215 F.3d 516 (5th Cir. 2000), 98-60639, Estate of Bratton v Nat'l Union Fire Ins. Co.
|Citation:||215 F.3d 516|
|Party Name:||Estate of LARRY M BRATTON, Joann M Bratton, executrix Plaintiff - Appellee, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; AIG LIFE COMPANIES; ITT THOMPSON INDUSTRIES INC; ITT GROUP ACCIDENT INSURANCE PROGRAM Defendants - Appellants.|
|Case Date:||June 20, 2000|
|Court:||United States Courts of Appeals, Court of Appeals for the Fifth Circuit|
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Appeal from the United States District Court For the Northern District of Mississippi
Before JONES, BARKSDALE and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
The plaintiff, the Estate of Larry Bratton, through JoAnn Bratton, Executrix, brought this suit under § 502(a)(1)(B) and § 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) and (a)(3), to recover benefits allegedly due under an optional voluntary group accident disability insurance policy offered to salaried employees of ITT Thompson Industries, Inc. ("ITT Thompson") and underwritten and administered by a health insurer, National Union Fire Insurance Company of Pittsburgh, Pennsylvania ("NUFI").1 Mr. Bratton was employed by ITT Thompson in Mississippi from February 1971 to August 20, 1976. Shortly after ITT Thompson terminated Mr. Bratton's employment, he was severely injured in an automobile accident on August 21, 1976. As a result, Mr. Bratton filed claims for and recovered benefits under other optional plans in which he had properly enrolled as an ITT Thompson employee, including a long-term disability benefit program underwritten byTravelers Insurance Company and an accidental death and dismemberment coverage provided by the Equitable Life Assurance Society. On January 22, 1996, over nineteen years after his August 21, 1976 accident, Mr. Bratton caused a notice of claim to be submitted to NUFI for disability benefits under the optional accident disability plan, outside the time limits set in the policy, and NUFI therefore denied his claim.2
During a bench trial, the district court, over defendants' objections, allowed the Estate of Larry Bratton to introduce evidence extraneous to the administrative record, including testimony from JoAnn M. Bratton, the widow of Mr. Bratton and Executrix of his estate, regarding the merits of the claim, such as her conversations with Mr. Bratton prior to his accident about their agreement that he should enroll for the coverage in question, her presence during his telephone conversation with an ITT Thompson or International Telephone and Telegraph Corporation, et. al. ("ITT Corp.") employee about dismemberment coverage after the accident, Mr. Bratton's statements to her following the telephone conversation, and her calculations and inferences that his final pay check stub showed the deduction of an amount for group insurance that included premiums for the disputed coverage. Rendering judgment for the Estate, the district court rested its decision on an equitable estoppel theory crucially based on findings of facts inferred from the trial evidence extrinsic to the administrative record. The district court inferred from JoAnn Bratton's calculations and its own based on Mr. Bratton's final pay check stub and cost of insurance data in ITT group insurance booklets introduced by the plaintiff that ITT Thompson had regularly deducted from Mr. Bratton's pay checks amounts corresponding to the cost of the optional accident disability insurance for Mr. Bratton with NUFI. The district court further found that, following the termination of Mr. Bratton's employment by ITT and his accident on August 21, 1976, he was led to believe during a telephone conversation, by an ITT personnel employee, whom the court inferred was acting as an ERISA fiduciary with respect to the group insurance in question, that his disability was not covered under the optional accident disability policy because he did not suffer severance of a limb.3 For reasons stated in its memorandum opinion, the district court rendered its final judgment ordering that the plaintiff recover of the defendants $258,394.26 ($51,000 in principal plus prejudgment interest from August 21, 1977) with interest and costs. The defendants appealed.
I. STANDARDS AND PROCEDURES OF JUDICIAL REVIEW
OF ERISA PLAN ADMINISTRATOR'S DENIAL OF BENEFITS CLAIMS
ERISA provides federal courts with jurisdiction to review benefit determinations
by fiduciaries or plan administrators. See 29 U.S.C. § 1132(a)(1)(B). Consistent with established principles of trust law, 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. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113-15 (1989). An administrator, fiduciary or trustee is a fiduciary to the extent that he exercises any discretionary authority or control. See id. at 113 (citing 29 U.S.C. § 1002(21)(A)(i)). If a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a factor in determining whether there is an abuse of discretion. See id. at 115.4
The plan administrator has the obligation to identify the evidence in the administrative record and the claimant must be afforded a reasonable opportunity to contest whether that record is complete. See Vega v. National Life Ins. Services, 188 F.3d 287, 295, 299 (5th Cir. 1999) (en banc) (citing Barhan v. Ry-Ron Inc., 121 F.3d 198, 201-02 (5th Cir. 1997)). Once the administrative record has been determined, the district court may not stray from it but for certain limited exceptions, such as the admission of evidence related to how an administrator has interpreted terms of the plan in other instances, and evidence, including expert opinion, that assists the district court in understanding the medical terminology or practice related to a claim. See id. at 299.5 Thus, the administrative record consists of relevant information made available to the administrator prior to the complainant's filing of a lawsuit and in a manner that gives the administrator a fair opportunity to consider it. See id. If an administrator has made a decision denying benefits when the record does not support such a denial, the court may, upon finding an abuse of discretion on the administrator's part, award the amount due on the claim and attorney's fees. See id. at 302 (citing Salley v. E.I. DuPont de Nemours & Co., 966 F.2d 1011, 1014 (5th Cir. 1992)).
Our review of the administrative record reveals that NUFI issued the master group optional voluntary accident policy to ITT Corp; that the policy designated NUFI as "the Company" and ITT Corp. as "the Holder"; and that neither ITT Corp., nor ITT Thompson, nor any of their affiliates or employees had or exercised any authority under the policy to act as an administrator or a fiduciary.6 Further,
the policy was administered solely by NUFI and its affiliate, AIG Life Companies, and, under the terms of the policy and ERISA, the insurer, NUFI, was the designated plan administrator.7 Consequently, we find no basis in law or the administrative record for the district court's conclusion that the ITT employee who discussed dismemberment coverage with Mr. Bratton by telephone was acting as a fiduciary with respect to the NUFI policy.8
For this reason, and because the district court strayed far outside the administrative record by conducting its own trial de novo on the merits of the claim, we can give no deference to its factual findings or application of equitable estoppel. Instead, we proceed to review the plan administrator's decision based upon the administrative record in accordance with Vega and the authorities upon which it relies.
The denial of benefits to Mr. Bratton by the NUFI plan administrator challenged by the plaintiff under § 1132(a)(1)(B) must be reviewed under a de novo standard because the NUFI optional voluntary accident disability policy does not give the administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan. See Bruch, 489 U.S. at 115. As the Supreme Court indicated in Bruch, the court therefore should review the claim "as it would...any other contract claim -- by looking to the terms of the plan and other manifestations of the parties' intent." Id. at 112-13 (citing Connery v. Phoenix Steel Corp., 249 A.2d 866 (Del. 1969); Atlantic Steel Co. v. Kitchens, 187 S.E.2d 824 (Ga. 1972); Sigman v. Rudolph Wurlitzer Co., 11 N.E.2d 878 (Ohio Ct. App. 1937)). For factual determinations under ERISA plans, however, we have held that federal courts owe due deference to an administrator's findings and, for their review, the abuse of discretion standard is appropriate. See Southern Farm Bureau Life Ins. Co. v. Moore, 993 F.2d 98, 101 (5th Cir. 1993); Pierre v. Connecticut Gen. Life Ins. Co., 932 F.2d 1552, 1562 (5th Cir. 1991).
Applying the foregoing standards to the administrative record, we conclude
that the administrator's denial of the plaintiff's claim should be upheld as being consistent with a correct interpretation of the insurance contract and a reasonable determination of facts based on the administrative record. Although the administrator may have misspoken in stating that the claim was barred by the "Statutes of Limitation" rather than the time limits set in the policy, her finding that "no claim for benefits had been filed prior to January 22, 1996," over nineteen years after Mr. Bratton's August 21, 1976 accident, shows that her decision was solidly based upon the record and consistent with a correct reading of...
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