Kroschinsky v. TRUSTEES OF SS TRADE ASS'N

• Decision Date: 11 February 1992
• Docket Number: Civ. No. JFM-91-1928.
• Citation: 790 F. Supp. 559
• Parties: Richard A. KROSCHINSKY, Jr. v. The TRUSTEES OF STEAMSHIP TRADE ASSOCIATION/INTERNATIONAL LONGSHOREMEN'S ASSOCIATION PENSION TRUST FUND-BENEFITS TRUST FUND, et al.
• Court: U.S. District Court — District of Maryland

790 F. Supp. 559

Richard A. KROSCHINSKY, Jr. v. The TRUSTEES OF STEAMSHIP TRADE ASSOCIATION/INTERNATIONAL LONGSHOREMEN'S ASSOCIATION PENSION TRUST FUND-BENEFITS TRUST FUND, et al.

Civ. No. JFM-91-1928.

United States District Court, D. Maryland.

February 11, 1992.

Stephen R. Layton, Layton & Muskin, Stevensville, Md., for plaintiff.

Paul B. Lang, Niles, Barton & Wilmer, Baltimore, Md. and Anthony Abato, Jr., Lutherville, Md., for defendants.

MEMORANDUM

MOTZ, District Judge.

Richard A. Kroschinsky, Jr. has brought this action under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et. seq. ("ERISA"), against the Steamship Trade Association of Baltimore/International Longshoremen's Association Pension Trust Fund (the "Pension Fund") and the Steamship Trade Association of Baltimore/International Longshoremen's Association Benefits Trust Fund (the "Benefits Fund") (collectively "defendants") seeking recovery of $12,000 in benefits allegedly due him in connection with a work-related injury. Specifically, Kroschinsky alleges that officials of the Benefits Fund, in determining his eligibility for benefits, denied him credit for vacation and holiday hours earned during the period of his disability and that as a consequence, he suffered a downgrade in benefits status. Defendants have moved for summary judgment.

I.

Since 1974 Kroschinsky has been employed as a longshoreman by the Baltimore Stevedoring Co., a member of the Steamship Trade Association of Baltimore (the "STA"), pursuant to successive collective bargaining agreements between the STA and the International Longshoremen's Association (the "ILA"). During his employment, Kroschinsky has participated in and contributed to both the Benefits Fund and the Pension Fund established by the STA and the ILA. On November 30, 1983, Kroschinsky suffered an injury to his left knee while working at Locust Point. The injury left him temporarily disabled and prevented him from working during most of the contract year (October 1, 1983 — September 30, 1984) established by the collective bargaining agreement ("CBA") then in effect.

The Benefits Fund allocates benefits according to a worker's "insured group" designation: Group A workers are entitled to a more extensive package of benefits than Group B workers. An employee's benefits status for a given contract year depends, at least in part, on the number of hours credited to the employee during the prior contract year. In order to maintain Group A status, an employee must have received credit for 1100 hours during the prior year. The number of hours earned roughly corresponds to the number of hours worked during that year. However, special provision is made for disabled employees: during the period of disability, an employee receives credit at a predetermined, flat rate, which on an annual basis would allow the employee to maintain the group status he held at the time of injury. For employees who are Group A workers this rate is 22 hours per week.

From 1974 through 1984, Kroschinsky qualified for Group A benefits. As a result of his injury, however, Kroschinsky received only 1087 hours of credit for the 1983-84 contract year, 13 fewer than he needed to retain Group A status. This was so because although he was given credit at the rate of 22 hours per week for the period from December 1, 1983 (the day after his injury) through September 30, 1984 (the last day of the contract year) — resulting in a total credit of 962 hours — he had worked only 125 hours prior to December 1, 1983 during the 1983-84 contract year.

II.

As a threshold matter, it is clear that whatever the merit of Kroschinsky's claim against the Benefits Fund may be, the Pension Fund is entitled to summary judgment on the ground that it is not a proper party defendant. The two Funds are separate entities with distinct functions: the Pension Fund provides retirement income and the Benefits Fund provides medical and disability benefits. Kroschinsky seeks to recover only the latter.¹

III.

Defendants assert that Kroschinsky's claim is time-barred. The pertinent facts relating to this defense are as follows: (1) Kroschinsky was advised shortly after December 10, 1984, of his change in coverage from Group A to Group B; (2) under the terms of the Plan he had 60 days in which to file an appeal from this decision; (3) he filed his appeal on or about April 25, 1988; (4) the trustees denied his appeal on the merits on June 24, 1988 and advised him of that decision by a letter dated July 8, 1988; (5) he received the trustees' letter on July 11, 1988; and (6) this suit was filed on July 10, 1991.

Maryland's three-year limitation period for contract actions applies to actions for wrongful denial of employee benefits brought under 29 U.S.C. § 1132(a)(1). See Dameron v. Sinai Hosp., 815 F.2d 975, 981 (4th Cir.1987); Md.Cts. & Jud.Proc. Code Ann. § 5-101. Ordinarily the limitations period does not begin to run until the plaintiff has exhausted all remedies under the Plan's internal appeals process and been notified of the final decision denying the benefits claim. See, e.g., Dameron v. Sinai Hosp., 595 F.Supp. 1404, 1415 (D.Md. 1984), aff'd in part and rev'd in part, 815 F.2d 975 (4th Cir.1987); Kemp v. Control Data Corp., 785 F.Supp. 74 (D.Md.1991). What the case law does not yet make clear is whether "notification" to the plaintiff occurs when notice is sent or when it is received by the plaintiff.

The facts of the present case might seem to raise that issue squarely since the date of the letter notifying Kroschinsky of the denial of his appeal was July 8, 1988, the date of Kroschinsky's receipt of the letter was July 11, 1988 and the date that this suit was filed was July 10, 1991. However, the fact which I find to be dispositive is that Kroschinsky's internal appeal to the trustees was itself untimely. As stated above, under the terms of the Plan he had sixty days in which to file his appeal, and he, in fact, filed it more than three years after he was first notified of the decision to deny him Group A benefits. To hold that this untimely appeal was sufficient to toll limitations would be to invite the prosecution of stale claims. See Kemp, supra, at n. 3.²

IV.

Although I have ruled that Kroschinsky's claim is time-barred, I will nevertheless address the merits of his claim in the event that my ruling as to limitations is reversed on appeal.

A.

In an action for benefits allegedly due under ERISA, the standard of judicial review depends upon whether the plan at issue "vests in its administrators discretion either to settle disputed eligibility questions or to construe `doubtful provisions' of the plan itself." de Nobel v. Vitro Corp., 885 F.2d 1180, 1186 (4th Cir.1989) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111-12, 109 S.Ct. 948, 954-55, 103 L.Ed.2d 80 (1989)). If the plan administrators enjoy such authority, the court "may disturb the challenged denial of benefits only upon a showing of procedural or substantive abuse." Otherwise their decisions are reviewed de novo. de Nobel, 885 F.2d at 1186; see also Boyd v. UMW Health & Retirement Funds, 873 F.2d 57, 59 (4th Cir.1989).

The natural place to look for evidence of the plan administrators' discretionary powers is the document under which they act. See, e.g., Bruch, 489 U.S. at 111, 109 S.Ct. at 954. Here, the Benefits Fund was established by an Agreement and Declaration of Trust between the STA and the ILA, effective January 1, 1976 (the "Trust Agreement"). The Trust Agreement endows the trustees with broad power to interpret the agreement and administer the Benefits Fund. Pursuant to § 4.05, the trustees have the power to construe the provisions of the agreement; their construction is binding on employees and beneficiaries subject to the appeals procedures set out in the Trust Agreement. Section 6.01 gives the trustees "full authority to determine all questions of the nature, amount and duration of benefits to be provided." The trustees, pursuant to § 6.03, also have "full authority to determine eligibility requirements for benefits" which shall be binding upon employees. The breadth of the trustees' discretion under these provisions entitles the Benefits Fund to a deferential standard of review with respect to its determination of Kroschinsky's benefits status. See de Nobel, 885 F.2d at 1186-87.

B.

As stated above, the thrust of Kroschinsky's complaint is that he lost eligibility for Group A benefits status because the Benefits Fund wrongfully denied him credit for vacation and holiday hours earned during his disability. There is language in the Summary Plan Description which at first blush may appear to support his position.³ One sentence states that employees, like Kroschinsky, who work for an STA member in work covered by the CBA will receive "credit for the number of hours for which wages are calculated." (Emphasis added.) Arguably, under the provision an employee's benefits status should reflect vacation and holiday pay. However, elsewhere the Summary Plan Description specifically provides a different method for calculating credit during periods of disability. An employee qualified to receive Group A benefits at the time of injury or sickness will receive "credit for 22 hours per week, up to a maximum of 1100 hours per contract year while ... being paid Worker's Compensation for temporary total disability." No mention is made of any vacation or holiday credit. Thus, in not giving Kroschinsky any vacation or holiday credit the trustees were interpreting the Plan in accordance with its literal terms. This cannot be said to constitute an abuse of discretion.

Kroschinsky further contends, however, that the trustees' interpretation of the eligibility requirements bring them into conflict with the Trust Agreement pursuant to which the Plan was established. Section 4.02 of the Trust Agreement does place one constraint on the Trustees' discretion: they must...