Bard v. Boston Shipping Ass'n

• Decision Date: 19 December 2006
• Docket Number: No. 06-1810.,06-1810.
• Citation: 471 F.3d 229
• Parties: Paul BARD, Plaintiff, Appellant, v. BOSTON SHIPPING ASSOCIATION; International Longshoremen's Association Pension Plan, a/k/a BSA-ILA Pension Plan, a/k/a BSA-ILA Trust Fund, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 229

471 F.3d 229

Paul BARD, Plaintiff, Appellant, v. BOSTON SHIPPING ASSOCIATION; International Longshoremen's Association Pension Plan, a/k/a BSA-ILA Pension Plan, a/k/a BSA-ILA Trust Fund, Defendants, Appellees.

No. 06-1810.

United States Court of Appeals, First Circuit.

Heard October 3, 2006.

Decided December 19, 2006.

Robert E. Daidone, for appellant.

Geoffrey P. Wermuth, for appellees.

Before TORRUELLA, Circuit Judge, CYR, Senior Circuit Judge, and LYNCH, Circuit Judge.

LYNCH, Circuit Judge.

This is an unusually complex denial of benefits case that arises under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461. The defendant is a multi-employer pension plan ("BSA-ILA" or "the Plan"), and at issue is a decision by its Board of Trustees ("the Board") to deny disability benefits to a former employee, Paul Bard. The district court upheld this denial. We reverse and order an award of benefits.

In so doing, we do not reach Bard's invitation to join those circuits holding that a plan's ERISA violations will strip it of the deference its decisions otherwise enjoy. Rather, using a model of analysis previously employed by this circuit, we hold that Bard was prejudiced by the Plan's numerous regulatory violations, and that on the particular facts here he is entitled to the remedy of an award of benefits.

I.

Bard worked as a crane operator on the Boston docks for some 30 years. On July 16, 2001, he was involved in a workplace accident. As Bard had a history of substance abuse and was working under a "last chance agreement," he was subjected to a post-accident drug test. He tested positive. His employment was accordingly terminated on July 23, 2001.

Bard sought medical treatment, and his doctors diagnosed him as suffering from a variety of psychological disorders that made him disabled and unable to work.¹ Before applying for disability benefits from the Plan, Bard applied for Social Security disability benefits on November 26, 2001. His Social Security claim was initially denied. However, on May 10, 2003, after a hearing at which Bard presented additional evidence, an ALJ issued a written opinion awarding Bard disability benefits on the basis that Bard had been suffering from a "severe" disability since July 22, 2001 — one day before Bard received his termination letter.

Armed with this finding, Bard applied for disability benefits from BSA-ILA. The troubled journey of that application is described below.²

A. The Plan's Structure and Documents

BSA-ILA is a multi-employer employee benefits plan, regulated by ERISA, and governed by a Board of Trustees composed of 14 members. Seven members are management trustees selected by the Boston Shipping Association, and seven are union trustees selected by the International Longshoremen's Association. If the trustees deadlock on an issue, an "impartial umpire" selected by the trustees will cast the deciding vote. A plan provision declares that "[e]xcept as provided by ERISA, all decisions of the Board, including all those made in the interpretation and administration of the Plan, shall be conclusive, final and binding."

For disability benefits, plan documents state that a claimant is eligible for these benefits if he, or she, is a "Participant who has completed fifteen . . . Years of Service [and] becomes totally and permanently disabled." The Plan also provides that "[t]he Board, upon competent medical evidence, shall be the sole judge of whether a Participant is disabled." The word "Participant" is defined in the Plan to mean "an Employee who has met the requirements of eligibility to participate in the Plan." "Employee" is in turn defined as "each individual who now, or hereafter is employed as a Longshoreman, Clerk, or Linehandler in the industry and is a member of the ILA and for whom an Employer is required to make contributions" to the Plan. Nothing in the Plan's documents explicitly states that an applicant for disability benefits must have become disabled at a time when he was still employed.

The administrative record contains what appears to be the summary plan description (SPD). See 29 U.S.C. § 1022(a) (requiring an ERISA plan to provide information about the plan "written in a manner calculated to be understood by the average plan participant and . . . sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan"). That SPD states that "[t]o be eligible [for disability benefits] you must: [(1)] Have completed 15 Years of Pension Service at the time you became disabled . . . [and (2)] Demonstrate to the Board by submission on approved forms of competent medical evidence that you are permanently and totally disabled." Nothing in the SPD states that the claimant must have been disabled at a time when he was still employed. The SPD is dated April 1988, and there is no evidence that the Plan ever updated its SPD, or, if so, that any updated description was provided to Bard.

B. Bard's First Benefits Application

Sometime between August and October of 2003, Bard notified BSA-ILA that he wanted to apply for disability benefits in accordance with the Plan's provisions. Bard's initial letter stated that he had been diagnosed with manic depression, "which the doctor felt was a chronic on going [sic] problem for many years," and that the Social Security Administration had found him mentally disabled. The record does not reveal whether Bard provided any documentation along with this letter.

At its regular meeting on October 29, 2003, the Board determined that Bard was not eligible to apply for a disability pension. The Board's minutes refer to a prior arbitration, dated July 15, 2002, which had rejected an application for disability benefits from a claimant named Gerard McLaughlin (the "McLaughlin arbitration"). The Board read the McLaughlin arbitration to mean that an individual who was no longer employed was ineligible to even apply for a disability pension. It also apparently interpreted this arbitration to mean that an employee is only eligible for benefits if he became totally and permanently disabled while still employed. We note that the Board had never amended the SPD to reflect these points, and Bard had no prior notice of the Board's reading.

It is also not clear that this was the correct reading. The McLaughlin decision, which is in the record, relied heavily on minutes from a February 1993 Board meeting in which the Board apparently denied a claim from a former employee named Paul Cocchi (the "Cocchi claim") because the "onset" of Cocchi's disabling condition had occurred after Cocchi had left employment. Finding McLaughlin's case indistinguishable from Cocchi's, the arbitrator denied McLaughlin's claim. Importantly, the decision specifically declined to extend itself to a situation where an employee "leaves employment because of the onset of a disabling condition that becomes total and permanent at a later date." This nuance apparently went unnoticed by the Board, and it is unclear if Bard was ever given an opportunity to dispute the Board's reading of the McLaughlin arbitration.³

C. The First Denial and Bard's Attempted Review

The record contains no evidence that the Board's first denial of benefits, or its specific reasons for that denial, were communicated to Bard in writing or by electronic means. This was in contravention of federal regulations. See 29 C.F.R. § 2560.503-1(g)(1) (requiring "written or electronic notification" of any initial "adverse benefit determination"); id. § 2560.503-1(g)(1)(i) (requiring that this notification explain the specific reasons on which the determination was based). By some means, however, Bard learned the outcome of the Board's first decision, although not necessarily its reasoning, as Bard took an administrative appeal in late 2003 to challenge the Board's initial determination.

The appeal apparently went to the Board because it had failed to provide for an independent appellate body. This also contravened regulations. See id. § 2560.503-1(h)(3)(ii), (h)(4) (requiring that an appeal be decided, without any deference to the prior determination, by an appropriate plan fiduciary "who is neither the individual who made the [initial] adverse benefit determination . . . nor the subordinate of such individual").

During January 2004, Bard also submitted an application for disability benefits on a BSA-ILA form, along with medical documentation regarding his disability. Some of the documentation stated that Bard was "totally and permanently disabled," but did not date the onset of symptoms or of total disability. However, a letter from Dr. Alba De Simone and Dr. Kishanlal Chakrabarti stated that Bard had become disabled in December of 2001. At the time Bard submitted this letter, it appears that he understood the Plan to require him to demonstrate that he was disabled, but not that he was disabled while still employed. There is no evidence that, as of this point in time, the Board had yet informed Bard of the reasons for its initial rejection of his application, as it was required to do.

The trustees again considered Bard's case at a January 30, 2004 meeting. This time they debated the substantive question of whether Bard's application should be approved. They deadlocked. They asked that the Plan's attorney be present at the next meeting to advise them.

After the January 30th meeting, but before the next Board meeting, it appears that Bard had additional medical information faxed to the Board: a medical report from a counselor at Lawless & Company (a counseling service provider). This report stated that Bard had received treatment for substance abuse in March of 2000. The report also stated that as of that month, which was more than a year before Bard's crane accident, Bard had shown symptoms consistent with various psychological disorders, though the counselor had declined to make a...