Halpin v. W.W. Grainger, Inc.

• Citation: 962 F.2d 685
• Decision Date: 06 May 1992
• Docket Number: No. 91-1153,91-1153
• Parties: , 15 Employee Benefits Cas. 1500 John HALPIN, Plaintiff-Appellee, v. W.W. GRAINGER, INCORPORATED, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 685

962 F.2d 685

60 USLW 2779, 15 Employee Benefits Cas. 1500

John HALPIN, Plaintiff-Appellee, v. W.W. GRAINGER, INCORPORATED, Defendant-Appellant.

No. 91-1153.

United States Court of Appeals,

Seventh Circuit.

Argued Oct. 30, 1991.

Decided May 6, 1992.

David J. Bressler, Timothy McLean (argued), Rooks, Pitts & Poust, Wheaton, Ill., for plaintiff-appellee.

Harry Sangerman (argued), Timothy L. Moorehead, McDermott, Will & Emery, Chicago, Ill., Henry F. Galatz, W.W. Grainger, Inc., Skokie, Ill., for defendant-appellant.

Before EASTERBROOK, RIPPLE, and KANNE, Circuit Judges.

RIPPLE, Circuit Judge.

John Halpin's total disability benefits were terminated by W.W. Grainger, Inc. (Grainger), his employer and the administrator of the long-term disability plan that covered Mr. Halpin. Mr. Halpin brought an action under ERISA challenging Grainger's termination of his benefits and was granted summary judgment by the district court. Grainger now appeals. For the following reasons, we affirm.

I BACKGROUND

A. Facts

Grainger, an electrical equipment supplier, hired John Halpin in 1970 as a full-time outside sales representative. In December 1982, after twelve years of service, Mr. Halpin suffered an anterior wall myocardial infarction. On April 19, 1983, Mr. Halpin underwent a left ventricular aneurysm re-section. He continues under medication for coronary artery disease. In September of 1984, Mr. Halpin was awarded total disability insurance benefits by the Social Security Administration. Mr. Halpin also received total disability benefits under Grainger's long-term disability plan (Plan). In the spring of 1988, Thomas L. Jacobs & Associates (TLJ), which had been hired by Grainger to administer the Plan, notified Mr. Halpin that it was reviewing his eligibility for benefits and asked him to have his doctor fill out a questionnaire which it provided. His doctor did so. On May 30, 1988, TLJ notified Mr. Halpin that his disability payments were terminated because he no longer met the Plan's definition of total disability. Mr. Halpin appealed the termination, and Grainger denied his appeal. Mr. Halpin then brought this action for reinstatement of benefits.

B. District Court Proceedings

In the district court, the parties filed cross-motions for summary judgment. The district court determined that Grainger's termination of Mr. Halpin's benefits should be reviewed under the arbitrary and capricious standard. It based this determination on the discretionary authority which the Plan gave to Grainger to "determine all questions arising in the administration, interpretation and operation of the Plan." The district court found that there was no conflict of interest which would mandate a greater degree of scrutiny.

The district court then determined that the termination of benefits had been arbitrary and capricious: Grainger had not "articulated an explanation for the decision that takes into account all the relevant facts," gave "no explanation concerning why it did not consider rehabilitative employment together with vocational training, or why it did not make an effort to determine whether a suitable job offer would be

                made to plaintiff or whether ... employers are unlikely to risk employing a person of plaintiff's age and condition."  Memorandum Opinion and Order, No. 89 C 8700 at 9-10, 1991 WL 1710 (Jan. 4, 1991).   The district court granted summary judgment to Mr. Halpin and ordered retroactive reinstatement of his benefits
                

II ANALYSIS

A. Standard of Review

In reviewing the district court's decision to grant summary judgment, our task is to review de novo the record and the controlling law. ¹ Becker v. Tenenbaum-Hill Assocs., Inc., 914 F.2d 107, 110 (7th Cir.1990). The party moving for summary judgment bears the burden of establishing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); see Adickes v. S.H. Kress & Co., 398 U.S. 144, 159, 90 S.Ct. 1598, 1609, 26 L.Ed.2d 142 (1970). A motion for summary judgment is "not an appropriate occasion for weighing the evidence; rather, the inquiry is limited to determining if there is a genuine issue for trial." Lohorn v. Michal, 913 F.2d 327, 331 (7th Cir.1990). Any doubt as to the existence of a genuine issue for trial is resolved against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513-14, 91 L.Ed.2d 202 (1986).

As noted above, the district court determined that the Plan gave the administrator discretionary authority to determine eligibility and that, therefore, the administrator's decisions were to be reviewed under the arbitrary and capricious standard. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111, 109 S.Ct. 948, 954, 103 L.Ed.2d 80 (1989). Mr. Halpin argues that Grainger did not have discretion under the Plan to construe ambiguous terms and that therefore, under Bruch, Grainger's determinations under the Plan should have been reviewed de novo. See id. It is plain, however, under our caselaw, that the language of the Plan gave discretion to Grainger to interpret the Plan. The Grainger Plan provides that the administrator "shall determine all questions arising in the administration, interpretation and operation of the Plan." This language is very close to the language of the plan under review in Foster McGaw Hospital of Loyola University v. Building Material Chauffeurs, Teamsters & Helpers Welfare Fund of Chicago, 925 F.2d 1023, 1026 (7th Cir.) (plan giving trustees authority to "determine all questions arising in the administration, interpretation and application of the Health and Welfare Plan, including questions of eligibility ..." required deferential review), cert. denied, --- U.S. ----, 112 S.Ct. 74, 116 L.Ed.2d 48 (1991). ²

B. Statutory Procedures and Requirements for Denial of Benefits

ERISA sets certain minimum requirements for procedures and notification when a plan administrator denies a claim for benefits. In a nutshell, ERISA requires that specific reasons for denial be communicated to the claimant and that the claimant be afforded an opportunity for "full and fair review" by the administrator. Section 1133, 29 U.S.C. § 1133, reads as follows:

In accordance with regulations of the Secretary, every employee benefit plan shall--

(1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and

(2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

The regulations promulgated by the Secretary require that the initial notice of a claim denial contain

(1) The specific reason or reasons for the denial;

(2) Specific reference to pertinent plan provisions on which the denial is based;

(3) A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

(4) Appropriate information as to the steps to be taken if the participant or beneficiary wishes to submit his or her claim for review.

29 C.F.R. § 2560.503-1(f). These requirements insure that when a claimant appeals a denial to the plan administrator, he will be able to address the determinative issues and have a fair chance to present his case. As we noted in Wolfe v. J.C. Penney Co., 710 F.2d 388, 392 (7th Cir.1983), "[d]escribing additional information needed and explaining its relevance, as required by subsection (3) of 29 C.F.R. § 2560.503-1, enables a participant both to appreciate the fatal inadequacy of his claim as it stands and to gain a meaningful review by knowing with what to supplement the record."

The regulations also require plans to provide an internal appeals process: every plan must "establish and maintain a procedure by which a claimant or his duly authorized representative has a reasonable opportunity to appeal a denied claim to an appropriate named fiduciary, and under which a full and fair review of the claim and its denial may be obtained." 29 C.F.R. § 2560.503-1(g)(1). The review procedure must allow a claimant or his representative to "(i) Request a review upon written application to the plan; (ii) Review pertinent documents; and (iii) Submit issues and comments in writing." Id.

The regulations also require that the decision on review be made within 60 days of the appeal, or in special circumstances, within 120 days. The notice of the decision on review must include specific reasons and specific references to the pertinent plan provisions on which the decision is based. 29 C.F.R. § 2560.503-1(h).

Our case law, which is in accord with that of the other circuits, makes clear that these regulations are designed to afford the beneficiary an explanation of the denial of benefits that is adequate to ensure meaningful review of that denial. Noted Judge Wood for the court in Brown v. Retirement Committee of Briggs & Stratton Retirement Plan, 797 F.2d 521 (7th Cir.1986), cert. denied, 479 U.S. 1094, 107 S.Ct. 1311, 94 L.Ed.2d 165 (1987):

[T]he persistent core requirements of review intended to be full and fair include knowing what evidence the decision-maker relied upon, having an opportunity to address the accuracy and reliability of that evidence, and having the decision-maker consider the evidence presented by both parties prior to reaching and rendering his decision.

Id. at 534 (quoting Grossmuller v. International Union, United Auto., Aerospace & Agric. Implement Workers of Am., UAW, 715 F.2d 853, 858 n. 5 (3d Cir.1983)); accord Wolfe, 710 F.2d at 391-92. These requirements enable the claimant to prepare adequately "for any further administrative review, as well as appeal to the federal courts." Matuszak v. Torrington Co., ...