Lown v. Continental Casualty Co., 00-1547

• Decision Date: 07 December 2000
• Docket Number: No. 00-1547,00-1547
• Parties: (4th Cir. 2001) CLAUDIA LOWN, Plaintiff-Appellant, v. CONTINENTAL CASUALTY COMPANY, Defendant-Appellee. . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 543

238 F.3d 543 (4th Cir. 2001)

CLAUDIA LOWN, Plaintiff-Appellant, v. CONTINENTAL CASUALTY COMPANY, Defendant-Appellee.

No. 00-1547.

UNITED STATES COURT OF APPEALS, FOR THE FOURTH CIRCUIT.

Argued: December 7, 2000.

Decided: February 2, 2001.

Appeal from the United States District Court for the District of South Carolina, at Columbia.

Joseph F. Anderson, Jr., Chief District Judge. (CA-99-82-3-17) [Copyrighted Material Omitted] COUNSEL: ARGUED: Robert Edward Hoskins, FOSTER & FOSTER, L.L.P., Greenville, South Carolina, for Appellant. Ingrid Blackwelder Erwin, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C., Greenville, South Carolina, for Appellee.

Before WILKINSON, Chief Judge, TRAXLER, Circuit Judge, and James C. CACHERIS, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.

Affirmed by published opinion. Chief Judge Wilkinson wrote the opinion, in which Judge Traxler and Senior Judge Cacheris joined.

OPINION

WILKINSON, Chief Judge:

Claudia Lown argues that the federal courts lack subject matter jurisdiction over this case because her long term disability plan was a church plan not governed by the Employee Retirement Income Security Act, 29 U.S.C. S 1001 et seq. (1994) ("ERISA"). Lown further argues that if jurisdiction is proper, the district court erred in finding that she was not totally disabled under the plan. Because ERISA applies to Lown's plan, and because Lown did not prove that she was totally disabled, we affirm the judgment of the district court.

I.

Claudia Lown worked as a mental health counselor at Baptist Healthcare System of South Carolina, Inc. This hospital is located in Columbia, South Carolina. Until 1993, Baptist Healthcare was affiliated with the South Carolina Baptist Convention, a group of state Baptist churches. That year, Baptist Healthcare's Board voted to remove itself as an agency of the South Carolina Baptist Convention. The Convention subsequently ratified the Board's decision. According to a Baptist Healthcare official, after 1993 no Baptist Healthcare board member was a member of or held any office with the South Carolina Baptist Convention. The official also stated that after 1993, Baptist Healthcare did not receive any funding from either the Southern Baptist Convention or the South Carolina Baptist Convention.

Baptist Healthcare System served individuals of all faiths and creeds. Fifteen chaplains as well as five or six ministerial counselors served the hospital. No denominational requirement existed for either the chaplains or the counselors. Its approximately 3,000 employees were affiliated with a number of different faiths.

Baptist Healthcare maintained a long term disability plan for its employees. Continental Casualty Co. issued and insured this disability plan for employees of Baptist Healthcare. Continental made determinations of eligibility under the plan. Baptist Healthcare and Continental used their best efforts to comply with all substantive requirements of ERISA. The plan endeavored to file all required forms to maintain its status as an ERISA plan. Participants in the disability plan were specifically advised that the plan was subject to ERISA. The benefits booklet outlined the ERISA rights of participants under a section entitled "Your Rights Under ERISA."

Certain Baptist Healthcare employees were also eligible for a retirement plan. This retirement plan was established and maintained by the Annuity Board of the Southern Baptist Convention. The retirement plan was constructed as a church plan in order to qualify for exemption from ERISA. Lown apparently was eligible for participation in both the retirement plan and the disability plan.

Lown's job required her to sit for most of the day, although she had to stand and walk for a combined two hours per day. Her last day at work was September 16, 1997. In the preceding eight weeks, Lown had missed work on average about every other day. Lown's disability plan only covered disabilities that were ongoing as of December 16, 1997. Lown filed a timely claim for total disability alleging that she suffered from chronic fatigue and pain. Lown submitted relevant medical evidence from two doctors -Drs. Russell Ditzler and Frank Vasey. Keith Didyoung, a physician's assistant with Dr. Ditzler's practice, also documented Lown's illness. Didyoung's Attending Physician Statement of December 1, 1997 stated that Lown was only partially disabled. Furthermore, he wrote that he thought Lown was capable of light work, her job could be modified to allow her to work, and trial employment could begin on a part-time basis that month.

Continental denied Lown's claim for disability benefits on March 5, 1998. Continental noted that the plan only provided benefits in case of total disability, and that Lown was not totally disabled under the plan. Specifically, Continental determined that Lown's documentation was inadequate to prove a total disability because of the lack of test results or other objective evidence to support the disability. Continental called Dr. Vasey to request more concrete information, like diagnostic tests, which would show that Lown was totally disabled. Dr. Vasey responded that there was "no `proof' beyond my opinion based on 1000 patients or so." The company also pointed to Lown's increased energy and ability to take care of a sick family member as reasons for denying Lown's claim.

Lown appealed this decision on April 14, 1998. She provided a new statement from Dr. Vasey in which he stated that Lown had been totally disabled since September of 1997. In her letter, Lown claimed that she stopped work in September of 1997 on Dr. Vasey's recommendation. Continental reviewed this new evidence, and told Lown that it was not adequate to support an award of benefits. Subsequently, Continental's Appeals Committee denied Lown's claim. On August 27, Lown further supplemented the record by submitting affidavits from herself and from Drs. Ditzler and Vasey. Dr. Ditzler stated that Lown was totally disabled as of August, 1997. Dr. Vasey stated that Lown was totally disabled as of February, 1998.

Lown filed suit in state court, and Continental removed the case to federal court on federal question grounds. The district court, under de novo review, upheld the denial of Lown's benefits. It stated that Lown failed to present reasonably supported and consistent evidence of total disability. It thus ruled that Continental did not owe Lown benefits under the plan. Lown now appeals.

II.

A.

Lown contends that the disability plan was a church plan, not an ERISA plan. If the disability plan was a church plan, no federal question would exist because the plan would not be covered by ERISA. Because federal question jurisdiction is the only alleged basis for suit in federal court, we must remand the case to state court if the disability plan was a church plan.

ERISA is a "`comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans.'" Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137 (1990) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983)). ERISA applies to employee benefit plans established or maintained by any employer engaged in commerce. 29 U.S.C. S 1003(a). Federal courts have jurisdiction to hear an action brought to recover benefits due under an ERISA plan. 29 U.S.C. S 1132(a), 1132(e).

Church plans are not ERISA plans, however. 29 U.S.C. S 1003(b)(2). A church plan means a plan established and maintained "for its employees (or their beneficiaries) by a church or by a convention or association of churches." Id.S 1002(33)(A). A church plan does not include all plans maintained by a church. The statute specifically excludes plans established and maintained primarily for the benefit of those "who are employed in connection with one or more unrelated trades or businesses." Id.S 1002(33)(B)(i).

Despite this exception to the definition of a church plan, a plan established by a corporation associated with a church can still qualify as a church plan. The statute defines church plans to include plans "maintained by an organization, whether a civil law corporation or otherwise, . . . if such organization is controlled by or associated with a church or a convention or association of churches." Id. S 1002(33)(C)(i). An organization is controlled by a church when, for example, a religious institution appoints a majority of the organization's officers or directors. 26 C.F.R. S 1.414(e)-1(d)(2) (2000). To be "associated with a church," the corporation must share "common religious bonds and convictions with that church or convention or association of churches." 29 U.S.C. S 1002(33)(C)(iv).

B.

Our jurisdiction in this case thus turns on whether, at the expiration of Lown's coverage under the plan in 1997, the disability plan was an ERISA plan or a church plan. By 1997, the South Carolina Baptist Convention did not control Baptist Healthcare. The Convention did...