# Benito T. PEREZ, Jr., Plaintiff-Appellant, v. AETNA LIFE INSURANCE COMPANY, Defendant-Appellee

> Court of Appeals for the Sixth Circuit · July 1, 1998 · 150 F.3d 550

URL: https://www.frixlaw.com/law-library/cases/9491330

## Case

- **Full name:** 22 Employee Benefits Cas. 1385, Pens. Plan Guide (Cch) P 23946r Benito T. Perez, Jr. v. Aetna Life Insurance Company
- **Court:** Court of Appeals for the Sixth Circuit
- **Decided:** July 1, 1998
- **Citations:** 150 F.3d 550; 22 Employee Benefits Cas. (BNA) 1385; 1998 U.S. App. LEXIS 14955; 1998 WL 347611
- **Precedential status:** Published
- **Opinion:** Dissent by Boggs
- **Judges:** Martin, Merritt, Kennedy, Jones, Nelson, Ryan, Boggs, Norris, Suhrheinrich, Siler, Batchelder, Daughtrey, Moore, Cole
- **Cited by:** 267 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9491330

## How later opinions describe it (automated extraction)

- holding that “it is grossly unreasonable and against public policy to offer installment loans at 1,147.14 to 1,500 percent interest”—in a case in which payday lenders offered, through “take-it-or-leave-it” adhesion contracts, such “usurious” interest rates “primarily to less-e…
- holding plan granted discretionary authority to the defendant when it provided that the defendant “shall have the right to require as part of the proof of claim satisfactory evidence . . . that [the claimant] has furnished all required proofs for such benefits”
- holding that the term "satisfactory," even without specifying to whom the proof must be satisfactory, is sufficient to grant discretion if the administrator is "the only named party with the right to request such evidence"
- finding that federal common law rules of contract interpretation apply in construing an ERISA plan, and a plan's provisions must be interpreted “according to their plain meaning, in an ordinary and popular sense.”

## Opinion text

BOGGS, Circuit Judge,
dissenting.
This ease involves a straight-forward interpretation of the meaning of words. The Supreme Court has set out the standard in Firestone: does the document grant discretion to the plan administrator in making decisions under the plan? See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 , 109 S.Ct. 948 , 103 L.Ed.2d 80 (1989). Since the grant must be a clear and affirmative one, as the court correctly holds, see Majority Opinion at 555-556, it seems to me that the words at issue here, furnish “written proof,” do not grant such discretion. I therefore respectfully dissent.
I
The court’s opinion in this ease carefully and correctly sets out the basic tenets of the law concerning the standard of review for decisions by the administrator of an ERISA plan to deny benefits to a claimant. Fires- iowerequires that there be a grant of discretion to the administrator before such decision will be given the deference of the “arbitrary and capricious” standard of review. See Majority Opinion at 552 n. 1 (citing Firestone, 489 U.S. at 115 , 109 S.Ct. 948 ). Otherwise, “de novo ” review applies. Ibid. Under our decisions, that grant must be “clear.” See ibid, at 555-556 (citing Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir.1994); Tiemeyer v. Community Mut. Ins. Co., 8 F.3d 1094, 1099 (6th Cir.1993)).
The majority also correctly notes that when the language of the plan clearly gives discretionary decision-making power to the administrator, courts have upheld such language. See Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 983 (6th Cir.1991) (“evidence satisfactory to the Insurance Company”); Donato v. Metropolitan Life Ins. Co., 19 F.3d 375, 379 (7th Cir.1994) (“satisfactory to us”). Where the majority goes astray is in holding that the language in our plan is “similar” to such language, and thus is governed by the same principles. The court’s opinion correctly concedes that the two types of language are dissimilar in a very impor *559 tant grammatical respect. One specifies to whom the proof must be satisfactory; the other does not. As the opinion notes, Aet-na’s language in our case lacks the crucial “indirect object.” See Majority Opinion at 556, 557-558.
The court’s opinion also (perhaps over-generously 1 ) seems to concede that the eases finding discretion that it cites, see Majority Opinion at 555-556, all required the proof to be satisfactory to the administrator, and thus considers our case, in which no decision-maker is specified, as largely one of first impression.
The court errs in deciding that we may simply assume that the plan must mean that the proof is “satisfactory” to the administrator, for that is the only entity which could be the intended decision-maker. To me the difference between these two phrases, especially the difference to a sophisticated drafter, is enormous. When faced with the language “satisfactory proof’ (or “written proof’ or “due proof’ or simply “proof’), the immediate response of any half-trained lawyer is “satisfactory to whom” (or, “proof’ in whose judgment?). In this case, the Aetna drafter did not supply an answer, and it seems much more plausible that the default reading should be an objective standard, satisfactory to a neutral arbiter, or satisfactory in terms of the over-all meaning of the contract, rather than satisfactory to one of the two interested parties.
While individual ERISA plan participants generally have very little power over the exact terms of their plan, such plans are frequently negotiated in collective bargaining arrangements. In either instance, the worker or the worker’s representatives might well find a significant difference between having their benefits determined wholly at the discretion of the plan administrator, usually a company chosen by the management of the plan, and having a neutral standard of proof. Reasonable participants reading the language of this plan would be quite unlikely to be on notice that they should be meticulous, and wary of the plan administrator, who will have enormous discretion.
II
The majority’s argument based on the structure of the approval process proves too much. Every benefit plan requires the submission of some type of claim. The benefit administrator has to know that one claims benefits. Then the administrator has to match the claim against some type of standard and make a decision. There is no dispute about that. Even in Firestone , itself, the plan required that a claimant apply for benefits when he or she is “physically or mentally unable to perform [his or her] job.” Firestone, 489 U.S. at 105-06 , 109 S.Ct. 948 .
The question at issue here is whether in so doing, the administrator is held to an objective standard upon review, or is to be upheld unless a decision is not only objectively wrong, but also arbitrary and capricious. The majority’s holding virtually eliminates the possibility of de novo review, unless the plan specifically says that de novo review will apply — the exact opposite of the result required by Firestone. See Firestone, 489 U.S. at 109 , 109 S.Ct. 948 . After all, how could there be a system in which benefits are claimed other than by applying to the plan administrator. See Ayers v. Continental Cas. Co., 955 F.Supp. 50, 53 (W.D.Va.1996).
The majority holding, resting as it does primarily on the nature of the application process, also underscores the weakness of its grammatical argument. “Evidence satisfactory to the Insurance Company,” as in Miller, 925 F.2d at 983 , or “evidence satisfactory to the committee,” as in Bali v. Blue Cross & Blue Shield Ass’n, 873 F.2d 1043, 1047 (7th Cir.1989), are clear. Indeed, the concession in Yeager, notiiig that the language in that policy could be clearer, see Yeager, 88 F.3d at 381, and the majority’s footnote 8 today, admonishing plan drafters, undercut the specific reasoning of Yeager, that there is “no *560 meaningful distinction between” the two types of language [“submit proof that is satisfactory to us” v. “submit satisfactory proof of total disability to us.”]. Id. at 380-81.
Finally, it is well to note that the key plan language here does not even require “satisfactory proof,” as in Yeager. Rather, it requires the claimant to furnish “written proof,” and only later states that the claimant must show “satisfactory evidence ... that [he] has jumished all required proofs.... ” Majority Opinion at 555 (emphasis added). Obviously, if a claimant has submitted a claim with support that is objectively sufficient to prove the claim, that would have to be “satisfactory evidence” of his having furnished such proof! The nature of the proof required is itself qualified only by the term “written,” and the grant of discretion, if there is to be one, must be carried simply in the language “written proof.” Thus, only the majority’s structural argument can possibly be a logical basis for its holding today.
III
The large majority of courts that have ruled on language that does not contain, a referent as to who shall decide the quality of proof submitted have held that such language does not grant discretion, and have applied de novo review.
A very recent Ninth Circuit case, Kearney, is the clearest. See Kearney v. Standard Ins. Co., 144 F.3d 597, 600 (9th Cir.1998). There, a requirement of “satisfactory written proof’ of loss was found not to create a discretionary standard of review. Ibid, at 605. The opinion specifically held that a previous Ninth Circuit case, Snow v. Standard Ins. Co., 87 F.3d 327 (9th Cir.1996), did not dictate a discretionary standard of review, because the language in Snow (“proof satisfactory to the company”) differentiated it from that in Kearney (“satisfactory written proof’). Kearney , 144. F.3d at 609-10. In so holding, the circuit chose between the decisions of two of its district courts — William son v. Unum Life Ins. Co., 943 F.Supp. 1226 (C.D.Cal.1996), which came to the same conclusion, and Atkin v. Standard Ins. Co., No. C95-01176 FMS, 1996 WL 88814 , at *1 (N.D.Cal. Feb.16, 1996), which relied on Snow to find that such language granted discretion.
In Bounds v. Bell Atlantic Enter., 32 F.3d 337, 339 (8th Cir.1994), the 8th Circuit similarly held that “adequate proof of loss” did not confer discretion. This was confirmed in the more recent case of Brown v. Seitz Foods, Inc., 140 F.3d 1198, 1199-1200 (8th Cir.1998), which involved the phrase “due ... proof of loss.”
Additionally, clear decisions invoking de novo review were issued by district courts in the District of Massachusetts in Cleary v. Knapp Shoes Inc., 924 F.Supp. 309, 312 (D.Mass.1996) (“submit proof of loss”); the Southern District of New York in Sarosy v. Metropolitan Life Ins. Co., No. 94-CIV 543(SHS), 1996 WL 426387 , at *1 (S.D.N.Y. July 30, 1996) (“written proof of loss”); and the Western District of Virginia in Ayers, 955 F.Supp. at 53 (“due written proof of loss”).
In the 4th Circuit case of Quesinberry v. Life Ins. Co., 987 F.2d 1017 , 1020-22 (4th Cir.1993), the court noted that both parties conceded that de novo review applied to language stating that the claimant must in accord with terms of the policy “file proof of loss.”
The primary authority to the contrary appears to be the 7th Circuit’s holding in Patterson v. Caterpillar Inc., 70 F.3d 503, 505 (7th Cir.1995), although the language there could be considered a bit stronger than in our ease, in that the plan stated that the claimant must file “such due proof as shall be ... required.” Feeling themselves bound by Patterson , district courts in the 7th Circuit have held similarly. See Bollenbacher v. Helena Chem. Co., 926 F.Supp. 781, 786 (N.D.Ind.1996) (“when the company receives proof’); Infantino v. Waste Management, Inc., 980 F.Supp. 262, 266 (N.D.Ill.1997) (provide “proof’ of disability). However, even within the 7th Circuit, in the case of Lehmann v. UNUM Life Ins. Co., 916 F.Supp. 897 (E.D.Wis.1996), the district court for the Eastern District of Wisconsin held that “satisfactory proof’ did not confer discretionary review.
In fact, the Caldwell case, from the District of Kansas, is the only clear holding from *561 an unfettered court that accepts the proposition that naked language requiring “proof,” with or without some qualifier such as “due,” “proper,” or “satisfactory,” is enough to be a clear grant of discretion to the plan administrator. See Caldwell, 959 F.Supp. at 1361. 2
IV
Thus, based both on the ordinary rules of English and the large preponderance of authority from other federal courts, we should hold that the language in Aetna’s policy does not grant to Aetna the type of discretion required by Firestone . I therefore respectfully dissent.
. Caldwell v. Life Ins. Co. does involve a finding of a grant of discretion in a case where there is no indirect object or discretionary language. 959 F.Supp. 1361 (D.Kan.1997). Patterson v. Caterpillar Inc., 70 F.3d 503, 505 (7th Cir.1995), arguably does not have such language, though it does contain the stronger direction that the claimant must submit "such due proof as shall be ... required.” See infra pp. 560-561.
. District courts within our own circuit, understandably at something of a loss for guidance following Yeager, Perez, and the en banc rehearing of Perez, have reached mixed results. Judge Gadola in the Eastern District of Michigan (pre- Yeager) held that “receives proof” of loss did not confer discretion, Holsey v. UNUM Life Ins. Co., 944 F.Supp. 573, 576 (E.D.Mich. 1996); however, following Yeager, the same judge found that "satisfactory proof” did confer discretion. Miller v. Auto-Alliance Int’l, Inc. 953 F.Supp. 172, 175 (E.D.Mich.1997). Judge Feikins, also in the Eastern District of Michigan, held that "due written proof of loss” did not confer discretion, War-shaw v. Continental Cas. Co., 972 F.Supp. 428, 430 (E.D.Mich.1997), as did Judge Bell in the Northern District of Ohio in Ragsdale v. Unum Life Ins. Co., 999 F.Supp. 1016, 1017-18 (N.D.Ohio 1998), with respect to a simple requirement for submission of "proof.”

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9491330. Public record. Not legal advice.