Marx v. Meridian Bancorp, Inc.

Opinions of the United

2002 Decisions States Court of Appeals

for the Third Circuit

3-28-2002

Marx v. Meridian Bancorp

Precedential or Non-Precedential:

Docket 01-2918

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

___________

No. 01-2918

___________

LOIS E. MARX,

Appellant

v.

MERIDIAN BANCORP, INC. , LONG TERM DISABILITY PLAN; JOHN DOES 1-10

IN THEIR CAPACITIES AS MEMBERS OF THE ADMINISTRATIVE COMMITTEE

ON EMPLOYEE BENEFIT PLANS (A.K.A. THE BENEFITS DESIGN

COMMITTEE); METROPOLITAN LIFE INSURANCE COMPANY; CORESTATES

FINANCIAL CORPORATION

___________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Civ. No. 99-CV-4484)

District Judge: The Honorable Ronald L. Buckwalter

___________

Argued, Tuesday, February 26th, 2002

Before: ROTH, FUENTES and GIBSON*, Circuit Judges

(Opinion Filed: March 27, 2002)

___________________

Ronald H. Surkin (argued)

Margo L. Buckles

Gallagher, Schoenfeld, Surkin & Chupein, P.C.

25 West Second Street

Media, Pennsylvania 19063-0900

Attorneys for Appellant

E. Thomas Henefer

Stevens & Lee

111 North Sixth Street

Reading, Pennsylvania 19603

Attorney for Appellees

________________________

OPINION OF THE COURT

________________________

FUENTES, Circuit Judge:

Lois Marx appeals the District Court’s decision to grant the Defendants’ summary

judgement motion, in opposition to Marx’s suit for long-term disability benefits under the

Employee Retirement Income Security Act of 1974 ("ERISA"). For the reasons stated

below, we will affirm.

Lois Marx began working as a secretary for Meridian Bancorp, Inc. ("Meridian")

________________________

* The Honorable John R. Gibson, United States Circuit Judge for the Eight Circuit, sitting

by designation.

in 1991. In January 1995, Marx requested a leave of absence on account of back pain

which she claimed affected her ability to sit or stand for extensive periods of time. With

the support of her treating physician, Dr. Mark Kender, Marx filed a claim for long-term

disability ("LTD") benefits with Defendants under the Meridian Bancorp, Inc. Long-Term

Disability Plan (the "Plan"), alleging an inability to work on account of the pain and the

depression it caused her.

The LTD Plan is an ERISA-regulated employee welfare benefit plan established

by Meridian. Under the Plan, the Administrative Services Committee of Meridian has

been designated as the "Plan Administrator," and is responsible for the day-to-day

operation and management of the Plan. See, Meridian Bancorp Long Term Disability

Plan, Art. I, 1.24.. Significantly, Meridian had entered into an Administrative Services

Agreement (the "Agreement") with Metropolitan Life Insurance Co. ("MetLife") to carry

out many of its responsibilities under the Plan. Generally, as the "Claim Administrator,"

MetLife was required to provide "claim adjudication services at the direction of the Plan

Administrator." Id., at 1.06.

To establish a claim for LTD under the Plan, a claimant must show that she is

unable to perform the duties of her own job. See, the Plan 1.32 (defining a Participant’s

’total disability’ as being "unable to engage in the material and substantial duties of his or

her Regular Occupation immediately prior to the Date of Disability."). If a claimant can

establish disability under this standard, she may receive benefits during a two year

"Waiting Period." After the Waiting Period, a claimant’s eligibility is assessed under a

more stringent standard, one which requires her to demonstrate that she is unable "to

perform any occupation" for which she "is qualified or may reasonably become qualified

by training, education or experience." 1.32 & 1.03 of the Plan (defining ’Total

Disability’ and ’Any Occupation,’ respectively).

Marx succeeded in her claim to receive LTD benefits under the initial standard and

received benefits for the two year Waiting Period. During that time, Marx consulted other

doctors, underwent surgery for her back and took steps to establish a claim for permanent

disability benefits. For instance, she submitted medical records to the Plan Administrator,

received an independent medical examination and filed for Social Security Disability

Income ("SSDI"), all in accordance with the Plan’s requirements.

At the end of the Waiting Period, Defendants reevaluated Marx’s eligibility under

the more stringent standard of review and denied Marx’s benefits. Marx appealed this

determination and argued that SSA’s 1996 finding of total disability should have resulted

automatically in the same decision by Defendants. Marx also criticized the behavior of

Dr. O’Brien, the independent medical examiner and hence questioned the credibility of

his findings. Despite these arguments, Defendants upheld their decision on appeal.

On July 16, 1998, Marx, now represented by counsel, sought a third review of her

claim. Marx again argued that the SSA’s findings should have been conclusive. The

Claim Administrators, Metropolitan Life Insurance Company ("MetLife"), informed

Marx that she could submit additional medical evidence and Marx followed this

suggestion. However, on September 23, 1998, MetLife informed Marx that it would not

re-open her case.

On September 8, 1999, Marx filed a claim with the U.S. District Court for the

Eastern District of Pennsylvania under ERISA. See, 29 USC 1132(a)(1)(B) (authorizing,

inter alia, suits by a participant or beneficiary in an approved plan "to recover benefits

due to him under the terms of his plan"). After the completion of discovery, Defendants

filed for summary judgment.

On June 20, 2001, the District Court granted the Defendant’s summary judgment

motion. See, Marx v. Meridian, 2001 WL 706280. The Court first determined that the

appropriate standard for reviewing MetLife’s denial of Marx’ LTD benefits was a

deferential ’arbitrary and capricious’ standard. Id. at *2.

The Court next applied the Arbitrary and Capricious standard to Marx’ substantive

claims. Regarding Marx’ claim that MetLife had denied her LTD benefits on the basis of

an incomplete medical file, the District Court found that "temporal discrepancies"

between the letters actually submitted by MetLife and Marx’ claims in her affidavit about

which letters were missing "[led] the Court to question the integrity of Plaintiff’s

affidavit." The Court therefore found that "in the absence of any evidence other than

Plaintiff’s assertions that she submitted these materials, the Court does not find that this

issue is sufficient to preclude a grant of summary judgment in favor of Defendants."

Marx, 2001 WL, at *4.

The Court next addressed Marx’ claim that the decision of the Social Security

Administration to grant Marx SSDI benefits mandated a parallel finding by MetLife with

regard to Marx’ LTD benefits. The Court determined that, according to the Plan, an SSA

finding is only one factor among many that may be considered when granting disability

benefits and would not mandate receipt of LTD benefits. Id. at *5.

Finally, the Court considered Marx’ claim that the decision of the independent

medical examiner, Dr. O’Brien, that Marx was not totally disabled, was unfounded. The

Court first observed that Marx’ claim only referenced the standard medical check-box

questionnaire filled out by the doctor, but ignored the four-page, single-spaced analysis of

Marx’ condition submitted by Dr. O’Brien. The Court also noted Dr. O’Brien’s comment

that, during the examination, Marx was "uncooperative and recalcitrant." The Court

concluded that "in light of [Marx’] behavior, the fact that Dr. O’Brien’s conclusions are

supported by other evidence in the record and the fact that the Court places more

significance on Dr. O’Brien’s discussion than on the checkmarks on a form, the Court

finds that MetLife’s reliance on Dr. O’Brien’s analysis does not render MetLife’s decision

arbitrary and capricious. " Id. The Court accordingly granted summary judgement and

dismissed Marx’ claim.

On July 18, 2001, Marx timely filed for appellate review with this court.

Our review of a District Court’s decision to grant summary judgement is plenary.

Orvosh v. Program of Group Ins. for Salaried Employees of Volkswagen of America,

Inc., 222 F.3d 123, 128-29 (3d Cir. 2000). Therefore, like the District Court, this Court

must consider the evidence in the record in the light most favorable to the nonmoving

party, See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, (1986). Additionally, we

may grant summary judgment only where the moving party has established that there are

no genuine issues as to any material fact and that the moving party is entitled to a

judgment as a matter of law. Fed.R.Civ.P. 56. However, we may affirm the summary

judgment decision of the District Court if it could have been reached on any ground

below, including grounds rejected or not reached by the District Court. University of

Maryland v. Peat Marwick Main & Co., 923 F.2d 265 (3d Cir. 1991).

After a careful review of the briefs and appendices submitted by the parties, we

find no basis for disturbing the District Court’s rulings on Marx’ substantive claims. We

write only to address Marx initial claim on appeal: that the District Court erred in making

its threshold determination, when it decided to use a deferential arbitrary and capricious

standard, rather than reviewing MetLife’s denial of Marx’s application for LTD benefits

de novo. We exercise plenary review of the standard applied by the District Court. See,

Gritzer v. CBS Inc., 275 F.3d 291, 295 (3d Cir. 2002).

ERISA explicitly authorizes suits by a participant or beneficiary "to recover

benefits due to [her] under the terms of his plan, to enforce [her] rights under the terms of

the plan, or to clarify [her] rights to future benefits under the terms of the plan" See, 29

USC 1132(a)(1)(B). However, ERISA does not set out the standard of review for an

action brought by a plan participant under 1132(a)(1)(B). See, Mitchell v. Eastman

Kodak Co., 113 F.3d 433 (3d Cir 1997). Nevertheless, the Supreme Court has addressed

the question of the appropriate standard for actions challenging "denials of benefits based

on plan interpretations." See, Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989).

In Firestone, the Court held that "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." Id., at 115 [emphasis added]. This Court subsequently held that where

de novo review is inappropriate, an arbitrary and capricious standard should be applied in

evaluating a claim against a plan administrator for denial of benefits. See, Stoetzner v.

U.S. Steel Corp., 897 F2d 115, 119 (3d Cir. 1990); See also, Firestone, 489 US at 114

("[w]here the plan affords the administrator discretionary authority, the administrator’s

interpretation of the plan will not be disturbed if reasonable.") [emphasis added].

Therefore, we must determine whether the Plan granted discretionary authority to

MetLife to determine Marx’ eligibility for LTD benefits.

To determine the proper standard of review, we must begin with the language of

the plan. See, Luby v. Teamsters Health, Welfare & Pension Trust Funds, 944 F.2d

1176, 1180 (3d Cir. 1991) (instructing that "[w]hether a plan administrator’s exercise of

power is mandatory or discretionary depends upon the terms of the plan," and that "the

terms of the plan are construed without deferring to either party’s interpretation."); See

also, Firestone, 489 US at 115 ("the validity of a claim is likely to turn on the

interpretation of terms in the plan at issue"). The District Court below examined the

language of Meridian’s LTD Plan and found that the Plan "does not contain an [explicit]

grant of authority to MetLife."Marx v. Meridian, 2001 WL 706280, at *3. Nevertheless,

under ERISA, the discretion required to trigger the deferential arbitrary and capricious

standard of review need not be expressly stated in the plan, but can be implied from its

terms. See, Luby, 944 F.2d at 1180, quoting, Nobel v. Vitro Corp., 1180, 1187 (4th Cir.

1989) (no "magic words," such as "discretion is granted ...," need be expressly stated in

order for the plan to accord the administrator discretion to interpret plan terms and to hear

and decide disputes between persons alleging themselves to be beneficiaries, so long as

the plan on its face clearly grants such discretion). Accordingly, the District Court found

that certain provisions of the Plan, "taken together with the structure of MetLife’s

responsibilities,...suggest an almost unavoidable grant of [implicit] discretionary authority

by Meridian to MetLife," and therefore reviewed MetLife’s conclusions under an

arbitrary and capricious standard. Id. At oral argument, counsel for Meridian relied on

one specific provision in asserting that the terms of the Plan make it clear on its face that

Meridian had granted discretion to MetLife to determine eligibility for the Plan’s

participants. See, the Plan, 6.04(j) ("Upon request for review [of a denial of benefits] the

Plan Administrator will arrange and supervise a full review of the claim by the Claims

Administrator [MetLife], whose decision after such a review shall be final.") [emphasis

added].

At oral argument, counsel for Marx admitted that the provisions of the Plan (and

specifically 6.04(j)) grant some discretion to MetLife to determine a Participant’s

eligibility for LTD benefits. However, he argued that MetLife’s decision denying Marx’

LTD benefits must be reviewed de novo because MetLife had not been specifically

designated an "ERISA fiduciary" under the Plan, and only an "ERISA fiduciary" is

entitled to the deferential standard of review. See, the Agreement, Article I (stating that

"in the discharge of its obligations under this Agreement, MetLife acts solely as an agent

of Meridian...and not as a fiduciary as that term is defined under [ERISA])." In addition,

he cited a single piece of correspondence between Meridian and MetLife regarding a

previous claimant’s application for LTD benefits as demonstrating an "undeniable course

of dealing" between the two companies that clearly indicates that Meridian, and not

MetLife, had ultimate authority over decisions to deny Plan benefits. See, II Appendix

409, Letter from MetLife to Meridian ("We have completed a review of Ms. Williams

LTD claim [and MetLife therefore] recommend[s] termination of benefits. As claims

fiduciary, you [Meridian] must inform the claimant of your final decision in this matter.")

However, there is no requirement in the jurisprudence of either the Supreme Court

or this Court that limits the deferential standard of review to ERISA fiduciaries. As the

District Court below pointed out, Firestone explicitly instructed that a Benefit Plan may

confer discretionary authority sufficient to trigger the deferential standard of review on

either a fiduciary or an administrator. See, Marx, 2001 WL, at *3, note 2, citing,

Firestone, 489 U.S. at 115. Furthermore, the Third Circuit case law cited by Marx is

inapposite. See, e.g. Gritzer v. CBS, Inc., 275 F.3d 291, 295 (3d Cir. 2002) (holding that

an Administrator’s denial of benefits under a pension plan that was governed by ERISA

was subject to de novo review, where the administrator did not in fact exercise discretion

when making denial of benefits). Neither party contends here that MetLife did not in fact

exercise discretion in denying Marx’ benefits in this instance. Additionally, the language

of ERISA itself specifically allows a "named [ERISA] fiduciary" to delegate its fiduciary

responsibilities to non-fiduciaries. See, 29 U.S.C. 1105(c)(1) (instructing that "[t]he

instrument under which a plan is maintained may expressly provide for procedures ...for

named fiduciaries to designate persons other than named fiduciaries to carry out fiduciary

responsibilities ... under the plan.").

Furthermore, Marx’ allegation that the prior correspondence between Meridian and

MetLife demonstrates an "undeniable course of dealing" between the parties is far from

concrete. The subsequent letter, from Meridian to the claimant, Ms. Williams, informs her

that "based on Metropolitan Life’s review of your file...[MetLife] ha[s] no alternative but

to uphold their previous decision to terminate your LTD claim." See, II Appendix 411

[emphasis added]. Clearly, even in this one instance that Marx offers, one could

reasonably assume that Meridian had delegated final decision making authority to

MetLife, with regard to the claimant’s right to LTD benefits. This court has previously

instructed that "[a]lthough extrinsic evidence can be used to show that a contract is

ambiguous ... extrinsic evidence cannot be used to create an ambiguity." U.A.W. v.

Skinner Engine Co., 188 F.3d 130 (3d Cir. 1999). (noting also that a party offering such

extrinsic evidence "must produce objective facts, not subjective and self-serving

testimony, to show that a contract which looks clear on its face is actually ambiguous.").

We find that the language of the Plan, and specifically 6.04(j), is clear on its face

in granting discretionary authority to MetLife to determine eligibility for LTD benefits

under the Meridian Plan. Since the language is clear on its face, we reject the extrinsic

"course of dealing" evidence offered by Marx. See, Epright v. Environmental Res. Mgt.,

Inc. Health & Welfare Plan, 81 F.3d 335, C.A.3 (Pa.),1996 ("[P]ast practice is of no

significance where the plan document is clear."). We therefore affirm the District Court’s

finding that a deferential arbitrary and capricious standard of review was proper in this

instance.

Accordingly, we will affirm the Order of the District Court, granting Defendant’s

motion for summary judgment, and dismiss Marx’ claim in full.

_____________________________

TO THE CLERK OF THE COURT:

Kindly file the foregoing Opinion.

/s/ Julio M. Fuentes

Circuit Judg