorney fees in its appeal of the district court’s judgment.
ground of untimeliness. The Fund concluded that according Because we affirm the district court’s conclusion that the
to the Plan, all information necessary to process a claim, Board of Trustees’ interpretation of the Plan is unreasonable,
including a subrogation agreement where there is a potentially the Fund is not entitled to attorney fees. Therefore, the
liable third party, must be submitted within its one-year district court did not abuse its discretion in refusing to grant
deadline for filing claims. Shelby appealed the denial of its attorney fees to the Fund.
claim to the Board of Trustees and submitted for the Board’s
consideration a copy of Mason’s assignment of benefits to Shelby also challenges the district court’s denial of attorney
Shelby, a police report for the accident involving Mason, and fees and prejudgment interest3 claiming that the Fund acted
the subrogation agreement signed by Mason. On April 3, in bad faith in denying its claim for benefits and unreasonably
1997, the Board of Trustees met and decided to affirm the interpreted the provisions of the Plan to its detriment. We do
denial of benefits to Shelby on the ground of untimeliness. It not have jurisdiction to consider this argument because
concluded that a claim for benefits relating to an accident Shelby did not file a notice of cross-appeal. See Francis v.
involving third party action is not properly filed until all Clark Equip. Co., 993 F.2d 545, 552 (6th Cir. 1993).
information, including a signed subrogation agreement, is
submitted to the Fund. Under the Plan, a participant must file III. CONCLUSION
a claim for benefits within one year of the date on which the
charges were incurred. In this case, Shelby provided medical For the reasons stated above, we AFFIRM the district
treatment to Mason beginning on June 30, 1995, and the Fund court’s summary judgment determination that the Fund’s
did not receive a signed subrogation agreement until October denial of benefits to Shelby based on the Board of Trustees’
21, 1996. The Board of Trustees reasoned that Mason’s interpretation of the Plan’s one-year time requirement for
failure to submit a timely subrogation agreement had filing claims is arbitrary and capricious, we REVERSE the
prejudiced the Fund’s ability to pursue damages from the district court’s grant of summary judgment sua sponte
driver of the car that struck Mason because of Tennessee’s awarding Shelby the full amount of damages, and we
one-year statute of limitations for personal injury actions. REMAND for the purpose of determining the amount owed
to Shelby under the terms of the Plan. In addition, we
Shelby filed a complaint in district court challenging this AFFIRM the district court’s denial of attorney fees to the
conclusion under 29 U.S.C. § 1132(a)(1)(B) of the Employee Fund.
Retirement Income Security Act of 1974 (“ERISA”) on May
1, 1998. It attached as exhibits a copy of Mason’s assignment
of benefits to Shelby, the subrogation agreement with
Mason’s signature, a letter indicating that the Fund had made
some payments for claims related to Mason’s accident, and an
affidavit stating the amount owed to Shelby. In response, the
Fund filed a motion to dismiss Shelby’s complaint arguing
that the Board of Trustees’ interpretation of the Plan and 3
ERISA does not require an award of prejudgment interest to a
denial of benefits is not arbitrary and capricious. The Fund prevailing plan participant, although a district court has the discretion to
attached as exhibits to its brief excerpts of the Plan, an grant such an award in accordance with equitable principles. See Ford v.
affidavit describing the Fund’s attempts to contact Mason for Uniroyal Pension Plan, 154 F.3d 613, 616 (6th Cir. 1998). This
determination is reviewed for abuse of discretion. See id.
16 Shelby County Health Care v. Southern No. 99-5191 No. 99-5191 Shelby County Health Care v. Southern 5
Council of Industrial Workers, et al. Council of Industrial Workers, et al.
C. Attorney Fees a subrogation agreement, and copies of correspondence
between Shelby and the Fund regarding the subrogation
Under 29 U.S.C. § 1132(g)(1), a “court in its discretion agreement and the status of Shelby’s claim. Shelby filed a
may allow a reasonable attorney’s fee and costs of action to response to the Fund’s motion to dismiss making the
either party.” A district court must consider the following following arguments: that the Board of Trustees’
factors in deciding whether to award attorney fees, interpretation of the Plan is arbitrary and capricious, that the
Plan should be estopped from denying payment of the claim,
(1) the degree of the opposing party’s culpability or bad and that the Plan failed to provide Shelby with a copy of the
faith; (2) the opposing party’s ability to satisfy an award Plan in violation of 29 U.S.C. § 1132(c)(1). Shelby also
of attorney’s fees; (3) the deterrent effect of an award on attached several exhibits, including Mason’s assignment of
other persons under similar circumstances; (4) whether benefits, an affidavit describing its outstanding bill for
the party requesting fees sought to confer a common services provided to Mason, correspondence between Shelby
benefit on all participants and beneficiaries of an ERISA and the Fund, and a copy of the police report. Finally, the
plan or resolve significant legal questions regarding Fund filed a reply to Shelby’s response and addressed each of
ERISA; and (5) the relative merits of the parties’ Shelby’s arguments. The Fund included as exhibits
positions. correspondence between the Fund and Shelby.
Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir. 1998) As the parties were filing these motions, the district court
(quoting Secretary of Dep’t of Labor v. King, 775 F.2d 666, entered a scheduling order pursuant to FED. R. CIV. P. 16(b),
669 (6th Cir. 1985)), cert. denied, 119 S. Ct. 1756 (1999). establishing the deadline for completing discovery on October
We review a district court’s award or denial of attorney fees 5, 1998, the deadline for filing potentially dispositive motions
for abuse of discretion. See id. on November 5, 1998, and setting trial for January 25, 1999.
On November 5, 1998, the Fund filed a motion for an
The district court denied requests for attorney fees from the extension of time to file dispositive motions until 30 days
Fund and from Shelby. The Fund renews its request for after the district court’s order ruling on the Fund’s motion to
dismiss. The district court granted this motion. However,
two months later the district court sua sponte converted the
reasonable expectations should apply. Shelby also argues that the Fund Fund’s motion to dismiss into a motion for summary
is estopped from denying benefits because the Fund misrepresented that judgment and denied the motion in an order entered on
it would pay benefits upon receipt of a signed subrogation agreement January 5, 1999. The district court concluded that the Board
regardless of the one-year deadline and because the Fund partially
performed by making de minimis payments on claims in connection with of Trustees’ interpretation of the Plan is arbitrary and
Mason’s accident. Because we affirm the district court’s award of capricious, sua sponte granted Shelby summary judgment, and
summary judgment based on the determination that the Fund’s denial of ordered the Fund to pay Shelby $31,770.22, the full amount
Shelby’s claim on the ground of untimeliness is arbitrary and capricious, of benefits Shelby requested. The district court rejected
we need not address these arguments. In addition, Shelby asserts that the Shelby’s argument that the Fund should be estopped from
Fund violated ERISA by failing to comply with Shelby’s request for a
copy of the Plan pursuant to 29 U.S.C. § 1132(c)(1). However, the denying payment and that the Fund violated 29 U.S.C.
district court rejected this claim because Shelby did not raise this issue in § 1132(c)(1) by refusing to provide Shelby with a copy of the
its complaint, and we do not have jurisdiction to review this determination Plan. Finally, the district court denied both parties’ requests
because Shelby did not file a notice of cross-appeal. See Francis v. Clark for attorney fees and Shelby’s request for prejudgment
Equip. Co., 993 F.2d 545, 552 (6th Cir. 1993).
6 Shelby County Health Care v. Southern No. 99-5191 No. 99-5191 Shelby County Health Care v. Southern 15
Council of Industrial Workers, et al. Council of Industrial Workers, et al.
interest. The Fund filed a timely notice of appeal of the interpretation of the Plan is arbitrary and capricious as a
district court’s judgment. matter of law.
II. ANALYSIS After determining that the Board of Trustees’ interpretation
is unreasonable, the district court concluded that Shelby had
A. Summary Judgment Sua Sponte filed its claim when it billed the Fund for its services shortly
after they were incurred and thus had met the one-year time
When a district court grants summary judgment sua sponte, requirement. When the Fund denied Shelby’s claim, the Fund
its decision is subject to two separate standards of review. reasoned that a complete claim had not been filed until
The substance of the district court’s decision is reviewed de October 21, 1996, when the Fund received a subrogation
novo under the normal standards for summary judgment. See agreement signed by Mason. The Fund stated that it had
Salehpour v. University of Tennessee, 159 F.3d 199, 203 (6th contacted Mason several times to request that he sign a
Cir. 1998), cert. denied, 119 S. Ct. 1763 (1999). The district subrogation agreement and “advised that the claim would not
court’s procedural decision to enter summary judgment sua be processed until the fund received the required agreement.”
sponte, however, is reviewed for abuse of discretion. See id. J.A. at 65. Based on the Fund’s reasoning in denying
We have held that a district court may enter summary Shelby’s claim, it is clear that the Fund considered Shelby’s
judgment sua sponte in certain limited circumstances, “‘so request for payment of services to be a claim for benefits.
long as the losing party was on notice that [it] had to come The Fund simply did not consider the claim complete for
forward with all of [its] evidence.’” Id. at 204 (quoting processing until it received the subrogation agreement. The
Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986)). More district court properly concluded that Shelby had filed its
specifically, we have held that FED. R. CIV. P. 56(c) mandates claim when it billed the Fund a few weeks after the charges
that the losing party must “be afforded notice and reasonable were incurred and well within the one-year deadline required
opportunity to respond to all the issues to be considered by by the Plan. Therefore, the district court did not err in
the court.” Employers Ins. of Wausau v. Petroleum concluding that the Fund’s denial of benefits to Shelby for
Specialties, Inc., 69 F.3d 98, 105 (6th Cir. 1995). A clear untimeliness was arbitrary and capricious.
example of the district court’s power to grant summary
judgment sua sponte is found in FED. R. CIV. P. 12(b), which Having found that Shelby filed a timely claim for benefits,
gives a district court the authority to turn a motion to dismiss the district court then awarded Shelby $31,770.22 for the
into a motion for summary judgment where the court is hospital services it provided to Mason. As already discussed
presented with materials outside the pleadings. See FED. R. in Part II.A supra, the district court abused its discretion in
CIV. P. 12(b); see also Employers Ins., 69 F.3d at104-05. granting summary judgment sua sponte on the amount owed
This rule expressly states, to Shelby. Therefore, we remand this case to the district court
to determine the proper amount of benefits Shelby is entitled
If, on a motion asserting the defense numbered (6) to to for the hospital services it2 provided to Mason in accordance
dismiss for failure of the pleading to state a claim upon with the terms of the Plan.
which relied can be granted, matters outside the pleading
are presented to and not excluded by the court, the
motion shall be treated as one for summary judgment and 2
We note that Shelby also makes a variety of other arguments on its
disposed of as provided in Rule 56, and all parties shall behalf. With respect to the Board of Trustees’ interpretation of the Plan,
Shelby argues that the rule of contra proferentum and the doctrine of
14 Shelby County Health Care v. Southern No. 99-5191 No. 99-5191 Shelby County Health Care v. Southern 7
Council of Industrial Workers, et al. Council of Industrial Workers, et al.
Plan states only that benefits may not be paid until a be given reasonable opportunity to present all material
subrogation agreement is submitted as part of the proof of made pertinent to such a motion by Rule 56.
loss for a claim; it does not state that this is necessary to file
a claim and that benefits may be denied altogether if such an FED. R. CIV. P. 12(b). Whether a district court must provide
agreement is not filed within the one-year deadline for filing actual notice that it intends to convert a motion to dismiss into
claims. a motion for summary judgment depends on the facts and
circumstances of each case. See Salehpour, 159 F.3d at 204.
The Fund also points to another provision in the Plan to However, “[w]here one party is likely to be surprised by the
support the Board of Trustees’ interpretation. The Plan states proceedings, notice is required.” Id.
that it excludes any “[c]harges which are or may become the
responsibility of any third party. (The plan Administrator has The Fund argues that the district court abused its discretion
been authorized by the Trustees to pay benefits when the because it did not provide any notice that it was
beneficiary and legal counsel have executed a subrogation contemplating entering summary judgment against the Fund.
form which is satisfactory to the plan Administrator.)” J.A. Instead, the Fund asserts, the district court led the Fund to
at 36. The Fund argues that this provision gives the Trustees believe that it would have an opportunity to file a motion for
discretionary authority to request documentation for claims, summary judgment because the district court granted its
including the determination of what documentation is motion for an extension of time to file dispositive motions
required in order for a claim to be filed. The Fund cites to within 30 days of ruling on its motion to dismiss. Therefore,
Bali v. Blue Cross & Blue Shield Ass’n, 873 F.2d 1043, 1047 the Fund claims it was denied the opportunity to present all
(7th Cir. 1989), in which the court determined that a plan material pertinent to a motion for summary judgment.
administrator had discretionary authority to determine the
documentation required to prove disability based on the The district court did not abuse its discretion in sua sponte
language of the plan. Unlike Bali, however, in this case the converting the Fund’s motion to dismiss into a motion for
language in the Plan giving discretionary authority to the plan summary judgment pursuant to FED. R. CIV. P. 12(b). The
administrator to require a satisfactory subrogation agreement Fund submitted substantial extrinsic material to the district
only relates to the plan administrator’s authority to pay court as exhibits to its motion to dismiss. In response to the
benefits. This provision only requires a satisfactory Fund’s motion, Shelby also included exhibits extrinsic to the
agreement before the payment of benefits; it does not state pleadings. The Fund then filed a reply to Shelby’s response
that such documentation is required in order to file a claim. to the Fund’s motion to dismiss and thus had the opportunity
to respond to the arguments and exhibits that Shelby
Although the language of the Plan regarding when a claim submitted. In their briefs, both parties comprehensively
is filed is ambiguous, the Board of Trustees’ interpretation addressed the Fund’s argument that the Board of Trustees’
that all information, including a signed subrogation agreement interpretation of the Plan is not arbitrary and capricious.
when third party liability may be involved, necessary to Because the parties both submitted numerous exhibits fully
process a claim must be submitted to file a claim is an addressing the Fund’s argument for dismissal, they had
unreasonable interpretation. This requirement cannot be sufficient notice that the district court could consider this
found in the language of the Plan. Therefore, the district outside material when ruling on the issues presented in the
court did not err in concluding that the Board of Trustees’ Fund’s motion to dismiss and could convert it into a motion
for summary judgment under FED. R. CIV. P. 12(b). The
8 Shelby County Health Care v. Southern No. 99-5191 No. 99-5191 Shelby County Health Care v. Southern 13
Council of Industrial Workers, et al. Council of Industrial Workers, et al.
parties also had a reasonable opportunity to address the Board possible liability. This allows the Fund to determine whether
of Trustees’ interpretation of the Plan. Thus, the Fund and or not the claim is covered under the Plan. The Fund also
Shelby had sufficient notice and opportunity to address the argues that it must have a signed subrogation agreement in
issues presented in the Fund’s motion. See Salehpour, 159 order to pursue any action against a potentially liable third
F.3d at 204 (affirming the district court’s conversion of a party. In this case, the Fund argues that it could not file suit
defendant’s motion to dismiss into a motion for summary against the driver of the car that struck Mason because the
judgment where both parties had submitted voluminous one-year statute of limitations for personal injury suits under
outside material and had the opportunity to respond to the Tennessee law had already expired once it received a signed
issues and evidence presented). Furthermore, when a district subrogation agreement from Mason. The Fund claims that
court is reviewing a plan administrator’s denial of benefits, these are rational purposes behind the Board of Trustees’
the court may only consider those materials that were interpretation of the Plan.
available to the plan administrator when it made its final
decision. See Miller v. Metropolitan Life Ins. Co., 925 F.2d The Fund also argues that where there is ambiguity in the
979, 986 (6th Cir. 1991). In this case, the materials Shelby Plan, the Board of Trustees has the discretion to resolve the
had submitted to the Board of Trustees to review on its appeal ambiguity. We have stated that “we grant plan administrators
were also submitted to the district court as exhibits to the who are vested with discretion in determining eligibility for
Fund’s motion to dismiss. Because the district court already benefits great leeway in interpreting ambiguous terms.” Moos
had all of the material it could examine in conducting its v. Square D Co., 72 F.3d 39, 42 (6th Cir. 1995). A plan
review of the Board of Trustees’ denial of benefits, the Fund administrator’s interpretation of ambiguous provisions must,
could not have submitted any additional evidence. Therefore, however, be reasonable. See Johnson, 970 F.2d at 1574.
the district court did not abuse its discretion when it sua Although the Fund has provided rational justifications for
sponte converted the Fund’s motion to dismiss into a motion requiring a subrogation agreement to be submitted within the
for summary judgment and ruled on the Fund’s argument that one-year time requirement for filing claims, it has not
the Board of Trustees’ denial of benefits based on the Board’s established the reasonableness of this requirement based on
interpretation of the Plan regarding the requirements for filing the language of the Plan. As previously discussed, the Plan
a timely claim is not arbitrary and capricious. requires that a claim for benefits be filed within one year but
does not elaborate on what is required in order properly to file
Next we must determine whether the district court abused a claim. The Plan does not state that a participant must
its discretion in granting summary judgment sua sponte to submit all information that is necessary to process the claim
Shelby, a nonmoving party. We have noted that although “a in order to file the claim within the deadline. Nor does the
district court should only enter summary judgment in the Plan give any indication that a signed subrogation agreement
absence of a cross-motion with great caution . . . the fact that is required to file a claim. It states, “[t]he participant is
the nonmoving party has not filed its own summary judgment required to submit a signed copy of a Subrogation Agreement
motion does not preclude the entry of summary judgment if provided by the Fund office as part of proof of loss for a
otherwise appropriate.” K.E. Resources, Ltd. v. BMO Fin. claim involving third party action. Failure to submit such
Inc. (In re Century Offshore Management Corp.), 119 F.3d signed agreement may cause payment of the claim to be
409, 412 (6th Cir. 1997) (affirming the district court’s sua delayed until the third party action is resolved or disallowed
sponte grant of summary judgment to a nonmoving party due to failure on the part of the participant to provide
where the parties had fully briefed the determinative issue and adequate proof of loss.” J.A. at 38 (emphasis added). The
12 Shelby County Health Care v. Southern No. 99-5191 No. 99-5191 Shelby County Health Care v. Southern 9
Council of Industrial Workers, et al. Council of Industrial Workers, et al.
Subrogation Agreement provided by the Fund office as part had agreed that no factual dispute existed). Shelby had not
of proof of loss for a claim involving a third party action. filed any dispositive motions which would have put the Fund
Failure to submit such signed agreement may cause payment on notice that it had to come forward with all of its evidence
of the claim to be delayed until the third party action is in response to Shelby’s complaint. When the district court
resolved or disallowed due to failure on the part of the ruled on the Fund’s converted motion for summary judgment,
participant to provide adequate proof of loss.” J.A. at 38. the court concluded that the Board of Trustees’ interpretation
Based on its interpretation of these provisions, the Board of of the Plan regarding the requirements for filing a timely
Trustees concluded that a claim is not “filed” until the Fund claim is arbitrary and capricious as a matter of law. As
receives all information required to process the claim. In discussed above, the district court did not abuse its discretion
cases involving a potentially liable third party, a participant in deciding this issue on summary judgment. Because the
must submit a subrogation agreement to process a claim. Fund had denied Shelby’s benefits for untimeliness, the
Therefore, the Board of Trustees determined that the Fund district court then sua sponte entered summary judgment on
must receive a subrogation agreement as part of the proof of behalf of Shelby and awarded the full amount of damages
loss within the one-year deadline for the submission of claims requested. Neither party, however, had addressed the issue of
for cases involving potential third party liability. Although the amount of benefits the Fund would have awarded to
Shelby billed the Fund for the services it provided to Mason Shelby under the terms of the Plan had the Fund determined
soon after the charges were incurred, a subrogation agreement that Shelby had filed a timely claim. The Fund points out that
with Mason’s signature was not submitted within the one-year Shelby may not be entitled to the full amount of the claim
deadline. The Fund argues that the Board of Trustees’ under the Plan. For example, the Plan states that it will not
interpretation of the Plan is reasonable and Shelby’s claim cover “[c]harges which are not ‘Reasonable and Customary’,
should be denied accordingly. or which are excessive.” J.A. at 34. Nor will it pay for
“[s]ervices which are not ‘Medically Necessary.’” J.A. at 34.
The Plan does not explain when a claim will be considered The Plan also states that it will not cover “[c]harges for
to have been filed for the purpose of the one-year time benefits that are not payable due to the application of any
requirement for filing claims. The language of a plan is specified deductible or co-payment provisions contained
ambiguous if it is subject to more than one reasonable herein.” J.A. at 37. Because the parties had not addressed in
interpretation. See Wulf v. Quantum Chem. Corp., 26 F.3d their briefs the issue of the amount of benefits due under the
1368, 1376 (6th Cir.), cert. denied, 513 U.S. 1058 (1994). In Plan and the district court had granted the Fund’s motion for
the absence of any further explanation of when a claim is an extension to file dispositive motions, it was reasonable for
filed, one could make several different reasonable the parties to believe that the district court would only rule on
interpretations of this provision. The Fund argues that the the issues presented in the Fund’s converted motion for
Board of Trustees’ construction of the Plan that a participant summary judgment. They were not on notice that the district
must submit all information required to process a claim, court would consider on summary judgment the amount of
including a signed subrogation agreement if there is third benefits due. Moreover, the Fund and Shelby did not have a
party action, within the one-year deadline for filing claims is reasonable opportunity to address this issue before the district
reasonable. It claims that this interpretation serves several court decided it. Therefore, the district court abused its
important purposes. The subrogation agreement includes a discretion in granting summary judgment sua sponte to
questionnaire about the accident or incident, which informs Shelby on the amount of benefits due under the terms of the
the Fund about the nature of the third party’s involvement and Plan.
10 Shelby County Health Care v. Southern No. 99-5191 No. 99-5191 Shelby County Health Care v. Southern 11
Council of Industrial Workers, et al. Council of Industrial Workers, et al.
B. Denial of Benefits similar language. See Smith v. Ameritech, 129 F.3d 857, 863
(6th Cir. 1997) (finding such a grant where the plan states that
We now review the merits of the district court’s summary its administrator is vested with “full discretionary authority to
judgment determination that the Board of Trustees’ interpret the terms of the Plan and to determine eligibility for
interpretation of the Plan regarding the requirements for filing and entitlement to Plan benefits in accordance with the terms
a timely claim is arbitrary and capricious. See Salehpour v. of the Plan.”). Therefore, the Board of Trustees’
University of Tennessee, 159 F.3d 199, 203 (6th Cir. 1998), interpretation of the Plan, resulting in the denial of benefits,
cert. denied, 119 S. Ct. 1763 (1999). We review de novo the must be affirmed unless it is arbitrary and capricious. Under
district court’s decision, applying the same FED. R. CIV. P. 56 this standard of review, “we must decide whether the plan
summary judgment standard used by the district court. See administrator’s decision was ‘rational in light of the plan’s
Davis v. Sodexho, Cumberland College Cafeteria, 157 F.3d provisions.’” Id. (quoting Daniel v. Eaton Corp., 839 F.2d
460, 462 (6th Cir. 1998). Summary judgment is appropriate 263, 267 (6th Cir.), cert. denied, 488 U.S. 826 (1988)). A
where there is no genuine issue of material fact and a party is decision is not arbitrary and capricious if it is based on a
entitled to a judgment as a matter of law. FED. R. CIV. P. reasonable interpretation of the plan. See Johnson v. Eaton
56(c). In an action challenging the denial of benefits under 29 Corp., 970 F.2d 1569, 1574 (6th Cir. 1992). Congress
U.S.C. § 1132(a)(1)(B), a plan administrator’s decision is enacted ERISA “to promote the interests of employees and
reviewed “under a de novo standard unless the benefit plan their beneficiaries in employee benefit plans and to protect
gives the administrator or fiduciary discretionary authority to contractually defined benefits.” Firestone, 489 U.S. at 113
determine eligibility for benefits or to construe the terms of (quotations omitted). As part of this goal, Congress intended
the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. ERISA plans to “be uniform in their interpretation and simple
101, 115 (1989). If the benefit plan does grant such in their application.” McMillan v. Parrott, 913 F.2d 310, 312
discretionary authority, the plan administrator’s decision to (6th Cir. 1990). Thus, a plan administrator must discharge its
deny benefits is reviewed under the “arbitrary and capricious” duties with respect to the plan “‘in accordance with the
standard of review. See Perez v. Aetna Life Ins. Co., 150 F.3d documents and instruments governing the plan.’” Id. at 311
550, 555 (6th Cir. 1998) (en banc). This highly deferential (quoting 29 U.S.C. § 1104(a)(1)(D)). In interpreting the
standard of review is appropriate only if the benefit plan provisions of a plan, a plan administrator must adhere to the
contains “‘a clear grant of discretion [to the administrator] to plain meaning of its language, as it would be construed by an
determine benefits or interpret the plan.’” Id. (quoting Wulf ordinary person. See Callahan v. Rouge Steel Co., 941 F.2d
v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir.), cert. 456, 459-60 (6th Cir. 1991).
denied, 513 U.S. 1058 (1994)).
The Board of Trustees denied Shelby’s claim for benefits
In this case, the administrator of the Plan is the Board of because it concluded that the claim was not submitted within
Trustees. The Plan states, “This Board has the primary the Plan’s one-year time limit. The Plan states that no
responsibility for decisions regarding eligibility rules, type of benefits will be paid for “[a]ny charges incurred more than
benefits, administrative policies, management of Plan assets, one year prior to the date the claim is filed.” J.A. at 37. Nor
and interpretation of Plan provisions.” J.A. at 39. The parties will any benefits be paid for “[c]harges which are or may
agree that this language expressly gives the Board of Trustees become the responsibility of any third party.” J.A. at 36. In
the authority to interpret the Plan. We have found a clear cases involving a potentially liable third party, the Plan
grant of discretionary authority in a benefit plan containing requires a participant to “submit a signed copy of a