Moore v. Metropolitan Life Ins. Co.
| Decision Date | 02 September 1988 |
| Docket Number | D,No. 641,641 |
| Citation | 856 F.2d 488 |
| Parties | , 9 Employee Benefits Ca 2685 Richard A. MOORE and Mary Amstad, on behalf of themselves and as representatives of a class of persons similarly situated, Plaintiffs-Appellants, v. METROPOLITAN LIFE INSURANCE COMPANY, a mutual company incorporated in New York State, Defendant-Appellee. ocket 87-7793. |
| Court | U.S. Court of Appeals — Second Circuit |
Irving R. M. Panzer, Washington, D.C. (Daniel J. Gatti, Gatti, Gatti, Maier & Smith, Portland, Or., Tas Coroneos, Chevy Chase, Md., Stanley Heisler, New York City, of counsel), for plaintiffs-appellants.
Larry M. Lavinsky, New York City (Robert J. Kochenthal, Jr., Proskauer Rose Goetz & Mendelsohn, New York City, of counsel), for defendant-appellee.
Before LUMBARD, WINTER and ALTIMARI, Circuit Judges.
Defendant-appellee Metropolitan Life Insurance Company ("Metropolitan") maintains medical benefit plans for its employees under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Secs. 1001-1461 (1982). These plans contain provisions unambiguously reserving Metropolitan's right to amend or terminate them. Pursuant to that reservation of rights, Metropolitan has amended the plan numerous times, usually augmenting benefits, but sometimes diminishing them. This appeal presents the question of whether Metropolitan may be barred from altering benefits under the plans by various communications to its employees that described the plans as, inter alia, providing "lifetime" benefits "at no cost." We hold that the unambiguous provisions of the plan must govern, because altering a welfare benefit plan on the basis of non-plan documents and communications, absent a particularized showing of conduct tantamount to fraud, would undermine ERISA. Accordingly, we affirm.
Metropolitan has provided group health insurance to its employees for over seventy years. Metropolitan presently maintains a multipart Insurance & Retirement Program ("I & R Program") for eligible employees and field representatives. At issue are the medical plans provided under two parts of the I & R Program. The first is the Comprehensive Medical Expense Plan, covering both active employees and retirees under the age of 65 ("Comprehensive Plan"). The second is the Supplementary Medical Expense Plan, covering retirees 65 years of age and older ("Supplemental Plan").
Metropolitan's medical plans constitute welfare benefit plans under Section 3(1) of ERISA, 29 U.S.C. Sec. 1002(1). ERISA requires that the plan administrator, here Metropolitan, file a "plan description" with the Secretary of Labor and furnish plan participants and beneficiaries with a summary plan description ("SPD") "written in a manner calculated to be understood by the average plan participant, and ... sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights ... under the plan." 29 U.S.C. Sec. 1022. See also 29 U.S.C.
Secs. 1021, 1024. Metropolitan issued its initial SPD when the SPD requirement first became effective in 1977, and issued a second SPD in 1984. Both SPDs unambiguously reserved to Metropolitan the right to change or discontinue the medical expense plans. The 1977 SPD thus stated: "The Company expects to continue the Metropolitan Insurance and Retirement Program and the other employee benefit plans. However, it reserves the right to change or discontinue any portion of the benefits described in this summary." The 1984 SPD included similar language, under the heading "Change or Discontinuance of Plan."
Over the years, Metropolitan has published booklets other than SPDs explaining its group insurance benefits. With one exception, each of these booklets unambiguously reserved to Metropolitan the right to amend or terminate the benefits offered. For example, as early as 1915, the company used the following language:
These rules may be modified or repealed by the Company's Executive at any time and without prior notice; the Company reserves the right to withdraw, at any time, and without prior notice, any or all contributions, bonuses, allowances or privileges provided for by these rules.
More recent booklets have contained language similar to the following:
CHANGE OR DISCONTINUANCE OF PLAN
The Company reserves the right at any time to change or discontinue this Supplementary Medical Expense Plan, except that any change shall be subject to the approval of the Superintendent of Insurance of the State of New York.
The single booklet omitting an express reservation of a right to amend or terminate was published in 1976--after ERISA was enacted in 1974, but before final regulations governing SPDs were promulgated in 1977. However, the following statement appeared on the booklet's inside front cover:
This summary describes briefly, in general terms, the important provisions of the Metropolitan Insurance and Retirement Program and other Company benefits. Complete details, terms, and conditions are contained in Plan Documents and Group Contracts. The specific language of the Plan Documents and Group Contracts will govern in every respect and instance.
Metropolitan has also communicated with its employees and retirees concerning its I & R Programs in other ways. Filmstrips have been used to explain and promote the various benefits available under its different plans. Metropolitan's managers and supervisors are given materials to be used in conjunction with these filmstrips and are encouraged to make an effort to convey to the company's employees the details of the various coverages. Articles explaining Metropolitan's various I & R Programs have also appeared in Metropolitan's employee newspapers as well as in specific memoranda and letters to active employees and retirees. Metropolitan's right to amend or terminate benefits was generally not stated in these various presentations. Moreover, these presentations occasionally described these benefits as being for the employee's "lifetime," and "at no cost."
Over time, Metropolitan has made numerous changes in its medical plans. While most of these changes have broadened coverage, some have diminished particular benefits. For example, prior to 1979, the annual deductible amount under both the Comprehensive and Supplementary Plans was $50 per person/$100 maximum per family. Effective January 1, 1979, the Comprehensive Plan deductible was doubled to $100 per person/$200 per family. Because the Comprehensive Plan covers retirees under the age of sixty-five as well as active employees, the 1979 change raised the deductible amount for some retirees. Contributions have also changed over the years. Prior to 1975, the Comprehensive Plan had been contributory for over thirty years. Effective mid-1975 and 1976 (depending upon employment classification), it became non-contributory. On May 1, 1978, however, it was made contributory again, in conjunction with the The changes in the medical plans that precipitated this lawsuit occurred in 1984 and 1985. In January 1984, the deductible amount was raised to $356 per person/$712 per family. The Medicare deductible, formerly eligible for reimbursement, was made ineligible. In December 1984, the deductible was increased again, to $400 per person/$800 per family. Another increase in 1985 raised the deductible to $424 per person/$848 per family.
addition of a dental plan and improvements in the Comprehensive Plan.
The named plaintiffs in this suit are retired Metropolitan employees. They purport to bring the action on behalf of the class of all retirees, surviving spouses, and disabled employees of Metropolitan eligible to receive benefits under the welfare provisions of Metropolitan's I & R Program. Count One of the complaint claimed that, under ERISA, Metropolitan lacked the power to change these benefits. Count Two alleged that such changes were a breach of a unilateral contract between Metropolitan and its retirees. Count Three asserted an estoppel theory. Count Four alleged that Metropolitan was barred from making changes in its welfare plan because its SPDs failed to meet the notice requirements of Section 102(b) of ERISA, 29 U.S.C. Sec. 1022(b). Count Five argued in the alternative that this failure to publish proper SPDs under Section 102(b) required a payment of damages even if such a failure did not in itself bar Metropolitan from making these changes.
Following discovery, Metropolitan moved for summary judgment, and the district court granted the motion. Because plaintiffs conceded that there is no "automatic vesting" of welfare benefits under ERISA, the court dismissed Count One. As to Count Two, the district court held that Metropolitan's plan and SPDs, which contained unambiguous reservations of the right to amend or terminate, were controlling and that extrinsic evidence could not be...
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