Block v. Pitney Bowes Inc.

• Decision Date: 21 January 1992
• Docket Number: No. 89-7039,89-7039
• Citation: 952 F.2d 1450
• Parties: Ralph BLOCK, Appellant, v. PITNEY BOWES INC., et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1450

952 F.2d 1450

293 U.S.App.D.C. 256

Ralph BLOCK, Appellant, v. PITNEY BOWES INC., et al., Appellees.

No. 89-7039.

United States Court of Appeals District of Columbia Circuit.

Argued Oct. 15, 1991.

Decided Jan. 21, 1992.

Appeal from the United States District Court for the District of Columbia (CV. No. 87-02618).

Mark A. Packman, with whom Edward N. Leavy, Washington, D.C., was on the brief, for appellant.

Ronald A. Lindsay, with whom Deborah A. Folloni, Washington, D.C., was on the brief, for appellees. Peter Chatilovicz, Washington, D.C., also entered an appearance for appellees.

Before RUTH BADER GINSBURG and SILBERMAN, Circuit Judges, and VAN GRAAFEILAND, ^* Senior Circuit Judge.

Opinion for the court filed by Circuit Judge RUTH BADER GINSBURG.

Concurring opinion filed by Senior Circuit Judge VAN GRAAFEILAND.

RUTH BADER GINSBURG, Circuit Judge:

Plaintiff Ralph Block appeals from a summary judgment granted to Pitney Bowes Inc. in an action under section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(1)(B), alleging improper denial of long-term disability benefits. See Block v. Pitney Bowes Inc., 705 F.Supp. 20 (D.D.C.1989). We conclude, first, that the district court's decision is consistent with instructions on the appropriate review standard later furnished by the Supreme Court in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). In accord with the district court, we hold that defendant "acted reasonably and legally" in determining that Block was not eligible for continued benefits under Pitney Bowes' long-term disability plan. See 705 F.Supp. at 25. We therefore affirm the district court's judgment.

I.

In October 1983, Block fell and suffered a serious and painful injury in the course of his employment as a Pitney Bowes Washington, D.C. sales representative. ¹ In April 1984, Block applied for total disability benefits under the company's plan. The plan provided for "total disability" benefits if an employee

is unable, because of injury or illness, to engage in any gainful occupation or profession for which he is reasonably fitted by education, experience, capability or training, except approved Rehabilitative Employment, as determined by the [Plan Administrative] Committee on the basis of periodic medical examinations.

Pitney Bowes Inc. Long Term Disability Plan, as amended January 1, 1983 (Plan) § 2.19. In late May 1984, Dr. Johnson, Block's principal treating physician throughout this matter, performed arthroscopic surgery on Block's knee, and Dr. Levine, Pitney Bowes' Medical Director, recommended that the Plan Administrative Committee grant Block temporary total disability benefits for a period of several months. The Committee granted the recommended benefits, which ran from April through September 1984.

In September 1984, Dr. Levine recommended terminating Block's disability benefits, based on medical information received from Dr. Johnson indicating that Block could work a full day subject to limitations on standing (two hours), walking, lifting (20 pounds), and bending (four out of eight hours). These limitations prevented Block from resuming his previous sales representative job or filling any other position in Pitney Bowes' Washington, D.C. office.

Relying on Dr. Levine's recommendation, the Committee concluded that Block was no longer "totally disabled," and therefore terminated his benefits on October 1, 1984. Block sought reconsideration of this decision, submitting to the Committee reports from two other doctors, both of whom reported that Block would not be able to return to work in the near future. The Committee reaffirmed its denial in December 1984, and did so again in two 1985 administrative reviews. In these reviews, the Committee accepted Dr. Levine's assessment that the additional submissions by Block did not undermine the opinion of Block's treating physician, Dr. Johnson, that Block was able to return to restricted work. Following notice of the Committee's third adherence to the decision denying benefits, Block sought judicial review under ERISA section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). ²

II.

At the time of the district court's decision, federal appellate courts were divided on the appropriate standard of judicial review for benefit determinations made by ERISA-plan administrators. Following this circuit's precedent, the district court said the governing standard was one of "reasonableness" or, using the formulation jurists have coined, "the arbitrary and capricious standard." 705 F.Supp. at 22 ("The key to the arbitrary and capricious standard is that if there is more than one action that is considered 'reasonable,' the Court must not overturn a decision found to be reasonable, even if an alternative decision also could have been considered reasonable."). ³

In Firestone, issued several weeks after our district court's decision, the Supreme Court resolved the standard of review issue. Summarizing its ruling, the Court wrote:

Consistent with established principles of trust law, we hold that a denial of benefits challenged under § 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.

489 U.S. at 115, 109 S.Ct. at 956. Decisions of administrators made for plans in the latter group, the Court indicated, are reviewable only for reasonableness. See id. at 107-09, 111, 113, 109 S.Ct. at 952-53, 954, 955.

The Pitney Bowes Plan before us, we think it evident, is of the kind that "gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." See id. at 115, 109 S.Ct. at 956. The Plan vests in the Administrative Committee power "to interpret and construe the Plan, [and] to determine all questions of eligibility and the status and rights of Participants." Plan § 7.7(a). Committee decisions "shall, to the extent not inconsistent with the provisions of the Plan, be final and conclusive and binding upon all persons having an interest in the Plan." Plan § 7.4. In trust law, as the Supreme Court pointed out, when the trustee has thus been given "power to construe disputed or doubtful terms, ... the trustee's interpretation will not be disturbed if reasonable." Firestone, 489 U.S. at 111, 109 S.Ct. at 954.

Empowering language similar to the provisions quoted from the Pitney Bowes Plan has been comprehended, almost invariably, as conveying "discretionary or final authority," see id. at 112, 109 S.Ct. at 955, of the kind that courts check only for reasonableness. See id. at 111, 109 S.Ct. at 954; e.g., Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 568, 105 S.Ct. 2833, 2839, 86 L.Ed.2d 447 (1985) (discretionary authority found in trust agreement providing that "any construction [of the agreement's provisions] adopted by the Trustees in good faith shall be binding"), quoted in Firestone, 489 U.S. at 111, 109 S.Ct. at 954; Exbom v. Central States, Southeast and Southwest Areas Health and Welfare Fund, 900 F.2d 1138, 1141 (7th Cir.1990) (trustees have discretionary authority under provisions conferring "power to construe [plan] provisions" and further stating that "any construction adopted by the [t]rustees in good faith is binding"); De Nobel v. Vitro Corp., 885 F.2d 1180, 1186 (4th Cir.1989) (administrators have discretionary authority in view of their power "[t]o determine all benefits and resolve all questions pertaining to the administration, interpretation and application of Plan provisions") (emphasis omitted); Curtis v. Noel, 877 F.2d 159, 161 (1st Cir.1989) (discretionary authority conferred by language charging administrators to determine "which Employees are eligible to participate in the Plan" and to "provide all parties dealing with the Plan an interpretation of Plan provisions on request"). ⁴

Block contends, nevertheless, that use of the word "discretion" in another provision of the Plan, section 6.1, shows that the Committee lacks discretion elsewhere. Plan § 6.1 provides in relevant part: "The Trustees ... shall have exclusive authority and discretion to manage and control the assets of the Plan...." This section on asset management tracks language in the pertinent ERISA section 403, 29 U.S.C. § 1103(a): the "trustees shall have exclusive authority and discretion to manage and control the assets of the plan...."

We think it untenable to argue that use of the word "discretion" in the context of plan asset management implies the absence of discretion in provisions authorizing plan administrators to construe the plan, determine all questions of eligibility, and render final, conclusive, and binding decisions. See Plan §§ 7.7(a), 7.4, excerpted supra p. 5. The Maryland district court called the "magic word" argument "incomprehensible" and "totally without merit." Steever v. Bristol-Myers Co., 727 F.Supp. 986, 989 (D.Md.1989). We agree with those characterizations.

The Court in Firestone surely did not suggest that "discretionary authority" hinges on incantation of the word "discretion" or any other "magic word." Rather, the Supreme Court directed lower courts to focus on the breadth of the administrators' power--their "authority to determine eligibility for benefits or to construe the terms of the plan." Firestone, 489 U.S. at 115, 109 S.Ct. at 956. We follow in this regard the Fourth Circuit's decision in De Nobel:

There are obviously no magic words required to trigger the application of one or another standard of judicial review.... [I]t ... need only appear on the face of the plan documents that the fiduciary has been "given [the] power to construe disputed or doubtful terms"--or to resolve disputes over benefits eligibility--in which case "the trustee's...