Eley v. Boeing Co.

• Citation: 945 F.2d 276
• Decision Date: 11 September 1991
• Docket Number: No. 90-35756,90-35756
• Parties: Sandra L. ELEY, Plaintiff-Appellant, v. BOEING COMPANY; King County Medical Blue Shield, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 276

945 F.2d 276

Sandra L. ELEY, Plaintiff-Appellant, v. BOEING COMPANY; King County Medical Blue Shield, Defendant-Appellee.

No. 90-35756.

United States Court of Appeals, Ninth Circuit.

Submitted Sept. 11, 1991. ^*

Decided Sept. 19, 1991.

Lawrence L. Shafer, Langley, Wash., for plaintiff-appellant.

Bruce D. Corker, Rebecca Dean, Perkins Coie, Seattle, Wash., for defendant-appellee.

Appeal from the United States District Court for the Western District of Washington.

Before WRIGHT, FARRIS and TROTT, Circuit Judges.

FARRIS, Circuit Judge:

OVERVIEW

Sandra Eley appeals the district court's summary judgment dismissal of her action for medical benefits against the Boeing Company and King County Medical Blue Shield pursuant to 29 U.S.C. § 1132 of ERISA. 742 F.Supp. 566. We affirm.

ISSUES

(1) Whether the district court erred in reviewing the plan administrator's interpretation of a plan term for abuse of discretion.

(2) Was the plan administrator's interpretation of "diagnostic test" an abuse of discretion?

FACTS

Boeing sponsors and funds an ERISA employee welfare benefit plan. The Welfare Benefit Plans Committee is the plan administrator. Boeing employs King County Medical Blue Shield as contract administrator. The plan is provided pursuant to collective bargaining agreements between Boeing and its salaried employees.

Shortly before she became covered under Boeing's health plan, Eley had a Pap test which resulted in a Class II-atypical finding. A Class-II result indicates that an abnormality, such as cervical cancer, may be present. Shortly after she became covered under the plan, Eley had a biopsy which indicated cervical cancer. She thereafter had a hysterectomy.

After her surgery, Eley submitted a claim to Blue Shield for reimbursement. Blue Shield denied the claim because it determined that the cancer was an illness for which Eley had received a diagnostic test (the Pap test) during the three-month period before her coverage became effective. Eley claimed that a Pap test was not a diagnostic test. Blue Shield reviewed the issue with its medical staff and reaffirmed its decision. Eley then appealed to Boeing's Welfare Benefit Plans Committee Eley brought suit in the district court, which granted summary judgment for the defendant. It found no abuse of discretion in the Committee's interpretation of the plan.

                submitting declarations of two physicians who stated that Pap tests were not diagnostic tests.   Blue Shield submitted the opinion of its medical staff and definitions from Webster's Dictionary and the Merck Manual of Diagnosis and Therapy.   The Committee concluded that Blue Shield had used proper procedures in reviewing Eley's claim and that it had properly interpreted the plan provision
                

DISCUSSION

I. Standard of Review of Administrator's Determination

Eley argues that the district court erred in reviewing the administrator's determination for abuse of discretion rather than de novo. We hold that the district court applied the proper standard of review.

In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989), the Supreme Court held that denials of benefits were 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." If the benefit plan gives the administrator discretionary authority, review for abuse of discretion is required. See id. at 114-15, 109 S.Ct. at 956 (stating that the Court could not conclude that Congress intended that arbitrary and capricious review be employed and using term "abuse of discretion" to describe appropriate standard of review); Jones v. Laborers Health & Welfare Trust Fund, 906 F.2d 480, 481 (9th Cir.1990) (applying abuse of discretion standard). ¹

The provisions of the Boeing plan ² are comparable to plan provisions we have previously held to confer discretion. See, e.g., Dytrt v. Mountain State Tel. & Tel. Co., 921 F.2d 889, 894 (9th Cir.1990) (plan administrator given authority " 'to determine eligibility for benefits or to construe the terms of the plan' " (quoting Bruch, 489 U.S. at 115, 109 S.Ct. at 956)); Jones, 906 F.2d at 481 ("Board of Trustees shall have power ... to construe the provisions of this Trust Agreement and the Plan, and any such construction adopted by the Board in good faith shall be binding."); Batchelor v. International Bhd. of Elec. Workers Local 861 Pension & Retirement Fund, 877 F.2d 441, 442-43 (5th Cir.1989) (plan administrator given "full and exclusive authority to determine all questions of coverage and eligibility"). See also Boyd v. Trustees of United Mine Workers Health & Retirement Funds, 873 F.2d 57, 59 (4th Cir.1989) (trustee given authority to make "full and final determination as to all issues concerning eligibility for benefits" and to promulgate rules). We hold that the plan gives "the administrator ... discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Bruch, 489 U.S. at 115, 109 S.Ct. at 956.

The Bruch Court also stated that if a plan bestows discretionary authority upon an administrator who is operating under a conflict of interest, the conflict must be considered in determining whether an abuse of discretion has occurred. Id. at 115, 109 S.Ct. at 956 (quoting Restatement (Second) of Trusts § 187, Comment d (1959)). We have held that if the employer is the administrator, a conflict ordinarily exists. Dytrt, 921 F.2d at 894 & n. 4 (quoting Bruch, 489 U.S. at 115, 109 S.Ct. at 956). In determining that Boeing did not abuse its discretion, the district court did not consider Boeing's role as both plan administrator and employer, apparently because Eley had not claimed that Boeing had acted in bad faith or with an improper motive. Boeing argues that even if the district court erred in requiring an allegation of improper motive, Blue Shield's role as contract administrator mitigates any potential conflict of interest. Blue shield made the initial plan interpretation and uses the same definition for other employer plans. Boeing also notes that collective bargaining produced the language of the plan. We need not decide whether the district court erred in declining to weigh Boeing's dual role. Even if Boeing has an interest in broadly construing the preexisting condition exclusion, Boeing's interpretation of the term is consistent with the plain language of the plan.

II. Boeing's Determination that a Pap Test Is a Diagnostic Test

The plan excludes "expenses during the first twelve months of a person's coverage to the extent that they are in connection with a preexisting condition." A preexisting condition is defined as "any illness ... whether or not diagnosed, for which a person has received medical treatment, consultation, a diagnostic test or prescribed medicines during the three-month period before his or her coverage becomes effective." Blue Shield interpreted "diagnostic test" to include Pap tests and therefore found that expenses related to Eley's cervical cancer surgery were excluded from coverage.

"[T]rustees abuse their discretion if they render decisions without any explanation, or construe provisions of the plan in a way that clearly conflicts with the plain language of the plan." Johnson v. Trustees of the Western Conf. of Teamsters Pension Trust Fund, 879 F.2d 651, 654 (9th Cir.1989). Boeing gave an explanation. Eley must therefore show that a genuine issue of material fact exists as to whether Boeing's interpretation of the term "diagnostic test" clearly conflicts with the plain language of the plan.

Eley failed to meet her burden under the Johnson test. We reject her assertion that the English language meaning of "diagnostic" supports her interpretation of the term rather than Boeing's. We recognize the correctness of her position that screening tests like the Pap test indicate the absence of disease while a diagnosis is defined as "the art or act of recognizing the presence of disease." Webster's New International Dictionary (2d ed. 1950) (emphasis added). Screening tests also recognize, however, the possible presence of disease, therefore fitting within the definition of diagnosis. Although a layperson would probably not consider herself "diagnosed" with cervical cancer upon receiving a Class II-atypical finding from her Pap test, the plan specifically excludes from coverage conditions not diagnosed for which a ...