Coomer v. Bethesda Hosp., Inc.

• Decision Date: 01 June 2004
• Docket Number: No. 02-3700.,02-3700.
• Citation: 370 F.3d 499
• Parties: Glenn A. COOMER; Christopher R. Stires; Lynnette Marie Stires; Diana Spang; Pete Reeme; Kathleen Reeme; Gary E. Berger; Roy K. Gerber; Jeffrey J. Custis; Michael Howcroft; Connie Brown Doherty; William D. Hozmann; Richard R. Beiting; James R. Faze; Lin A. Heinzelman; Scott Kinzer, Plaintiffs-Appellants, v. BETHESDA HOSPITAL, INC. and Bethesda Hospital Employee Pension Plan, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

370 F.3d 499

Glenn A. COOMER; Christopher R. Stires; Lynnette Marie Stires; Diana Spang; Pete Reeme; Kathleen Reeme; Gary E. Berger; Roy K. Gerber; Jeffrey J. Custis; Michael Howcroft; Connie Brown Doherty; William D. Hozmann; Richard R. Beiting; James R. Faze; Lin A. Heinzelman; Scott Kinzer, Plaintiffs-Appellants, v. BETHESDA HOSPITAL, INC. and Bethesda Hospital Employee Pension Plan, Defendants-Appellees.

No. 02-3700.

United States Court of Appeals, Sixth Circuit.

Argued: December 17, 2003.

Decided and Filed: June 1, 2004.

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Mark Joseph Byrne (argued and briefed), Jacobs, Kleinman, Seibel & McNally, Cincinnati, OH, for Appellants

Daniel Jerome Buckley (argued and briefed), Mary C. Henkel (briefed), Margaret A. Nero Fechtel (briefed), Vorys, Sater, Seymour & Pease, Cincinnati, OH, for Appellees.

Before BATCHELDER and SUTTON, Circuit Judges; BELL, Chief District Judge.^*

OPINION

BELL, Chief District Judge.

Participants in an employee pension plan have appealed the entry of summary judgment against them on their discrimination claims under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461, and the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621-634. For the reasons that follow, the district court's entry of summary judgment will be affirmed.

I. BACKGROUND

Plaintiffs are 16 former employees of Defendant Bethesda Hospital, Inc. (the "Hospital"). The Hospital is the sponsor of the Bethesda Hospital Employee Pension Plan (the "Plan"), an employee pension plan governed by ERISA. Plaintiffs are all former participants¹ in the Plan who had a vested right to pension benefits under the Plan when they separated from their employment at the Hospital.

The Plan is designed to pay monthly pension benefits when participants reach their normal retirement age of 65. The Plan also allows an early retirement benefit to retired employees at age 55 which may be taken as a monthly pension or in an actuarially reduced alternative form as provided under § 4.7. Section 4.7 allows for a lump sum distribution only if the actuarial equivalent of the benefit under the Plan is less than $5,000.

In 1992 Brian Rowan, an African-American Hospital employee who was under the age of forty, sought a lump sum distribution from his pension account so that he could attend medical school. At the time of his request the actuarial equivalent of his pension account was $6,645.22. In order to accommodate Rowan's request, the Bethesda Hospital, Inc. Board ("the Board") amended the Plan to allow the lump sum distribution to Rowan. The amendment, adopted on August 11, 1992, provided as follows:

Section 4.7(f)(i) of the Plan is amended by adding the following to the end thereof:

In addition, Brian Rowan ... may make the election above during 1992 notwithstanding the fact that his benefit under the Plan, determined as a lump sum actuarial equivalent, is $5,000 or more.

The Rowan distribution did not affect the benefits available to any other Plan participants.

On January 15, 1997, after learning about the distribution to Rowan, plaintiff Coomer requested a lump sum distribution of his pension benefits. At the time of his request Coomer's pension benefits had an actuarial equivalent of approximately $116,000. The Committee denied his request and advised him that he would be eligible for monthly payments of his benefit under the Plan beginning at any time after he attained age 55. Coomer appealed the Committee's decision. By letter dated April 17, 1997, James M. Connelly, Vice President and Chief Financial Officer of the Hospital, denied Coomer's second request for a lump sum settlement because the present value of Coomer's accrued benefit under the Plan exceeded $5,000. Connelly advised that "It is our underlying belief that the Plan should provide monthly retirement income to its participants and that lump sum payments should only be paid for diminimus [sic] amounts."

On October 15, 1999, Coomer and 15 other participants in the Plan filed this action in the United States District Court for the Southern District of Ohio. The first count of the amended complaint, brought on behalf of all of the plaintiffs, alleges discrimination in violation of § 510 of ERISA. The second count, brought on behalf of Coomer alone, alleges age discrimination in violation of the ADEA. Defendants filed a motion for summary judgment alleging that plaintiffs had failed to state a claim under ERISA because defendants had taken no adverse action against them and that Coomer had failed to state a claim under the ADEA for age discrimination. The district court granted the defendants' motion for summary judgment. Plaintiffs timely filed this appeal.

II. ANALYSIS

A. Standard of Review

We review a district court's grant of summary judgment de novo. Rowan v. Lockheed Martin Energy Systems, Inc., 360 F.3d 544, 547 (6th Cir.2004). Summary judgment is proper where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In evaluating a motion for summary judgment, the court must view the evidence and draw all reasonable inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The proper inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

B. The Non-Coomer Plaintiffs

Plaintiffs contend that the district court erred in dismissing all of the plaintiffs other than Coomer ("the non-Coomer plaintiffs") for failure to exhaust administrative remedies.²

Every employee benefit plan covered by ERISA is required to "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." 29 U.S.C. § 1133. Although ERISA is silent as to whether exhaustion of administrative remedies is a prerequisite to bringing a civil action, we have held that "[t]he administrative scheme of ERISA requires a participant to exhaust his or her administrative remedies prior to commencing suit in federal court." Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 986 (6th Cir.1991). "This is the law in most circuits despite the fact that ERISA does not explicitly command exhaustion." Ravencraft v. UNUM Life Ins. Co. of Am., 212 F.3d 341, 343 (6th Cir.2000). See also Fallick v. Nationwide Mut. Ins. Co., 162 F.3d 410, 418 n. 4 (6th Cir.1998) (citing cases that have read an exhaustion of administrative remedies requirement into the statute). The exhaustion requirement "enables plan fiduciaries to efficiently manage their funds; correct their errors; interpret plan provisions; and assemble a factual record which will assist a court in reviewing the fiduciaries' actions." Ravencraft, 212 F.3d at 343 (quoting Makar v. Health Care Corp., 872 F.2d 80, 83 (4th Cir.1989)).

It is undisputed that none of the non-Coomer plaintiffs requested a lump sum disbursement in excess of $5,000 from the Plan prior to filing this action. Plaintiffs contend this failure should be excused because it would have been a vain or futile act. Plaintiffs note that it is undisputed that their pension funds exceeded the $5,000 lump sum distribution limit under the Plan, and the defendants had made it clear that the Plan prohibited them from making a distribution that exceeded this amount.

Failure to exhaust administrative remedies is excused "where resorting to the plan's administrative procedure would simply be futile or the remedy inadequate." Fallick, 162 F.3d at 419. "The standard for adjudging the futility of resorting to the administrative remedies provided by a plan is whether a clear and positive indication of futility can be made." Id. A plaintiff must show that "it is certain that his claim will be denied on appeal, not merely that he doubts that an appeal will result in a different decision." Id. (quoting Lindemann v. Mobil Oil Corp., 79 F.3d 647, 650 (7th Cir.1996)).

Plaintiffs in the case at bar contend that exhaustion of the administrative process should be excused in this case just as it was in Costantino v. TRW, Inc., 13 F.3d 969 (6th Cir.1994), because the Plan did not allow disbursements in excess of $5,000 and it can be inferred from the denial of Coomer's request for a lump sum distribution that the remaining plaintiffs' claims would be denied as well. In Costantino we held that the district court did not abuse its discretion in excusing exhaustion in light of the district court's determination that the suit was directed to the legality of the amended plan rather than to a mere interpretation of it. Id. at 975. Moreover, we noted that requiring further administrative remedies would not have served any of the purposes of administrative exhaustion under the facts of that case. Id.

We reject the non-Coomer plaintiffs' reliance on Costantino. In contrast to Costantino, there is no clear and positive indication in this case that pursuing administrative remedies would have been a futile act. What plaintiffs sought in this action was to be treated in the same manner as Rowan. In other words, they sought an amendment to the Plan that would allow an early lump sum distribution. Under the terms of the Plan, the Hospital Board has "the right to amend the Plan at any time to any extent deemed advisable," as long as the amendment does not have the effect of decreasing any benefits accrued under the Plan before such amendment. Amendment of the Plan is a matter within the discretion of the Board.³ Plaintiffs have not alleged any factual basis for their claim of futility other than the denial of benefits to Coomer. The plaintiffs'...