124 F.3d 211 (9th Cir. 1997), 96-35229, Ficalora v. International Business Machines Corp.

Docket Nº:96-35229.
Citation:124 F.3d 211
Party Name:Robert A. FICALORA, Plaintiff-Appellant, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, a Delaware corporation licensed to conduct business in Washington; J.J. Sinnott, IBM Plan Administrator; International Business Machines, Inc. Medical Disability Income Plan; Chase Manhattan Bank, Trustee of MDIP; Michael A. Tarre, MDIP Administrator; Arnold J.
Case Date:September 15, 1997
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 211

124 F.3d 211 (9th Cir. 1997)

Robert A. FICALORA, Plaintiff-Appellant,

v.

INTERNATIONAL BUSINESS MACHINES CORPORATION, a Delaware corporation licensed to conduct business in Washington; J.J. Sinnott, IBM Plan Administrator; International Business Machines, Inc. Medical Disability Income Plan; Chase Manhattan Bank, Trustee of MDIP; Michael A. Tarre, MDIP Administrator; Arnold J. Kaminer; Charles D. Grose, M.D.; Steve Redmond, M.D.; W.R. Matson; D.A. Peguero; T.L. Richards; D.B. Robbins, M.D., Defendants-Appellees.

No. 96-35229.

United States Court of Appeals, Ninth Circuit

September 15, 1997

Editorial Note:

This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA9 Rule 36-3 regarding use of unpublished opinions)

Argued and Submitted June 5, 1997.

Appeal from the United States District Court for the Western District of Washington. Robert J. Bryan, District Judge, Presiding.

Before WRIGHT, PREGERSON and THOMPSON, Circuit Judges.

MEMORANDUM [*]

In 1980, International Business Machines (IBM) employed Robert A. Ficalora. In 1988, Ficalora began experiencing vision loss, fatigue, and numbness. After his doctor diagnosed him with multiple sclerosis (MS), Ficalora applied for benefits under IBM's Medical Disability Income Plan (MDIP or the Plan). The Plan Administrator denied Ficalora's request for benefits because Ficalora did not demonstrate that MS prevented him from being gainfully employed, as required by the Plan.

Ficalora then sued IBM in federal district court to enforce his right to benefits under the Plan, pursuant to Section 1132(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (ERISA). The district court granted summary judgment in IBM's favor, and Ficalora appeals. We have jurisdiction under 28 U.S.C. S 1291, and we affirm.

I

STANDARD OF REVIEW

A denial of benefits under ERISA should be "reviewed under a de novo standard unless the benefit plan gives the administrator ... discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). If an ERISA plan vests a plan administrator with such discretionary authority, however, "a district court may review the administrator's determination only for an abuse of discretion." Winters v. Costco Wholesale Corp., 49 F.3d 550, 552 (9th Cir.), cert. denied, 116 S.Ct. 276 (1995).

In the present case, the Plan provides:

The Plan Administrator shall have full power and au-thority to determine all matters arising in the administration, interpretation and application of the Plan, not inconsistent with the provisions of applicable law, and its interpretation and decisions with respect thereto shall be final and conclusive

Ficalora argues that the district court erred when it applied an abuse of discretion standard of review because: (1) the Plan did not give the Plan Administrator the discretion to make benefits decisions, and (2) the Plan Administrator's decision to deny benefits was influenced by a conflict of interest.

We disagree with both of Ficalora's arguments. We have repeatedly held that language similar to the language in IBM's Plan gives plan administrators the discretionary authority to determine eligibility for benefits. See, e.g., Canseco v. Construction Laborers Pension Trust for Southern California, 93 F.3d 600, 605 (9th Cir.1996), cert. denied, 117 S.Ct. 1250 (1997) (trustee of plan "shall have the power to administer" the plan, including the power "to construe the provisions of the Plan" and "any such construction adopted in ... good faith shall be binding"); Patterson v. Hughes Aircraft Co., 11 F.3d 948, 949 n. 1 (9th Cir.1993) (the plan administrator will issue a "written decision of approval or denial" including, in the event of denial a "clear reference to the Plan provisions upon which the denial is based."); Jones v. Laborers Health & Welfare Trust Fund, 906 F.2d 480, 481 (9th Cir.1990) (trustees shall have power "to construe the provisions of this Trust Agreement and the Plan, and any such construction adopted by the [trustees] in good faith shall be binding"); Madden v. ITT Long Term Disability Plan for Salaried Employees, 914 F.2d 1279, 1284 (9th Cir.1990) (the Administration Committee "shall have the exclusive right ... to interpret the Plan and to decide any and all matters arising hereunder, including the right to remedy possible ambiguities, equities, inconsistencies, or omissions ... [and] all interpretations and decisions of the ... Administration Committee ... with respect to any matter hereunder shall be final, conclusive and binding on all parties affected thereby.").

Under our precedent, the Plan Administrator's decision to deny Ficalora benefits is not subject to de novo review because it was not influenced by a conflict of interest. The parties do not dispute that a conflict of interest exists: IBM both employs the Plan Administrator and pays, either directly or through a fund, any benefits administered pursuant to the Plan.

To determine if a Plan Administrator's decision is entitled to a less deferential standard of review because of such a conflict, we employ a two-stage inquiry. Atwood v. Newmont Gold Co., 45 F.3d 1317, 1323 (9th Cir.1995). In the first stage, we "must determine whether the affected beneficiary has provided material, probative evidence, beyond the mere fact of the apparent conflict, tending to show that the fiduciary's self-interest caused a breach of the administrator's fiduciary obligations to the beneficiary." Id. Assuming that the beneficiary successfully satisfies this burden, in the second stage, "the plan bears the burden of producing evidence to show that the conflict of interest did not affect the decision to deny benefits." Id. If the plan does not carry that burden, we must review de novo the plan administrator's denial of benefits. Id.

Ficalora satisfied his burden in the first stage of this inquiry by pointing to a statement made by James J. Sinnott while he was the Plan Administrator considering Ficalora's request for benefits. According to Ficalora, Sinnott stated: "we are not going to pay you for the rest of your life."

Nevertheless, the district court was correct in applying an abuse of discretion standard of review, because IBM satisfied its burden, in the second stage, of "producing evidence to show that the conflict of interest did not affect the decision to deny benefits." Atwood, 45 F.3d at 1323. The plan administrator ultimately responsible for denying Ficalora benefits was Michael A. Tarre, not Sinnott. And, nothing in the record indicates that Tarre was influenced by a conflict of interest.

We conclude that the district court properly applied an abuse of discretion standard of review.

II

DENIAL OF BENEFITS

An ERISA plan administrator such as Tarre abuses his discretion if he "relies on clearly erroneous findings of fact in making benefits determinations." Taft v. Equitable Life Assur. Soc., 9 F.3d 1469, 1473 (9th Cir.1993); see also Atwood, 45 F.3d at 1323-24. Ficalora argues that Tarre relied on a clearly erroneous finding of fact in making the benefits denial decision--tarre's finding that Ficalora did not prove that MS prevented him from "the taking of any employment for pay or profit." 1

IBM concedes that Ficalora adequately demonstrated he suffered from MS. Based on the evidence available to him at the time he made his decision, however, Plan Administrator Tarre did not clearly err in finding that Ficalora did not demonstrate that MS precluded Ficalora from engaging in any gainful employment. Dr. Swanson, the IBM physician who examined Ficalora, stated that Ficalora had "no clear physical Limitation" that would prevent him from working, and nothing in the record establishes that Ficalora was completely disabled from working. Given this state of the record, Tarre did not clearly err in finding that Ficalora failed to prove he was incapable of performing any work for...

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