Phillips v. Metro. Life Ins. Co.

• Court: Texas Court of Appeals
• Citation: Phillips v. Metro. Life Ins. Co., 405 S.W.3d 880 (Tex. App. 2013)
• Decision Date: 03 July 2013
• Docket Number: No. 05–11–00678–CV.,05–11–00678–CV.
• Parties: Joann PHILLIPS, Appellant v. METROPOLITAN LIFE INSURANCE COMPANY and the Verizon Employee Benefits Committee, Appellees.

405 S.W.3d 880

Joann PHILLIPS, Appellant

v.METROPOLITAN LIFE INSURANCE COMPANY and the Verizon Employee Benefits Committee, Appellees.

No. 05–11–00678–CV.

Court of Appeals of Texas, Dallas.

May 10, 2013.

Rehearing Overruled July 3, 2013.

James L. Johnson, The Johnson Law Firm, Dallas, TX, for Appellant.

Linda G. Moore, Taber Estes Thorne & Carr, PLLC, Dallas, TX, for Appellees.

Before Justices FRANCIS and MURPHY.¹

OPINION

Opinion by Justice MURPHY.

JoAnn Phillips appeals from a summary judgment rendered in favor of Metropolitan Life Insurance Company and The Verizon Employee Benefits Committee (VEBC) on her claim that MetLife, acting on behalf of VEBC, improperly withheld long-term disability benefits to which she was entitled. We affirm.

I. BACKGROUND

During her employment as a benefit specialist with a subsidiary of Verizon Communications, Inc., Phillips participated in an employee welfare benefit plan (the Plan) governed by the Employee Retirement Income Security Act of 1974 (ERISA). 29 U.S.C.A. §§ 1001–1461. VEBC is the Plan administrator; MetLife is the Plan's claims administrator.

Phillips suffered from various health conditions. In April 2002, Verizon approved her request for an accommodation under the Americans with Disabilities Act to transition to a twenty-hour work week. Phillips ultimately stopped working in 2007 and became eligible for disability benefits under the Plan. Her date of disability is February 16, 2007. After receiving fifty-two weeks of short-term disability benefits, Phillips applied for and began receiving LTD benefits in 2008. Although the parties agree that Phillips is disabled and thus entitled to benefits, they disagree about the amount of monthly benefits due.

A. The Plan

LTD claims under the Plan are paid from the Verizon Long Term Disability Trust for Active Employees, which is funded with employee contributions. MetLife, as the claims administrator, received a fee to process disability claims and had the authority to make final determinations regarding eligibility and benefit claims. The Verizon summary plan description (SPD) ² provided to Phillips specifically identifies MetLife's authority as including discretion to (1) interpret the disability income program based on “provisions and applicable law and make factual determinations about claims,” (2) determine eligibility for benefits, (3) decide “the amount, form and timing of benefits,” and (4) resolve “any other matter” under the program raised by a participant or beneficiary or identified by the claims administrator. The SPD also provides that “[i]n case of an appeal, the claims administrators' decisions are final and binding on all parties to the full extent permitted under applicable law,” unless the participant or beneficiary later proves the “decision was an abuse of administrator discretion.”

The SPD describes the details related to a participant's disability coverage, but it advises that the person's health and well-being benefits, such as disability coverage, are governed by the official plan document, labeled “The Plan for Group Insurance.” Both the SPD and the Plan expressly incorporate the SPD by reference into the Plan as “the source of specific information relating to [a participant's] disability benefits.” ³

B. LTD Benefit Calculation

According to the SPD, Phillips's LTD benefit calculation is based on her “annual benefits compensation” and the LTD coverage option she was enrolled in at that time. The figure used for Phillips's “annual benefits compensation” is determined “at the time [she] first became totally disabled” under the short-term disability plan and is made up of the following amounts as of July 1 of the previous calendar year:

• Base pay, including any temporary increases.

• Short-term incentives, such as Verizon Incentive Plan awards.

• Commissions (based on a rolling 12–month period, beginning July 1).

• Foreign service premiums.

Overtime pay, discretionary awards, sales draws, and bonuses are excluded from annual benefits compensation. The SPD defines “pay” as a participant's “annual base salary,” which does not include overtime pay, incentives, or “[a]ny other element of compensation other than base recurring salary.”

Phillips's “monthly unreduced LTD benefit” is calculated by dividing her “annual benefits compensation by 12 to arrive at [her] monthly benefits compensation amount.” That amount is then multiplied by Phillips's benefit level, which was 50%. The monthly LTD benefit amount also is reduced by benefits provided from “[o]ther sources of disability income,” such as social security disability income and “[p]ension benefits from a Verizon pension plan, if [Phillips] elect[s] to receive them.” If the monthly LTD benefit is reduced by other sources of disability income, the monthly benefit “will not be reduced below whichever of these is greater”: 10% of her unreduced monthly LTD benefit or $100. But this minimum monthly benefit amount does not apply if the participant receives an overpayment of benefits.

C. Phillips's Claim for LTD Benefits

MetLife approved Phillips's claim for LTD benefits by letter dated September 30, 2008. For the period beginning February 15, 2008 (the date she became eligible for LTD benefits) through December 31, 2009, Phillips was paid LTD benefits based on an annual benefits compensation figure of $47,400, for an unreduced LTD benefit of $1,975.00 per month.⁴ That monthly benefit also was reduced by Phillips's social security disability income. On December 2, 2008, MetLife wrote to Phillips that it had reduced her monthly benefit by an additional amount of $760.25 per month based on her receipt of pension benefits effective November 2008. After the second reduction, her LTD benefit was $197.50 per month, which was the minimum monthly benefit amount under the Plan (10% of her unreduced monthly LTD benefit).

The reduction in Phillips's monthly LTD benefit based on pension benefits followed her certification, signed November 17, 2008, that she had “elected the Lump Sum option from the Verizon Management Pension Plan to commence on November 1, 2008.” This “payment option” paid $160,963.40. That same day, her spouse also signed a consent form in which he certified his consent “to [his] spouse's election to begin benefits now.”

When she elected the lump sum option, Phillips chose to roll over her pension benefits into a traditional IRA. And in accordance with her election, the Verizon benefits center sent Phillips a check payable to ING Bank for deposit into the “IRA OF JOANN H PHILLIPS.” The check stub described the payment amount as a “CASH DISTRIBUTION.” Phillips signed an IRA deposit form, indicating she was enclosing a check for deposit; the “deposit type” was for “Employer Plan to IRA Rollover.”

On January 8, 2010, MetLife informed Phillips by letter that her salary from which the annual benefits compensation was derived was “incorrectly reported” and the correct unreduced benefit payable was $1,402.08 per month, not $1,975.00 per month. This corrected amount was based on an annual benefits compensation figure of $33,650. MetLife adjusted Phillips's LTD claim to reflect the correct benefit amount, which included reductions for her social security disability income and pension benefits, and informed Phillips the correction resulted in an overpayment of her claim. Responding to Phillips's request for more information, MetLife sent Phillips another letter dated April 2, 2010, in which it explained that Phillips's “correct yearly pre-disability earnings were $33,650” and that her LTD benefit paid from February 2008 through December 31, 2009 on an annual benefits compensation figure of $47,400 resulted in an overpayment. MetLife further informed Phillips by a May 14, 2010 letter that the pre-disability earnings “used to calculate her monthly benefit amount” were provided by Verizon.

In the April 2010 letter, MetLife also addressed the additional offset to Phillips's LTD benefit based on her pension benefits. MetLife stated that in November 2008, it had received information from Phillips's employer indicating that she “had commenced her pension benefits and elected to take the payment in a lump sum amount of $160,963.40 with a monthly equivalent amount of $760.25.” It explained that although the lump sum amount was rolled over into an IRA, her employer confirmed that the rollover was “considered an offset to her monthly LTD benefit” amount as indicated in the Plan.

Phillips appealed MetLife's determination of her benefits in July 2010, contending MetLife made egregious errors in reducing her monthly LTD benefit based on a “miscalculation of her annual benefits compensation” and “an improper offset for pension benefits she ha[d] not received.” She sought $4,390.15 in underpaid LTD benefits through June 2010 because of “various miscalculations by MetLife.”

Regarding her contention MetLife miscalculated her annual benefits compensation, Phillips attached check stubs for the relevant period for determining her annual benefits compensation, which the parties agree is July 1, 2005 through June 30, 2006 based on her disability date of February 16, 2007. The check stubs reflected a consistent amount for the “cycle rate” and differing amounts as “basic wages.” Phillips explained that during the relevant period, she did not work a straight twenty-hour week or receive the same pay for each week. She asserted she was entitled to a monthly LTD benefit based on her “basic wages” plus incentive awards, for an annual benefits compensation amount of $46,037.75. Phillips claimed MetLife “utterlyfailed to explain the basis for its statement that Ms. Phillips'[s] ‘correct yearly pre-disability earnings were $33,650.00’ ” and failed to connect the figure with the language of the SPD.

Regarding her contention MetLife improperly offset pension benefits from her LTD benefit, Phillips attached excerpts from the SPD related to pension benefits, her Verizon pension election...