Martinez v. Sun Life Assurance Co. of Can.
| Citation | 948 F.3d 62 |
| Decision Date | 27 January 2020 |
| Docket Number | No. 18-2127,18-2127 |
| Parties | Marco MARTINEZ, Plaintiff, Appellant, v. SUN LIFE ASSURANCE COMPANY OF CANADA, Defendant, Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (1st Circuit) |
R. Joseph Barton, with whom Colin M. Downes and Block & Leviton LLP, Boston, MA, were on brief, for appellant.
Mark Schmidtke, Chicago, IL, with whom Diane M. Saunders, Boston, MA, David L. Schenberg, St. Louis, MO, and Ogletree, Deakins, Nash, Smoak & Stewart, P.C. were on brief, for appellee.
Before Torruella, Lipez, and Kayatta, Circuit Judges.
Appellant Marco Martinez challenges the decision by Sun Life Assurance Company of Canada ("Sun Life") to offset his benefits under its employer-sponsored long-term disability insurance policy ("the Plan") by the amount of his service-connected disability compensation ("Veterans' Benefits"). The district court found that Sun Life properly interpreted the language of the Plan to permit the offset and entered judgment for Sun Life on all counts.
Martinez argues that the district court erred in two primary ways: by concluding as a matter of law that Veterans' Benefits unambiguously qualify as a form of "Other Income Benefit" covered by the Plan's offset provision, and by rejecting as a matter of law that Sun Life's offset determination was motivated, at least in part, by his military service in violation of the Uniformed Services Employment and Reemployment Rights Act ("USERRA").
After careful review of the facts and law, we affirm.
The relevant facts are undisputed by the parties. Martinez is a disabled veteran who suffers from multiple sclerosis. He was honorably discharged from the United States Army in 1992. In September 2010, Martinez began work for the Athens Group and later became a participant in its employee welfare benefit plan, which included long-term disability benefits provided pursuant to an insurance policy issued by Sun Life and governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). In November 2012, when his health deteriorated, Martinez submitted a claim to Sun Life for long-term disability benefits. Sun Life approved his claim. Under the Plan, Martinez was entitled to monthly benefit payments calculated at sixty percent of his total monthly earnings, less any "Other Income Benefits." "Other Income Benefits," as defined by the Plan, include the following:
After Martinez had been receiving long-term disability benefits under the Plan for nearly a year, he submitted a claim in November 2013 to the United States Department of Veterans' Affairs ("the VA") for service-connected disability compensation pursuant to the Veterans' Benefits Act, 38 U.S.C. § 1110. The VA awarded Martinez Veterans' Benefits in January 2015, retroactive to July 19, 2013, based on a number of health conditions caused or aggravated by his military service, including multiple sclerosis. Martinez promptly notified Sun Life that his claim for Veterans' Benefits had been granted. By letter dated March 25, 2015, Sun Life informed Martinez that his Veterans' Benefits were considered "Other Income Benefits" subject to offset under the Plan and, as a result, his monthly Plan benefits would be decreased from $2,500 to $465. Sun Life also sought reimbursement of $32,560 for past overpayments. In describing Martinez's Veterans' Benefits as "Other Income Benefits," the letter excerpted the entire "Other Income Benefits" section of the Plan1 without further specifying which provision authorized the offset. The letter also notified Martinez of his right to appeal Sun Life's decision.
Martinez responded by asking Sun Life for clarification of which "Other Income Benefits" provision it relied upon for its decision. Sun Life referred Martinez to Sections 1.f and 6 of the Plan, quoting both Section 1 and Section 6 in full. Sun Life's letter bolded the language "any other act or law of like intent" in subsection 1.f and "or any similar plan or act" in Section 6. Martinez then submitted a formal appeal of Sun Life's decision, asserting various reasons for the exclusion of Veterans' Benefits as "Other Income Benefits" under the Plan, including that such benefits are not "compulsory" under Section 1.d.
In its letter denying Martinez's appeal, Sun Life again quoted the entire "Other Income Benefits" section of the Plan and stated:
Other Income Benefits are defined by the policy, as noted above. Specifically, Veteran Benefits would be considered disability or retirement benefits under the United States Social Security Act, or any similar plan or act or any other act or law of like intent. You are receiving Veteran Benefits due to a service connection for multiple sclerosis with the loss of use of both feet. You are receiving Long Term Disability benefits because of your multiple sclerosis diagnosis. Because you are being paid Veteran Benefits, as a result of your disability, the Veteran Benefits are considered Other Income.
The letter cited a number of federal cases supporting its decision, including Holbrooks v. Sun Life Assurance Co. of Canada, 570 F. App'x 831 (10th Cir. 2014), which held that service-connected disability benefits are awarded under a "Compulsory Benefit Act or Law" pursuant to the same policy language as set forth in the Plan. See id. at 835. After receiving Sun Life's letter denying his appeal, Martinez filed the instant action.
Martinez's complaint asserts seven counts: Count I alleges discrimination based on service in the military in violation of USERRA, 38 U.S.C. § 4311 ; Count II seeks benefits pursuant to ERISA, 29 U.S.C. § 1132(a)(1)(B) ; Count III alleges that Sun Life breached its fiduciary duty in violation of ERISA, 29 U.S.C. § 1104(a)(1)(A), (B), and (D) ; Count IV alleges co-fiduciary liability in violation of ERISA, 29 U.S.C. § 1105(a) ; Count V alleges violation of the Veterans' Benefits Act, 38 U.S.C. § 5301(a) ; Count VI seeks declaratory and injunctive relief under ERISA, 29 U.S.C. § 1132(a)(3), and 28 U.S.C. §§ 2201 - 02 ; and Count VII alleges knowing participation in a fiduciary breach by a non-fiduciary in violation of ERISA, 29 U.S.C. § 1132(a)(3). Sun Life filed a motion to dismiss, see Fed. R. Civ. P. 12(b)(6), which the district court denied without prejudice, instructing the parties to compile and file the administrative record regarding Martinez's ERISA benefit claim (Count II). After Sun Life submitted its complete claim file and applicable policy documents, Martinez moved for discovery on Count II. The district court denied the motion, stating that Martinez had not "overcome the strong presumption against discovery" in ERISA cases.
Sun Life then filed a motion for summary judgment on Count II, arguing that Martinez's Veterans' Benefits are "Other Income Benefits" and thus subject to offset as a matter of law because he receives them pursuant to a "Compulsory Benefit Act or Law" and "an act or law of like intent" to Workers' Compensation Law, both of which it contended are unambiguous terms within the Plan. In granting the motion, the district court held that the term "Compulsory Benefit Act or Law" unambiguously includes Veterans' Benefits like those awarded to Martinez. The court did not address the additional argument that Martinez's Veterans' Benefits also are awarded under "an act or law of like intent" to Workers' Compensation Law.
The district court then ordered the parties to file a joint report proposing a plan for resolving the remaining issues in the case. The parties proposed treating Sun Life's previously filed motion to dismiss as a motion for judgment on the pleadings. After briefing on the motion was complete, the court granted judgment for Sun Life on all remaining counts. The court held that Sun Life did not violate USERRA because Martinez's military status was not a motivating or substantial factor in the application of the "Other Income Benefits" provision of the Plan. The court found that "the plain language of the Plan does not distinguish between service members and non-service members;" rather, the Plan uniformly permits Sun Life to offset benefits received from third parties for the same disability, including Social Security disability benefits, which Martinez was also receiving and which had also been deducted from his Plan benefits. The district court also found that its prior ruling on Count II, concluding that Martinez's Veterans' Benefits were plainly included in the "Compulsory Benefit Act or Law" section of the Plan, compelled the conclusion that Sun Life did not breach any duties under ERISA as a fiduciary (Count III), a co-fiduciary (Count IV), or a non-fiduciary (Count VII) when it determined that Martinez's Veterans' Benefits were "Other Income Benefits" subject to offset.2 This appeal followed.
We begin with Martinez's ERISA claims, first addressing his appeal of the district court's summary judgment for Sun Life on Count II and then its dismissal of the other ERISA counts.
We review both a grant of summary judgment and a dismissal based on the pleadings de novo. Stamp v. Metro. Life Ins. Co., 531 F.3d 84, 87 (1st Cir. 2008) (summary judgment); Mass. Nurses Ass'n v. N. Adams Reg'l...
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