Meyer v. Duluth Building Trades Welfare Fund

• Decision Date: 05 August 2002
• Docket Number: No. 01-2819.,01-2819.
• Citation: 299 F.3d 686
• Parties: Jerald MEYER, Appellant, v. DULUTH BUILDING TRADES WELFARE FUND, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

299 F.3d 686

Jerald MEYER, Appellant, v. DULUTH BUILDING TRADES WELFARE FUND, Appellee.

No. 01-2819.

United States Court of Appeals, Eighth Circuit.

Submitted: March 11, 2002.

Filed: August 5, 2002.

Thomas F. Andrew, argued, Duluth, MN, for appellant.

John Bray, argued, Duluth, MN, for appellee.

Before HANSEN, Chief Judge, BEAM, and BYE, Circuit Judges.

BEAM, Circuit Judge.

Appellant Jerald Meyer, a participant in the Duluth Building Trades Health and Welfare Fund (Fund), was denied benefits by the Fund for injuries he received at his spouse's restaurant. He appeals from the district court's grant of summary judgment in favor of the Fund. We reverse.

I. BACKGROUND

On September 23, 1999, while measuring the side of his spouse's restaurant, Meyer fell from a scaffold and incurred a serious brain injury, three broken ribs, a broken wrist, and injury to his neck vertebrae. His accident left him totally disabled and unable to return to his trade as a plumber and pipefitter.

The Fund provides medical and weekly income benefits to employee-participants in accordance with its Trust Agreement and plan documents, and is governed by the Employee Retirement Income Security Act of 1974, as amended (ERISA), 29 U.S.C. § 1132. At the time of the accident, Meyer was a member of a participating local union that was affiliated with the Fund. His employment as a plumber and pipefitter—which had nothing to do with the assistance he was providing his spouse—was covered by a collective bargaining agreement between a contributing employer and a participating local union. Meyer had no ownership interest in, nor any rights or obligations related to his spouse's restaurant.

After sustaining injuries from the fall, Meyer submitted a claim to the Fund requesting that, pursuant to its provisions, the Fund cover his medical bills and afford him a weekly income benefit. Almost two months later, the Fund denied Meyer's claim, informing him that, "[t]he basis for this denial [could] be found in [his] Summary Plan Description on page 41, # 2(c). Based on the information received, it appears that this should have been covered under the restaurant's workmen's compensation." The Fund's Summary Plan Description states:

EXCLUSIONS AND LIMITATIONS

Payment will not be made under any health benefit or Weekly Income Benefit of the Plan for the following:

2. Charges incurred in connection with:

....

c. Any Accidental Injury or Sickness which would be covered under Workers' Compensation, or similar law, regardless of whether or not such insurance was in force and effect at the time of injury.

Meyer responded to the Trustees of the Fund:

I do not own any part of, or have any claim in the restaurant whatsoever. So I was not working for wages, profit or gain of any kind. I was not working at all. I was getting some measurements so that my wife could get an estimate from the lumber yard on redoing the back of the building.

Meyer also sent the Trustees a copy of a letter that his spouse received from a representative of her workers' compensation insurer. The letter explained that Meyer was not covered by his spouse's workers' compensation policy because, under state law, the spouse of a sole proprietor is excluded from coverage under the Minnesota Workers' Compensation Act (or "the Act"), and that, although coverage could be elected for family members, Meyer's spouse had not done so.

The Fund's administrator again denied Meyer's request for benefits. In her letter informing Meyer of the Fund's reconsideration of his claim, the administrator stated that "[e]ven though this [workers' compensation claim] was denied by the restaurant's workers' comp carrier, it appears that the main reason for denial was that you, personally, are not covered by the work comp insurance. It does appear, however, that you could have been covered if you had so elected." [Sic].

After Meyer exhausted all administrative remedies available to him, he brought this action in the district court¹ pursuant to ERISA, 29 U.S.C. § 1132(a)(1)(B). The court granted the Fund's motion for summary judgment and denied Meyer's similar motion.

II. DISCUSSION

A. Standard of Review

We review an ERISA plan's denial of benefits based on plan interpretation de novo unless the plan gives the administrator or fiduciary discretionary authority to determine participants' eligibility for benefits or to construe the plan's terms. Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Milone v. Exclusive Healthcare, Inc., 244 F.3d 615, 618 (8th Cir.2001); Wallace v. Firestone Tire & Rubber Co., 882 F.2d 1327, 1329 (8th Cir.1989). If the plan bestows that authority, we review the plan administrator's construction of the plan for abuse of discretion. Milone, 244 F.3d at 618. In contrast, where a plan's decision to deny benefits is based on its construction of existing law, the plan's interpretation of a controlling principle of law is reviewed de novo. E.g., Penn v. Howe-Baker Engrs., Inc., 898 F.2d 1096, 1100 & n. 3 (5th Cir.1990); Herrmann v. E.W. Wylie Corp., 766 F.Supp. 800, 802 (D.N.D.1991).

Because, as the Fund agreed at oral argument, resolution of this matter rests on interpretation of the Minnesota Workers' Compensation Act, we review the matter de novo. Nonetheless, given the Fund's erroneous application of the Act, the outcome in this matter would be the same under the abuse of discretion standard.²

B. The Act

The Minnesota Workers' Compensation Act defines "employee" as "any person who performs services for another for hire." 13 Minn.Stat. Ann. § 176.011, Subd. 9. Section 176.041 of the Act includes the following provisions:

Subdivision 1. Employments excluded. This chapter does not apply to any of the following:

....

(d) a sole proprietor, or the spouse, parent, and child, regardless of age, of a sole proprietor;

....

(k) a person whose employment at the time of the injury is casual and not in the usual course of the trade, business, profession, or occupation of the employer;

....

[Subdivision] 1a. Election of coverage. The persons, partnerships, limited liability companies, and corporations described in this subdivision may elect to provide the insurance coverage required by this chapter.

....

(f) .... The persons, partnerships, limited liability companies, and corporations described in this subdivision may ... elect coverage for an employee who is a spouse, parent, or child, regardless of age, of an owner, partner, manager, or executive officer, who is eligible for coverage under this subdivision. Coverage may be elected for a spouse, parent, or child whether or not coverage is elected for the related owner, partner, manager, or executive director and whether or not the person, partnership, limited liability company, or corporation employs any other person to perform a service for hire. Any person for whom coverage is elected pursuant to this subdivision shall be included within the meaning of the term employee for the purposes of this chapter.

The Fund based its decision to deny Meyer's claim for benefits on its interpretation of subdivision 1a(f) of the Act. In affirming the Fund's decision, the district court focused on the last sentence of subdivision 1a(f), which states that "[a]ny person for whom coverage is elected pursuant to this subdivision shall be included within the meaning of the term employee for the purposes of this chapter." The court concluded that "the extension of `employee' status, within the Minnesota Workers' Compensation Act, to spouses of owners who have elected to obtain Workers['] Compensation insurance, trumps any requirement that the `employee' be otherwise eligible for coverage," and consequently, "the owner's election of coverage for that spouse envelopes him or her within the meaning of an `employee,' without reference to the type of work in which the worker-spouse is engaged at the time of his or her injury." Through its construction of the Act, the court avoided the definitional requirement that an employee be a person "who performs services for another for hire," § 176.011, Subd. 9, and its exclusion for "casual" employees, § 176.041, Subd. 1(k).

The district court's analysis turns the Act on its head. To properly analyze the Act's exclusions and elections, one must not read those provisions in isolation but must first assess the Act's definitions and its structure generally. Only then can the language of the exclusions and elections be placed in context.

First, as indicated, section 176.011, subdivision 9, defines "employee" as "any person who performs services for another for hire." Next, section 176.021, subdivision 1, indicates that "[e]xcept as excluded by this chapter all employers and employees are subject to the provisions of this chapter." Section 176.041, subdivision 1, excludes specific employments from workers' compensation coverage, including "(d) a sole proprietor, or the spouse, parent, and child... of a sole proprietor," and "(k) a person whose employment at the time of the injury is casual and not in the usual course of the trade, business, profession, or occupation of the employer." But then, subdivision 1a of section 176.041 allows various entities to "elect to provide the insurance coverage required by this chapter." Business owners may "elect coverage for an employee who is a spouse, parent, or child... of [the] owner." § 176.041, Subd. 1a(f) (emphasis added). However, there is no election vehicle for employers of the "casual" employee. Compare § 176.041, Subd. 1(k), with § 176.041 Subd. 1a. Nor is there an election option for anyone who is not an "employee," as defined, including a non-employee-spouse. Finally, subdivision 1a(f) of section 176.041 indicates that "[a]ny person for whom coverage is elected pursuant to this subdivision shall be included within the meaning of the term employee for the purposes of this chapter." (Emphasis added).

Reading the plain...