Farhner v. United Transp. Union Discipline Income Prot. Program

• Decision Date: 03 May 2011
• Docket Number: No. 09–4431.,09–4431.
• Citation: 645 F.3d 338,51 Employee Benefits Cas. 1720
• Parties: Mark FARHNER, Plaintiff–Appellant,v.UNITED TRANSPORTATION UNION DISCIPLINE INCOME PROTECTION PROGRAM, Defendant–Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

645 F.3d 338

51 Employee Benefits Cas. 1720

Mark FARHNER, Plaintiff–Appellant,

v.UNITED TRANSPORTATION UNION DISCIPLINE INCOME PROTECTION PROGRAM, Defendant–Appellee.

No. 09–4431.

United States Court of Appeals, Sixth Circuit.

Argued: Dec. 9, 2010.Decided and Filed: May 3, 2011.

ARGUED: Gregory G. Paul, Equality at Work, PLLC, Sewickley, Pennsylvania, for Appellant. Kevin C. Brodar, United Transportation Union, Cleveland, Ohio, for Appellee. ON BRIEF: Gregory G. Paul, Equality at Work, PLLC, Sewickley, Pennsylvania, for Appellant.

Kevin C. Brodar, United Transportation Union, Cleveland, Ohio, for Appellee.Before: GILMAN and GRIFFIN, Circuit Judges; COLLIER, Chief District Judge.^*COLLIER, Chief D.J., delivered the opinion of the court, in which GRIFFIN, J., joined. GILMAN, J. (pp. 346–47), delivered a separate opinion concurring in the judgment reached.

OPINION

CURTIS L. COLLIER, Chief District Judge.

Plaintiff–Appellant Mark Farhner (“Farhner”) appeals the district court's order granting Defendant–Appellee United Transportation Union Discipline Income Protection Program's (the “Plan” or “DIPP”) motion for summary judgment. Farhner brings this action pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132, seeking judicial review of the Plan's denial of discharge benefits. Farhner argues that the Plan Administrator's decision to deny his benefits was arbitrary and capricious as a matter of law. Specifically, Farhner contends that he should not have been denied income replacement benefits by the Plan Administrator because his employer improperly terminated him for insubordination. Rather, Farhner asserts that he was protected by the Family and Medical Leave Act (“FMLA”). Farhner requests us to reverse the district court's grant of summary judgment in favor of the Plan and award him benefits with applicable interest.

For the reasons set forth below, we AFFIRM the district court's decision.

I. Relevant Facts/Procedural History

Farhner was employed by the Kansas City Southern Railway (“KCSR”) as a trackman and conductor. In May 2004, he advised his supervisor about “some personal things going on,” and he sought a medical leave of absence. The supervisor then advised Farhner that he would have to supply a note from his medical doctor in order for KCSR to evaluate whether Farhner's request for leave was one under the FMLA. On May 11, 2004, Farhner submitted a letter from his treating physician stating that Farhner needed a leave of absence for at least three months “for medical reasons.” Farhner's supervisor forwarded the letter to the Manager of Human Resources, who informed Farhner's supervisor that the letter did not provide sufficient information for KCSR to evaluate Farhner's request.

On May 12, 2004, Farhner's supervisor advised Farhner to contact the human resources manager to determine what information Farhner needed to provide. The supervisor also placed Farhner on vacation leave at that time. On May 13, 2004, Farhner contacted the human resources manager, who informed him that in order to evaluate his request, Farhner would need to provide a note from his treating physician describing (1) the date Farhner first saw his doctor; (2) a diagnosis; (3) the nature of any treatment; (4) a prognosis; and (5) a potential return date.

By May 25, 2004, Farhner had exhausted all of his vacation leave. Farhner's supervisor then contacted Farhner via telephone to inform him that if he could not provide the requested information, he would have to return to work within 48 hours. The supervisor followed up the conversation with a certified letter stating the same. Farhner replied on the same day by faxing a request for FMLA leave. He did not, however, provide the information that was requested by the human resources manager nor did he return to work.

On June 7, 2004, KCSR issued Farhner a Notice of Investigation to determine whether he was being insubordinate by failing to comply with the instructions given to him on May 25, 2004. A hearing was held on July 22, 2004, and Farhner was discharged from his employment with KCSR on July 30, 2004 for insubordination, in violation of the General Code of Operating Rules 1.6 and 1.13.

Subsequent to his discharge, Farhner filed an application for income-replacement benefits through the DIPP, which is structured in accordance with ERISA, 29 U.S.C. §§ 1001–1461. As a member of UTU, he was able to purchase coverage under the DIPP for any suspension or discharge, subject to certain restrictions. Some of those restrictions are found in Section 3.5(b) of the Plan, which explicitly states:

3.5(b) You will receive benefits under the Plan when you are suspended or discharged from your permanent, non-probationary employment for disciplinary reasons. You will also receive benefits under the Plan if your employer requires you to take remedial training with only “basic day” compensation and this results in a reduction in your earnings. However, the following disciplinary reasons are excluded from coverage; if you are suspended or discharged for one or more of these reasons you will NOT be entitled to benefits under the Plan:

(1) conduct endangering the life or livelihood of a fellow employee;

(2) unavailability for duty; sleeping on duty; missing calls;

(3) insubordination;

(4) misuse, theft or destruction of property of the Participant's employer;

(5) falsification of reports;

(6) failure to take or pass a required examination;

(7) use, possession or evidence of intoxicants or illegal drugs while on duty or subject to duty; or

(8) discipline due to criminal or civil court action.

After reviewing the transcript of the hearing held by KCSR, the Plan Administrator of the DIPP denied Farhner benefits in a letter dated September 13, 2004, stating that “under Section 3.5(b)(3) of the plan document ..., the Program does not cover discharges/suspensions for [insubordination].” Farhner appealed this decision to the Plan Administrator; however, his appeal was also denied on the same grounds. At all times, the Plan Administrator considered only the information obtained during the formal investigation conducted by KCSR, and it was not provided with (nor did it request) any other documentation to consider.

On November 30, 2004, the general chairman of the DIPP requested that a review committee reconsider the Plan Administrator's benefits determination. On December 9, 2004, the Chairperson of the review committee issued a final decision, upholding the denial of benefits. As cause, the review committee stated that the “issue [was] claimant's failure to comply with instructions and provide the requested information in a timely manner consistent with the FMLA.”

On December 8, 2008, Farhner filed suit in the Northern District of Ohio, challenging the Plan Administrator's determination. The parties filed cross-motions for summary judgment. The district court granted the DIPP's motion for summary judgment on the grounds that the express language of the Plan supported the denial of benefits. Specifically, the district court found the Plan Administrator's decision to be “the result of a deliberate, principled reasoning process” and “supported by substantial evidence,” quoting Bennett v. Kemper Nat'l Serv., Inc., 514 F.3d 547, 552 (6th Cir.2008). Because the evidence in the administrative record demonstrates that Farhner was discharged for insubordination, which is a stated exclusion under the Plan, the district court found that the Plan Administrator's decision was not arbitrary or capricious. In addition, the district court found it improper for Farhner to attempt to “litigate the lawfulness of his discharge by his employer” where KCSR “is not a party to the suit and is not the administrator of the Plan.” Likewise, the district court found that Farhner could not offer any “policy provision or law requiring the Plan Administrator to review the basis of the stated reasons for discharge or discipline by the employer to determine if it was valid or not.” Farhner timely appealed the district court's decision.

II. Standard of Review

A challenge to an ERISA plan's denial of benefits should be reviewed de novo “unless the benefit plan gives the [Plan] [A]dministrator ... discretionary authority to determine eligibility for benefits or to construe the terms of the [P]lan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). Here, the parties do not dispute that the Plan grants such discretion to the Plan Administrator. In addition, the Plan specifically provides “the Plan Administrator and other Plan fiduciaries shall have discretionary authority to interpret the terms of the Plan and to determine eligibility for and entitlement to Plan benefits in accordance with the terms of the Plan.” Where the Plan grants such discretionary authority, the administrator's decision is reviewed under the “arbitrary and capricious” standard of review. Id.

The arbitrary and capricious standard is “the least demanding form of judicial review of administrative action.” Besten v. Delta Am. Reinsurance Co., 202 F.3d 267 (table), No. 98–6225, 1999 WL 1336061, at *2 (6th Cir. Dec. 22, 1999). Therefore, if the Plan Administrator's decision is supported by substantial evidence, then it should be upheld. Id. In other words, the Plan Administrator's decision should be “rational in light of the [P]lan's provisions.” Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir.1997); see also Davis v. Kent. Fin. Cos. Ret. Plan, 887 F.2d 689, 693 (6th Cir.1989) (“When it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious.”). Nonetheless, this deferential standard is “tempered” by any possible conflict of interest where the Plan Administrator both determines eligibility and funds the Plan. Univ. Hosp. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 846 (6th Cir.2000).

Because Farhner...