Chevron Chemical Co. v. Oil, Chemical and Atomic Workers Local Union 4-447
Decision Date | 23 February 1995 |
Docket Number | No. 94-30035,94-30035 |
Parties | 19 Employee Benefits Cas. 1362, Pens. Plan Guide P 23,907 CHEVRON CHEMICAL COMPANY, et al., Defendants-Appellants, v. OIL, CHEMICAL AND ATOMIC WORKERS LOCAL UNION 4-447, et al., Plaintiffs-Appellees. |
Court | U.S. Court of Appeals — Fifth Circuit |
Hilton S. Bell, Julia M. Pearce, Milling, Benson, Woodward, Hillyer, Pierson & Miller, Isadore H. Koretzky, Grant Coleman, Elvige C. Richards, Carver, Darden, Koretzky, New Orleans, LA, for appellants.
Louis L. Robein, Jr., Robein, Urann & Lurye, Metairie, LA, for appellees.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before DAVIS, BARKSDALE, and STEWART, Circuit Judges.
The central issue at hand is whether the district court should have applied the abuse of discretion standard of review to the interpretation given an ERISA plan by its administrator. Members of a local union challenged the decision by a review panel of Chevron Chemical Company's Mental Health/Substance Abuse Plan (MH/SA Plan) that the members' coverage in the plan had not terminated because they continued to participate in another medical plan "sponsored by or offered through" Chevron; but, in a de novo review of that decision, the district court held otherwise. We conclude that the court should have applied the abuse of discretion standard; and, applying it to the administrator's decision, we REVERSE and RENDER.
In January 1989, as part of furnishing health care benefits, Chevron began covering its employees in the MH/SA Plan, and designated that plan as the primary recipient of the overall health care dollars it would contribute on behalf of its employees. In other words, for all of its employees' health care coverage, it agreed to contribute a sum certain, but with the first dollars earmarked for the MH/SA Plan.
These contributions, however, were not available immediately to all employees; contributions on behalf of union represented employees were conditioned on acceptance of the MH/SA Plan by their collective bargaining agent. In April 1990, Chevron and Oil, Chemical and Atomic Workers Local Union 4-447 (OCAW) executed a collective bargaining agreement for represented employees at Chevron's Oak Point facility in Belle Chasse, Louisiana; as a result, the OCAW members commenced being covered by the MH/SA Plan.
But shortly thereafter (June 1, 1990), some OCAW members terminated their participation in the general medical plan sponsored by Chevron, electing instead to participate in a newly negotiated, union-sponsored plan (OCAW Plan). Accordingly, Chevron commenced diverting a portion of its contributions for those employees' health care to the OCAW Plan, but continued to direct the first dollars of its contributions for them to the MH/SA Plan.
Because the OCAW Plan was sponsored by the union and provided, inter alia, a mental health/substance abuse rider, certain OCAW Plan participants believed that their participation in the MH/SA Plan had terminated, and so notified Chevron. It disagreed.
In November 1990, OCAW filed a claim with the MH/SA Plan, contending that named OCAW members were entitled to the "first dollars" that Chevron had earmarked for the MH/SA Plan. This position was based on MH/SA Plan Sec. 3(a)(i): "[i]f [a] Member participates in a health care plan sponsored by or offered through [Chevron]", his coverage under the MH/SA Plan does not terminate until the date that his coverage under the other plan also terminates.
Thus, the issue became whether the OCAW Plan was "sponsored by or offered through" Chevron. If it was, Chevron could continue to direct the "first dollars" to the MH/SA Plan; if not, the OCAW members would be entitled to those "first dollars". Chevron's assistant manager, welfare plans (Administrator), denied OCAW's claim, on the basis that under the collective bargaining agreement, OCAW had agreed to participate in the MH/SA Plan.
As a result, and maintaining that the OCAW Plan "is not a Chevron sponsored or offered plan", OCAW appealed to the review panel (Review Authority). In April 1991, the Review Authority rejected OCAW's contention, and upheld the Administrator's denial, stating in part that the OCAW Plan
Pursuant to Sec. 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Sec. 1132(a)(1)(B), OCAW and 70 of its members commenced this action, seeking, inter alia, to recover benefits allegedly due them, and to clarify their rights to current and future benefits under the MH/SA Plan. The parties consented to trial before a magistrate judge, who applied a de novo review to the Review Authority's decision. 1 Holding that, pursuant to Sec. 3(a)(i) of the MH/SA Plan, the OCAW members' coverage had terminated because the OCAW Plan is not "sponsored by or offered through" Chevron, the court ordered retrospectively the termination of coverage and restitution of contributions that Chevron had directed to the MH/SA Plan.
Critical to this appeal is the standard of review that the district court should have applied to the plan interpretation--de novo or abuse of discretion. Obviously, we must address that issue first, before turning to whether the OCAW Plan is "sponsored by or offered through" Chevron.
Sweatman v. Commercial Union Ins. Co., 39 F.3d 594, 600 (5th Cir.1994). Whether the district court employed the correct standard of review to an administrator's eligibility determination/plan interpretation is a question of law. Therefore, we review freely the district court's decision to apply a de novo, rather than an abuse of discretion, review. As hereinafter discussed, we conclude that, under the terms of the MH/SA Plan, the Administrator is given discretion in determining OCAW's claim, and that this discretion is vested also in the Review Authority; accordingly, the district court should have applied the abuse of discretion standard of review.
In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the Supreme Court held that
a denial of benefits challenged under Sec. 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.
Id. at 115, 109 S.Ct. at 956-57. Our court has recognized, however (as did the district court), that the Supreme Court Wildbur v. ARCO Chem. Co., 974 F.2d 631, 637 (5th Cir.) (quoting Block v. Pitney Bowes Inc., 952 F.2d 1450, 1453 (D.C.Cir.1992)), modified on other grounds, 979 F.2d 1013 (5th Cir.1992). On the other hand, discretionary authority cannot be implied, Cathey v. Dow Chem. Co. Medical Care Program, 907 F.2d 554, 558-59 (5th Cir.1990), cert. denied, 498 U.S. 1087, 111 S.Ct. 964, 112 L.Ed.2d 1051 (1991); "an administrator has no discretion to determine eligibility or interpret the plan unless the plan language expressly confers such authority on the administrator." Wildbur, 974 F.2d at 636.
When the union members began participating in the OCAW Plan in June 1990, MH/SA Plan Sec. 10 provided as follows: 2
SECTION 10. ADMINISTRATION AND OPERATION OF THE PLAN
....
(b) Administrative Power and Responsibility. The [Administrator] is the named fiduciary that has the authority to control and manage the administration and operation of the Plan. The [Administrator] shall prescribe such forms, make such rules, regulations, interpretations and computations and shall take such other action to administer the Plan as [he] may deem appropriate. In administering the Plan, the [Administrator] shall at all times discharge [his] duties with respect to the Plan in accordance with the standards set forth in section 404(a)(1) of ERISA.
As discussed, although the MH/SA Plan does not state that the Administrator has "discretion" to make eligibility determinations or plan interpretations, this is not a sine qua non for an administrator to be vested with such discretion. In addition to having "the authority to control and manage the administration and operation of the Plan", the Administrator is empowered to "make such rules, regulations, [and] interpretations ... and [to] take such other action ... as [he] may deem appropriate." (Emphasis added.) Thus, based on the MH/SA Plan's language, the Administrator has discretionary authority to make eligibility determinations and plan interpretations. See Salley v. E.I. DuPont de Nemours & Co., 966 F.2d 1011, 1014 (5th Cir.1992) ( ). 3
Because the district court reviewed the Review Authority's decision, not the Administrator's, OCAW contends that we should not focus on the authority given the Administrator, but, rather, on that given to a distinct, separate entity--the Review Authority. MH/SA Plan Sec. 13 provides for...
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