Hensley v. NW. Permanente P.C. Retirement Plan & Trust
| Decision Date | 08 May 2001 |
| Docket Number | DEFENDANTS-APPELLEES,No. 99-35962,PLAINTIFFS-APPELLEES,PLAINTIFFS-APPELLEE,No. 99-35936,DEFENDANTS-APPELLANT,DEFENDANTS-APPELLANTS,PLAINTIFFS-APPELLANTS,No. 00-35025,AND,99-35936,99-35962,00-35025 |
| Citation | 258 F.3d 986 |
| Parties | (9th Cir. 2001) SANDRA HENSLEY; JOHN WIEST, JR.; DONNA HOHNSTEIN; LINDA ONHEIBER, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED,, v. NORTHWEST PERMANENTE P.C. RETIREMENT PLAN & TRUST, A DEFINED CONTRIBUTION PENSION PLAN; NORTHWEST PERMANENTE P.C., AN OREGON CORPORATION; RETIREMENT PLANS COMMITTEE OF THE NORTHWEST PERMANENTE P.C. RETIREMENT PLAN & TRUST, AN UNINCORPORATED ASSOCIATION; PERMANENTE PHYSICIANS RETIREMENT PLAN FOR NORTHWEST PERMANENTE P.C., A DEFINED BENEFIT PLAN; ADMINISTRATIVE COMMITTEE OF PERMANENTE PHYSICIANS RETIREMENT PLAN FOR NORTHWEST PERMANENTE P.C., AN UNINCORPORATED ASSOCIATION, SANDRA HENSLEY; JOHN WIEST, JR.; DONNA HOHNSTEIN; LINDA ONHEIBER, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED,, v. NORTHWEST PERMANENTE P.C. RETIREMENT PLAN & TRUST, A DEFINED CONTRIBUTION PENSION PLAN; NORTHWEST PERMANENTE P.C., AN OREGON CORPORATION; RETIREMENT PLANS COMMITTEE OF THE NORTHWEST PERMANENTE P.C. RETIREMENT PLAN & TRUST, AN UNINCORPORATED ASSOCIATION; PERMANENTE PHYSICIANS RETIREMENT PLAN FOR NORTHWEST PERMANENTE P.C., A DEFINED BENEFIT PLAN; ADMINISTRATIVE COMMITTEE OF PERMANENTE PHYSICIANS RETIREMENT PLAN FOR NORTHWEST PERMANENTE P.C., AN UNINCORPORATED ASSOCIATION, SANDRA HENSLEY; JOHN WIEST, JR.; DONNA HOHNSTEIN; LINDA ONHEIBER, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED,, AND KATE BURNHAM, PLAINTIFF, v. NORTHWEST PERMANENTE P.C. RETIREMENT PLAN & TRUST, A DEFINED CONTRIBUTION PENSION PLAN, NORTHWEST PERMANENTE P.C., AN OREGON CORPORATION; RETIREMENT PLANS COMMITTEE OF THE NORTHWEST PERMANENTE P.C. RETIREMENT PLAN & TRUST, AN UNINCORPORATED ASSOCIATION; PERMANENTE PHYSICIANS RETIREMENT PLAN FOR NORTHWEST PERMANENTE P.C., A DEFINED BENEFIT PLAN; ADMINISTRATIVE COMMITTEE OF PERMANENTE PHYSICIANS RETIREMENT PLAN FOR NORTHWEST PERMANENTE P.C., AN UNINCORPORATED ASSOCIATION,BANK OF CALIFORNIA NA, NATIONAL BANKING ASSOCIATION, TRUSTEE FOR NORTHWEST PERMANENTE PC RETIREMENT PLAN AND TRUST.; KATHLEEN HOLAHAN, M.D., FID |
| Court | U.S. Court of Appeals — Ninth Circuit |
[Copyrighted Material Omitted] Counsel John V. Acosta, James N. Westwood and Scott E. Crawford, Stoel Rives Llp, Portland, Oregon, for the defendants-appellants-cross-appellees.
Karen O'Kasey, Schwabe, Williamson & Wyatt, Portland, Oregon, for the plaintiffs-appellees-cross-appellants.
D.C. No. CV-96-01166-JMS On appeal from the United States District Court for the District of Oregon Janice M. Stewart, Magistrate Judge, Presiding
Before: Alfred T. Goodwin, Morton I. Greenberg,* and Johnnie B. Rawlinson, Circuit Judges.
This matter comes on before this court on the appeal by Northwest Permanente P.C. ("NWP") and the related defendants from the district court's order for summary judgment reflecting its decision that NWP, as administrator for two pension plans, abused its discretion in interpreting the term "employee" in determining that the plaintiffs, a group of nurse practitioners and physician assistants employed by the Kaiser Foundation Health Plan (the "Kaiser Health Plan"), an affiliate of NWP, were not eligible for pension benefits under the NWP plans. The plaintiffs cross-appeal from the district court's decision to apply an arbitrary and capricious standard of review to the administrators' determinations rather than reviewing them de novo. Finally, NWP appeals from the district court's order awarding attorney's fees to the plaintiffs predicated upon its conclusion that the plan administrators had abused their discretion in interpreting the NWP pension plans. We affirm the district court's decision to apply an abuse of discretion standard, but reverse its decision that NWP abused that discretion in interpreting the pension plans. Accordingly, we also reverse the district court's award of attorney's fees to the plaintiffs.
NWP is a private corporation formed by a group of physicians to provide medical services to members of the Kaiser Permanente Medicare Care Program (the "Kaiser Program"). The Kaiser Program provides prepaid healthcare services to groups and individuals enrolled in the Kaiser Health Plan, a nonprofit qualified health maintenance organization, which provides administrative and financial services within the Kaiser Program. The Program fulfills its obligations to Kaiser members by maintaining an affiliate, Kaiser Foundation Hospitals ("Kaiser Hospitals"), to provide hospital facilities, and by contracting with independent groups of physicians"(Medical Groups") to provide medical services. The Kaiser Health Plan and Kaiser Hospitals are affiliates and share a common board of directors. The Medical Groups are separate entities that contract with the Kaiser Health Plan to provide medical services. The plaintiffs, a group of nurse practitioners and physician assistants, work for and receive their compensation and retirement and health benefits from the Kaiser Health Plan. They work with NWP physicians and other health care professionals, essentially the Medical Groups.
NWP sponsors two pension benefit plans: the Northwest Permanente P.C. Retirement Plan and Trust (the "NWP Plan") and the Permanente Physicians Retirement Plan for Northwest Permanente P.C. (the "Physicians Plan"). We refer to these plans together as the "Plans." The NWP Plan is a defined contribution plan administered by a ten-person committee appointed by the NWP president. The Physicians Plan is a defined benefit plan administered by a ten-member committee comprised of physicians and employees of the Kaiser Health Plan and various Medical Groups. The committees do not include any nurse practitioners or physician assistants.
On December 22, 1994, the named plaintiffs anonymously tried to submit claims for benefits under the Plans. Following correspondence between counsel regarding the nature of the plaintiffs' claims, plaintiffs were informed on April 26, 1995, that for their claims to be considered, they would have to reveal their identities. On June 28, 1995, the plaintiffs revealed their identities and submitted to the respective Plan administrators a "formal claim and demand" for pension benefits.
On July 28, 1995, the NWP Plan administrator denied the plaintiffs' claim for benefits under that Plan. By letters dated September 21 and 22, 1995, the plaintiffs requested a hearing and review of the decision under the NWP Plan. Meanwhile, on September 20, 1995, the Physicians Plan administrator similarly denied the plaintiffs' claim for benefits. The plaintiffs did not immediately appeal from the Physicians Plan administrator's decision.
Thereafter, on November 3, 1995, the NWP Plan administrator granted the plaintiffs' request for a hearing and review of the initial denial. The administrator's letter stated that the plaintiffs could "appear, with their attorneys, and submit evidence and arguments in support of their position " and "submit in advance of the hearing evidence and written arguments they wish to be considered prior to the hearing. " The letter asked the plaintiffs to advise the NWP Plan administrator of any additional documents or information they wanted.
The plaintiffs did not request any additional information from the NWP Plan administrator, choosing instead, by letter dated November 27, 1995, to inform the administrator that they were withdrawing their request for a hearing and that they wanted a "final decision [to] be made upon this matter based on the record as it stands." The NWP Plan committee then reviewed the earlier decision, and on January 30, 1996, informed the plaintiffs that it was affirming the administrator's decision.
Then, on June 11, 1996, the plaintiffs requested review of the Physicians Plan administrator's decision, submitting with their request additional evidence and argument. Thereafter, the Physicians Plan committee affirmed the administrator's decision denying the plaintiffs benefits.
In denying the plaintiffs' claims, both Plan administrators relied primarily on the conclusion that the plaintiffs were not "employees" of NWP, the Plans' sponsor. According to the terms of both Plans, a person is eligible to participate only if he or she is a "Qualified Employee." A "Qualified Employee" is defined by the NWP Plan, in relevant part, as"any employee of Employer." "Employer" is defined as NWP. Similarly, the Physicians Plan defines a "Qualified Employee," in relevant part, as "any employee of the Medical Group." The "Medical Group" is defined as NWP. Neither Plan specifically defines "employee," an omission that gave rise to the plaintiffs' claim. The administrators applied a "W-2" definition to the term, finding that because NWP does not and never has treated the plaintiffs as W-2 employees for Internal Revenue Service purposes, they were not eligible for benefits under the Plans.
On behalf of themselves and approximately 150 similarly situated individuals, plaintiffs brought suit seeking injunctive relief and a declaratory judgment that they were entitled to pension benefits under the...
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