Collins v. Central States, Southeast and Southwest Areas Health and Welfare Fund, 93-1571

• Decision Date: 03 March 1994
• Docket Number: No. 93-1571,93-1571
• Citation: 18 F.3d 556
• Parties: 17 Employee Benefits Cas. 2408 Mariann COLLINS, Appellant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 556

18 F.3d 556

17 Employee Benefits Cas. 2408

Mariann COLLINS, Appellant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND, Appellee.

No. 93-1571.

United States Court of Appeals Eighth Circuit.

Submitted Nov. 8, 1993.

Decided March 3, 1994.

Before FAGG and WOLLMAN, Circuit Judges, and VIETOR, ^* District Judge.

WOLLMAN, Circuit Judge.

Pursuant to 29 U.S.C. Sec. 1132(a)(1)(B), Mariann Collins brought this action against Central States, Southeast and Southwest Areas Health and Welfare Fund, seeking benefits for medical bills incurred by her late husband, Richard E. Collins ("Collins"). The district court ¹ granted summary judgment for Central States, and Mrs. Collins appealed. We find that the Central States Trustees' decision to deny benefits was not arbitrary or capricious and therefore affirm.

I.

From 1971 to 1990, the General Drivers & Helpers Local Union No. 554 ("Local 554") retained Collins' services as a researcher, lobbyist, writer, and editor. Under the direction of Local 554's secretary-treasurer, Collins researched legislation before the Nebraska state legislature and other political bodies and lobbied Local 554's position on such legislation. He also wrote articles for and assisted in the publication of Local 554's newspaper. Collins submitted all of his articles to Local 554 prior to publication, and it reserved the right to edit or censor any material that he submitted. Additionally, Collins attended Local 554's monthly meetings, at which he reported his activities to the union's general membership. Local 554 retained the right to terminate Collins' services at any time.

Collins was compensated on a monthly basis by Pro Law, an organization funded, controlled, and operated by Local 554. This compensation, which was Collins' sole source of income, was reported to the Internal Revenue Service on a 1099 Form rather than a W-2 Form. Local 554 reimbursed Collins for some of his work-related expenses and provided him with health care coverage by making contributions on his behalf to the Central States Health and Welfare Fund. Local 554 did not make contributions for Collins to the Central States Pension Fund as it did for its regular employees.

The Central States Health and Welfare Fund (the "Fund") is an employee welfare benefit plan under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001-1461. The Fund is administered in accordance with the Central States Health and Welfare Fund Trust Agreement (the "Trust Agreement") and the Central States Health and Welfare Fund Plan Document (the "Plan"). To participate in the Fund, an individual must be an "employee" as defined by the Plan. The Plan's definition of employee includes "[a]ll persons employed by the Union [Local 554] upon being proposed by the Union and accepted by the Trustees." Art. I, Sec. 1.25(b). The Plan states that "[i]n all instances the common-law test for, or the applicable statutory definition of, master-servant relationship shall control Employee status." Art. I, Sec. 1.25.

Until December 1989, Collins submitted medical claims to the Fund, and the Fund paid them. In late December 1989, however, Collins' coverage was brought to the attention of Albert E. Nelson, Director of Benefit Services for Central States. After investigating Collins' relationship with Local 554, Nelson wrote Collins a letter on January 11, 1990, explaining that Central States was pending his medical claims because it appeared that he was not an employee of Local 554 and thus was ineligible to participate in the Fund. The letter asked Collins to forward any information that would support a claim that he was employed by Local 554. In a letter dated January 14, 1990, Collins responded that he had no documents which indicated that he was a Local 554 employee.

During its March 1990 meeting, the Central States Board of Trustees, which consists of four employee representatives and four employer representatives, considered the question of Collins' eligibility and deferred it for further review. In early April, Collins' counsel submitted to the Trustees a letter arguing that Collins was employed by Local 554 under the Plan's terms. Collins' counsel also presented affidavits from Collins and Jerry Younger, Local 554's secretary-treasurer, both of which explained the relationship between Collins and Local 554. At their April meeting, the Trustees again deferred action on Collins' appeal because they wanted additional information before deciding the matter. On May 1, 1990, Nelson, on behalf of the Trustees, sent Collins' counsel a letter requesting, among other things, Collins' income tax returns filed since 1980; all written agreements between Collins and Local 554 and between Collins and Pro Law; and an explanation concerning why Central States did not make pension contributions for Collins. Collins and his attorney failed, however, to provide any of the requested information. At their May meeting, the Trustees decided that Central States would pay Collins' pending medical claims incurred prior to January 1, 1990; they unanimously voted to deny his claims after that date, however because he was not an employee as defined by the Plan.

Having been diagnosed with peripheral neuropathy, Collins died on September 1, 1990. As the representative of her husband's estate, Mrs. Collins brought this action, seeking benefits for Collins' 1990 medical claims. Central States moved for summary judgment. After reviewing the record before the Trustees, the district court granted the motion, finding that the Trustees' denial of benefits was not arbitrary or capricious. 820 F.Supp. 1194. This appeal followed.

II.

We review a denial of benefits under the deferential arbitrary-and-capricious standard in those cases in which the ERISA plan grants the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989); Oldenburger v. Central States S.E. & S.W. Areas Teamster Pension Fund, 934 F.2d 171, 173 (8th Cir.1991).

The Trust Agreement states that the "Trustees, by majority action, shall have the power to construe the provisions of this Agreement and the terms and regulations of the Health and Welfare Plan; and any construction adopted by the Trustees in good faith shall be binding upon the Union, Employees, and Employers." Art. IV, Sec. 17. The Trust Agreement further provides that all controversies, including those over a denial of benefits, shall be submitted to the Trustees and that the Trustees' decision shall be binding on all parties. Art. V, Sec. 2. Additionally, the Plan states that "the Trustees shall have the final authority to determine all matters of eligibility for the payment of claims." Art. X, Sec. 10.01. These provisions grant the Trustees discretionary authority to construe the terms of the Trust Agreement and the Plan and to determine an individual's eligibility for benefits. Oldenburger, 934 F.2d at 173-74; Exbom v. Central States, S.E. & S.W. Areas Health & Welfare Fund, 900 F.2d 1138, 1141 (7th Cir.1990).

In her brief, Mrs. Collins conceded that the Trust Agreement grants the Trustees discretion to decide questions concerning benefits claims and to construe provisions of the Trust Agreement and the Plan. Indeed, she stated that we should review the Trustees' decision under the arbitrary-and-capricious standard. Nevertheless, at oral argument, Mrs. Collins argued that we should apply a de novo standard of review in this case because whether Collins was an employee under the Plan is a legal question. She contended that when a fiduciary has discretionary authority, the arbitrary-and-capricious standard should be applied only to factual questions and de novo review should be applied to legal questions.

We find her argument unpersuasive. The Trust Agreement and the Plan give the Trustees broad authority to construe the Plan and to determine a claimant's eligibility for benefits. Accordingly, we conclude that the Trustees' determination that an individual is ineligible to participate in the Fund because he does not meet the Plan's definition of employee should be reviewed under the arbitrary-and-capricious standard. See Oldenburger, 934 F.2d at 173-74 (stating that the Trust Agreement vests the Trustees with discretion to interpret the meaning of the Plan's requirements of eligibility and to decide whether an individual fits under those requirements).

III.

We turn now to the primary issue raised by this appeal: whether the Trustees' decision that Collins was not an employee as defined by the Plan was arbitrary and capricious. As discussed above, the Plan's definition of employee includes the language "all persons employed by the Union upon being proposed by the Union and accepted by the Trustees." Focusing only on the latter part of this definition, Mrs. Collins argues that the Plan defines employee as any individual who is "proposed by the Union and accepted by the Trustees" and that Collins was so proposed and accepted. Mrs. Collins' interpretation, however, ignores the first part of the definition, which states that the person must be "employed by the Union." Collins may have been proposed by Local 554 and accepted by Central States, but under the Plan's terms he was ineligible to participate in the Fund unless he was employed by Local 554.

As stated earlier, the Plan provides that employee status is controlled by the common-law test for, or the applicable statutory definition of, the master-servant relationship. The only applicable statute cited by the parties is ERISA, and under ERISA the common-law test is used to define employee, Nationwide Mutual Insurance Co. v. Darden, --- U.S. ----, ----, 112...