Orzechowski v. The Boeing Company Non-Union Long-Term Disability Plan, 051117 FED9, 14-55919
|Opinion Judge:||BYBEE, Circuit Judge:|
|Party Name:||Talana Orzechowski, Plaintiff-Appellant, v. The Boeing Company Non-Union Long-term Disability Plan, Plan Number 625, an ERISA Plan; Boeing Company; Aetna Life Insurance Company, Defendants-Appellees.|
|Attorney:||Russell George Petti (argued), Los Offices of Russell G. Petti, La Canada, California; Glenn R. Kantor and Peter S. Sessions, Kantor & Kantor LLP, Northridge, California; for Plaintiff-Appellant. Ronald Keith Alberts, Matthew G. Kleiner, Jessica Wolff, Michelle L. Steinhardt, and Adelle Greenfiel...|
|Judge Panel:||Before: Alex Kozinski and Jay S. Bybee, Circuit Judges, and Donald E. Walter, District Judge.|
|Case Date:||May 11, 2017|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
Argued and Submitted August 30, 2016 Pasadena, California
Appeal from the United States District Court for the Central District of California Cormac J. Carney, District Judge, Presiding D.C. No. 8:12-cv-01905-CJC-RNB
Russell George Petti (argued), Los Offices of Russell G. Petti, La Canada, California; Glenn R. Kantor and Peter S. Sessions, Kantor & Kantor LLP, Northridge, California; for Plaintiff-Appellant.
Ronald Keith Alberts, Matthew G. Kleiner, Jessica Wolff, Michelle L. Steinhardt, and Adelle Greenfield, Gordon & Rees LLP, Los Angeles, California, for Defendants-Appellees.
Before: Alex Kozinski and Jay S. Bybee, Circuit Judges, and Donald E. Walter, [*] District Judge.
Employee Retirement Income Security Act
The panel reversed the district court's judgment, after a bench trial, in favor of the defendants in an ERISA action challenging a decision to terminate the plaintiff's long-term disability benefits.
The district court reviewed the benefits decision for an abuse of discretion because the ERISA plan gave defendants discretionary authority. The panel held that de novo review was required under California Insurance Code § 10110.6, which voided the discretionary clause contained in the plan.
The panel held that § 10110.6 is not preempted by ERISA because it falls within the savings clause set forth in 29 U.S.C. § 1144(b)(2)(A). Agreeing with the Seventh Circuit, the panel concluded that § 10110.6 is directed toward entities engaged in insurance, and it substantially affects the risk-pooling arrangement between the insurer and the insured.
The panel held that § 10110.6 applied to the plaintiff's claim because the relevant insurance policy renewed after the statute's effective date. The panel remanded the case to the district court.
BYBEE, Circuit Judge:
Talana Orzechowski challenges Aetna Life Insurance Company's (Aetna) decision to terminate her long-term disability benefits under a plan created by her employer, The Boeing Company (Boeing). Under the Employee Retirement Income Security Act of 1974 (ERISA), we may review a denial of benefits. Where a plan grants discretion to an administrator to determine benefits, we ordinarily review for abuse of discretion. By statute, however, California has voided such provisions conferring discretionary authority to ERISA plan administrators such as Aetna. Cal. Ins. Code § 10110.6(a). The district court held that California's statute did not apply to Boeing's plan and upheld Aetna's denial of benefits to Orzechowski. We disagree and hold that § 10110.6(a) applies here. We reverse the district court's judgment and remand the case to the district court to review Aetna's decision de novo.
A. Boeing's ERISA Plan
The lawsuit arises from Aetna's termination of Orzechowski's benefits under a health and welfare benefits plan that Boeing offers to its non-union employees (the Plan), which is governed by ERISA. The principal plan document is The Boeing Company Master Welfare Plan (Master Plan). This document provides general information about the various benefit plans Boeing offers, but does not detail the various benefits payable through the Plan. The Master Plan has a broad grant of discretionary authority, which has been delegated to a service representative, Aetna. This grant includes the power to "determine all questions that may arise including all questions relating to the eligibility of Employees and Dependents to participate in the Plan and amount of benefits to which any Participant or Dependent may become entitled."
The Master Plan incorporates by reference various component benefit programs and the applicable Governing Documents describing the entitlement to benefits under those programs. One such benefit program is The Boeing Company Non-Union Long-Term Disability Plan (PN 625) at issue in this case. The Summary Plan Description, a Governing Document, is a description of the plan which the Plan Administrator is required to provide under ERISA. 29 U.S.C. § 1022. Boeing's Summary Plan Description explains that insured employees are eligible for long-term benefits when they become disabled. For the first 24 months, "disabled" is defined as the employee's inability to perform "the material duties of [the employee's] own occupation" due to an injury or illness. (Emphasis added). After 24 months, disability is redefined so that an employee is disabled if she is "unable to work at any reasonable occupation for which [she] may be fitted by training, education, or experience." (Emphasis added). There are exclusions or limitations on the payment of long-term benefits. Relevant here, the long-term benefits plan covers conditions for a maximum of 24 months if the "primary cause" of the disability is "mental illness."
Aetna issued two documents, a policy and a certificate, which fund the disability benefits and are Governing Documents incorporated into the Master Plan.2 Through the Aetna Life Insurance Company Group Life and Accident and Health Insurance Policy No. 000707 (Policy) issued to Boeing, Aetna agreed to fund and administer long-term disability benefits to employees insured under the Boeing plan. The Policy includes a grant of discretionary authority to Aetna to "review all denied claims, " "determine whether and to what extent employees and beneficiaries are entitled to benefits, " and "construe any disputed or doubtful terms of the policy." The Policy further specifies that "Aetna shall be deemed to have properly exercised such authority unless Aetna abuses its discretion by acting arbitrarily and capriciously."
B. Orzechowski Becomes Disabled
Talana Orzechowski worked at Boeing until February 27, 2009. In 2004, she was diagnosed with fibromyalgia and chronic fatigue syndrome. In January and February 2009, Orzechowski began suffering memory problems and increases in fatigue. Orzechowski suffered from a number of serious symptoms of largely unknown cause, including fatigue, loss of motor control, spinal and joint pain, and loss of cognitive functioning. Some of the symptoms appeared to be psychological in nature, including depression, obsessive compulsions, and suicidal thoughts. Other symptoms were more typical of physical illness, such as profuse sweating, muscle and nerve pains, and lung weakness. She also suffered from a wide range of other physical ailments, including fatigue, headaches, tiredness, extended periods of sleeping, asthma, decreasing muscle tone, and nausea.
Orzechowski saw numerous doctors to attempt to...
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