Kress v. Food Employers Labor Relations Ass'n

• Decision Date: 10 December 2004
• Docket Number: No. 03-2269.,03-2269.
• Parties: Paul KRESS, Plaintiff-Appellant, v. FOOD EMPLOYERS LABOR RELATIONS ASSOCIATION and United Food and Commercial Workers Health and Welfare Fund, Defendant-Appellee, and Giant Food Stores, Incorporated, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

391 F.3d 563

Paul KRESS, Plaintiff-Appellant, v. FOOD EMPLOYERS LABOR RELATIONS ASSOCIATION and United Food and Commercial Workers Health and Welfare Fund, Defendant-Appellee, and Giant Food Stores, Incorporated, Defendant.

No. 03-2269.

United States Court of Appeals, Fourth Circuit.

Argued: October 26, 2004.

Decided: December 10, 2004.

COPYRIGHT MATERIAL OMITTED

ARGUED: Louis Fireison, Bethesda, Maryland, for Appellant. Terra Elswick Castaldi, Morgan, Lewis & Bockius, L.L.P., Washington, D.C., for Appellee. ON BRIEF: Darin L. Rumer, Louis Fireison & Associates, P.A., Bethesda, Maryland, for Appellant. Harry W. Burton, Donald L. Havermann, Morgan, Lewis & Bockius, L.L.P., Washington, D.C. for Appellee.

Before WILKINSON and TRAXLER, Circuit Judges, and HAMILTON, Senior Circuit Judge.

Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Judge TRAXLER and Senior Judge HAMILTON joined.

OPINION

WILKINSON, Circuit Judge.

Paul Kress, a participant in his employer's welfare benefit plan, was injured by a third party in an automobile accident away from work. Under such circumstances, the plan will advance participants accident-related expenses. The Summary Plan Description emphasizes that such payments are in the nature of a "service" to the plan's members, because "[r]ecovery from a third party can take a long time."

In order to receive the advance, participants and their attorneys must execute a subrogation agreement to reimburse the plan "before all others" from any third-party recovery. Kress's attorney refused to sign the agreement. After the 180 day time limit expired, the claim for the advance was denied. Kress brought suit, alleging that denying benefits because of the attorney's refusal to sign was wrongful under ERISA, 29 U.S.C. § 1001 et seq. The district court granted summary judgment to the plan. Because the SPD was clear and in no way violated ERISA, we affirm.

I.

A.

The Food Employers Labor Relations Association & United Food and Commercial Workers Health and Welfare Fund ("Fund") is a multi-employer welfare benefit plan governed by ERISA. It resulted from collective bargaining between unions and the employers. The Fund is administered by its trustees, half of whom are appointed by the unions, and half by the employers. The governing plan document, the Summary Plan Description ("SPD"), grants the trustees "the discretion to interpret the terms of this document" and to "interpret and apply its terms in situations not expressly addressed" in the SPD.

Participation in the Fund depends upon being "employed" by a participating employer. There are six ways to maintain this status: (1) actively working; (2) being on paid vacation; (3) being on jury duty; (4) collecting accident and sickness benefits; (5) collecting workers' compensation from a participating employer; and (6) being on leave covered by the Family and Medical Leave Act. Dependents of participants are covered as well, so long as the participant maintains his or her "employed" status.

Although "[b]enefits are not payable if the disability is due to an injury or sickness which, as determined by the Trustees, is ... the responsibility of" a third party, the Fund does assist its participants in such situations by advancing them funds to cover the extraordinary expenses. The SPD conditions such accident and sickness benefits on participants and their attorneys signing a Subrogation Agreement ("Agreement"). The SPD and the Agreement require that the Fund be reimbursed "in full" if the participant recovers from a third party; they also allow the Fund to litigate the suit if the individual does not. The SPD provides:

Waiting for a third party to pay for these injuries may be difficult. Recovery from a third party can take a long time (you may have to go to court), and your creditors will not wait patiently. Because of this, as a service to you, the Fund will pay your (or your eligible dependent's) expenses based on the understanding that you are required to reimburse the Fund in full from any recovery you or your eligible dependent may receive, no matter how it is characterized. This process is called "subrogation."

...

The Fund extends benefits to you and your dependents only as a service to you. The Fund must be reimbursed if you obtain any recovery from another person or entity's insurance coverage.

... [Y]our acceptance of benefits from the Fund means that you have agreed to reimburse the Fund — in full — for any benefits it has paid from any settlement, judgement, insurance, or other payment you, your eligible dependent, or your attorney receive as a result of your accident. It does not matter how these amounts are characterized, why they are paid, or whether or not these other payments are specified as being for your Accident and Sickness or Medical bills. The Fund requires that you and/or your eligible dependent (if applicable) and your or your dependent's attorney fill out, sign, and return to the Fund office a subrogation agreement that includes a questionnaire about the accident. Your claim will not be deemed complete and will be pended for payment until your fully executed subrogation agreement is received by the Fund office. If it is not completed in a timely fashion, your claim will be denied.

(emphasis added). The SPD requires that the Subrogation Agreement be "fully executed" within 180 days. The Agreement, though not the SPD, explicitly states that reimbursement of the Fund has a priority "before all others."

B.

Partly because he valued the benefits the Fund would provide him and his dependents, Paul Kress chose to work for Giant. He was an employee at a Giant grocery store in Silver Spring, Maryland, and he was a Fund participant.

On November 14, 2000, Kress was injured by a third party. He "was stopped at a traffic light when [he] was hit from behind due to no fault of [his own]." After the accident, Kress was no longer actively working. Therefore, of the six methods of maintaining his connection to the Fund, Kress now only qualified on the basis of his receipt of accident and sickness benefits.

Although it denied Kress's claim for benefits because his injury was caused by a third party, the Fund sent Kress the Agreement so that he could receive his expenses subject to its terms. Kress indicated that he wished to avail himself of the subrogation option. In anticipation of a properly completed Agreement, the Fund advanced Kress over $1500. He signed the Agreement, but his attorney refused, writing to the Fund that "attorney fees and related costs must be paid first." The Fund then contacted Kress, warning him that his claim was in jeopardy — but that he could rectify the situation by directing his attorney to sign the Agreement. This did not happen, and the Fund notified Kress that he was therefore not eligible for accident and sickness benefits. Because of this, his last connection to the Fund was severed, and his and his dependents' benefits were terminated.

In May 2002, Kress filed suit in Maryland state court. The action was subsequently removed to the U.S. District Court for the District of Maryland. Kress sought a declaratory judgment, recovery of plan benefits, and damages for breach of fiduciary duty. The gravamen of his claims was that the SPD did not — and could not legally — require his attorney's signature on an Agreement as a condition for coverage. The district court, concluding that the SPD did in fact require precisely that, and that ERISA in no way impeded such a requirement, granted summary judgment for the Fund in September 2003. Kress v. Food Employers Labor Relations Ass'n, 285 F.Supp.2d 678 (D.Md.2003). This appeal, which Kress limits to the question of whether the Fund can condition the receipt of benefits on the attorney's signature, followed.

II.

We review a grant of summary judgment de novo. Bailey v. Blue Cross & Blue Shield, 67 F.3d 53, 56 (4th Cir.1995). When an ERISA plan denies benefits, that decision is reviewed under an abuse of discretion standard, if — as here — plan administrators are granted discretionary authority to interpret the plan. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). In the case before us, however, the Fund's discretionary authority is not implicated, because the terms of the plan itself are clear.

III.

A.

Kress argues that the SPD does not authorize the Fund to condition benefits on the attorney signature since "[t]he specific terms of that agreement are not found within" the SPD. It follows, he claims, that the SPD is ambiguous with respect to the contents of the Subrogation Agreement — in particular, the Agreement's requirement that the plaintiff reimburse the Fund from any tort recovery "before all others." Therefore, he argues, the Fund cannot "unilaterally" enforce the Agreement, but must negotiate its contents. We think, however, that the SPD clearly establishes the Fund's priority status.

We first turn to the plain language of the SPD to determine whether it in fact authorizes the Fund's actions. "[T]he plain language of an ERISA plan must be enforced in accordance with `its literal and natural meaning.'" United McGill Corp. v. Stinnett, 154 F.3d 168, 172 (4th Cir.1998) (quoting Health Cost Controls v. Isbell, 139 F.3d 1070, 1072 (6th Cir.1997)).

The SPD emphasizes that participants must reimburse the Fund. The SPD employs such phrases as reimbursement "in full," from "any recovery," "no matter how it is characterized." The SPD insists that funds are advanced "only as a service to you," that the reimbursement must come from "any recovery," and that "acceptance of benefits" connotes agreement to reimburse "in full" from "any settlement, judgment, insurance, or other payment" received, including payments "your attorney receive[s]." Only someone determined to seek loopholes could read this refrain to mean anything other than that the Fund refuses to subsidize any part of the...