McElroy v. Smithkline Beecham Health & Welfare Trust Plan, CIVIL ACTION NO. 01-5734 (E.D. Pa. 7/31/2002)
| Decision Date | 31 July 2002 |
| Docket Number | CIVIL ACTION NO. 01-5734. |
| Parties | PAUL F. McELROY v. SMITHKLINE BEECHAM HEALTH & WELFARE BENEFITS TRUST PLAN FOR US EMPLOYEES, SMITHKLINE BEECHAM CORPORATION and UNUMPROVIDENT CORPORATION. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Presently before the Court are Defendants SmithKline Beecham Corporation and SmithKline Beecham Health & Welfare Benefits Trust Plan for US Employees' Motion for Summary Judgment (Docket No. 3), Defendant UnumProvident Corporation's Motion for Summary Judgment (Docket No. 12), Plaintiff Paul F. McElroy's Cross-Motion for Summary Judgment and Response to SmithKline Defendants' Motion for Summary Judgment (Docket No. 13), Defendant UnumProvident Corporation's Memorandum of Law in Opposition to Plaintiff's Cross-Motion for Summary Judgment and in Further Support of its Motion for Summary Judgment (Docket No. 16), SmithKline Defendants' Memorandum of Law in Opposition to Plaintiff's Cross-Motion for Summary Judgment and in Further Support of its Motion for Summary Judgment (Docket No. 17), SmithKline Defendants' Exhibits in Further Support of their Motion for Summary Judgment (Docket No. 18), Plaintiff's Reply to Defendants' Motion in Opposition to Plaintiff's Cross-Motion for Summary Judgment (Docket No. 19, 20), SmithKline Defendants' Supplemental Memorandum in Support of its Motion for Summary Judgment (Docket Nos. 21, 23) and Defendant UnumProvident's Supplemental Memorandum in Support of its Motion for Summary Judgment (Docket No. 22). For the reasons discussed below, Defendants Motions for Summary Judgment are GRANTED and Plaintiff's Cross-Motion for Summary Judgment is DENIED.
On November, 13, 2001, Plaintiff Paul F. McElroy filed a four-count Complaint pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), § 1132(a)(3) against Defendants SmithKline Beecham Corporation, SmithKline Beecham Health & Welfare Benefits Trust Plan for US Employees ("SmithKline") and UnumProvident Corporation1 (collectively, "Defendants"). Specifically, Plaintiff contests the calculation of the amount of long-term disability benefits owed to him under SmithKline Beecham's Long-Term Disability Plan ("the Plan"). The factual allegations on which the Plaintiff bases his claim are as follows. From November of 1965 until May of 1996, Plaintiff was employed with Conrail as a computer system analysis. See Pl.'s Compl. at ¶ 21. After more than thirty years, Plaintiff left Conrail and began to work for SmithKline Beecham in their Clinical Laboratories on September 9, 1996. As part of the benefits package provided by SmtihKline, Plaintiff was entitled to basic long-term disability benefits. In addition to the basic benefits, Plaintiff purchased increased long-term disability benefits. The SmithKline long-term disability policy provided that certain other disability payments received by the beneficiary may offset the SmithKline disability payment. See Defs.' Mot. Summ. J., Ex. B (SmithKline's Long-Term Disability Plan). Specifically, the offset provision permitted SmithKline to "reduced dollar for dollar" payments a beneficiary received from:
Primary Social Security benefits (your benefit only);
Worker's Compensation or Occupational Disease Law (including any lump sum payments);
State disability benefits or similar government benefits; or
Benefits received from the SmithKline Beecham Pension Plan.
Defs.' Mot. Summ. J., Ex. B.
According to Plaintiff, he became disabled on February 27, 1997 due to a heart condition. See Pl.'s Cross-Mot. Summ. J. at 4; Defs.' Mot. Summ. J., Ex. C. In July of 1997, Plaintiff filed his claim for long-term disability benefits but SmithKline, citing a preexisting condition, denied Plaintiff's claim. See Defs.' Mot. Summ. J., Ex. C, D. Plaintiff then appealed SmithKline's denial of his long-term disability benefits and brought suit against SmithKline on July 30, 1999. See McElroy v. SmithKline Beecham Corp., Civ. A. No. 99-3842 (E.D.Pa. 1999). The parties settled the case in July of 2000 and Plaintiff was reinstated to the SmithKline Plan, becoming eligible for benefits effective July 13, 2000. Defs.' Mot. Summ. J., Ex. F.
Prior to filing his first lawsuit against SmithKline, Plaintiff began receiving $2,023.15 in benefits on January 13, 1998 from the Railroad Retirement Board as a result of his prior employment with Conrail. See Pl.'s Compl. at ¶ 34; Defs.' Mot. Summ. J., Ex. E. On September 26, 2000, SmithKline informed Plaintiff that it would apply an offset to reduce Plaintiff's disability payments by the amount of disability annuity payments Plaintiff was receiving under the Railroad Retirement Act. See Defs.' Mot. Summ. J., Ex. G. Plaintiff then appealed the Plan Administrator's determination on October 5 and October 10, 2000. See id., Ex. H. On November 10, 2000, the Plan Administrator denied Plaintiff's appeal finding that the disability annuity Plaintiff receives pursuant to the Railroad Retirement Act was a "similar government benefit" under the Plan and therefore had to be deducted from Plaintiff's SmithKline benefit payment. See id., Ex. J. Plaintiff then commenced the instant lawsuit in November of 2001 contesting the Plan Administrator's application of the offset provision to the Railroad Retirement Act benefits. SmithKline then filed the instant Motion for Summary Judgment on March 12, 2002, to which Plaintiff responded with his own Cross-Motion for Summary Judgment.
A. Summary Judgment
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The party moving for summary judgment has the initial burden of showing the basis for its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant adequately supports its motion pursuant to Rule 56(c), the burden shifts to the nonmoving party to go beyond the mere pleadings and present evidence through affidavits, depositions, or admissions on file to show that there is a genuine issue for trial. See id. at 324. A genuine issue is one in which the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
When deciding a motion for summary judgment, a court must draw all reasonable inferences in the light most favorable to the nonmovant. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992), cert. denied, 507 U.S. 912, 113 S.Ct. 1262, 122 L.Ed.2d 659 (1993). Moreover, a court may not consider the credibility or weight of the evidence in deciding a motion for summary judgment, even if the quantity of the moving party's evidence far outweighs that of its opponent. Id. Nonetheless, a party opposing summary judgment must do more than just rest upon mere allegations, general denials or vague statements. Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001).
In its Motion for Summary Judgment, SmithKline argues that the decision of the Plan Administrator to offset Plaintiff's long-term disability benefits pursuant to section 502(a)(1)(B) of ERISA was not arbitrary or capricious. See Defs.' Mot. Summ. J. at 7. According to SmithKline, "the Plan Administrator's decision must be accorded great deference and this Court cannot upset his judgment." Id. Plaintiff counters that a heightened standard of review applies since SmithKline both funds and administers the Plan. See Pl.'s Resp. to Defs.' Mot. Summ. J. at 14. Furthermore, Plaintiff alleges that the Plan Administrator's application of the offset provision is "unreasonable and an abuse of discretion" as well as "contrary to the law of this Circuit." Id. at 8, 15. Both parties agree that there is no material fact at issue in this case. See id. at 8. Accordingly, the Court hereafter considers each claim.
First, the Court must determine what standard should be applied in reviewing SmithKline's decision to reduce Plaintiff's long-term disability benefits. In determining the appropriate standard of review under ERISA, the United States Supreme Court in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) rejected the universal application of the arbitrary and capricious standard when reviewing an ERISA administrator's decision regarding benefits eligibility. Rather, applying principles of trust law, the Firestone Court held that "a denial of benefits challenged under § 1132(a)(1)(B) is 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." Id. (emphasis added).
The Firestone holding was subsequently interpreted by the Third Circuit in Luby v. Teamsters Health, Welfare & Pension Trust Funds, 944 F.2d 1176 (3d Cir. 1991). Under Luby, where an administrator is granted discretionary authority to grant or deny benefits, the administrator's factual determinations as well as interpretations of the plan are reviewed under the arbitrary and capricious standard. See id. at 1183-84. The Third Circuit has also held that, where a conflict of interest exists, a heightened standard of review should apply. See Pinto v. Reliance Standard Life Ins. Co., 214 F.3d 377, 378 (3d Cir. 1998). The Pinto Court addressed the conflict of interest that arises when an insurer both decides claims and pays benefits from its own assets because "the fund from which the monies are paid is the same fund from which the insurance company reaps its profits. . ." Id. Therefore, in cases where "the same entity both funds...
To continue reading
Request your trial