Ravenscraft v. Hy-Vee Employee Ben. Plan and Trust

• Decision Date: 07 June 1996
• Docket Number: No. 95-2747,HY-VEE,95-2747
• Citation: 85 F.3d 398
• Parties: 20 Employee Benefits Cas. 1501 Jeff RAVENSCRAFT; Martha Ravenscraft, Plaintiffs-Appellants, v.EMPLOYEE BENEFIT PLAN AND TRUST; Hy-Vee Food Stores, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 398

85 F.3d 398

20 Employee Benefits Cas. 1501

Jeff RAVENSCRAFT; Martha Ravenscraft, Plaintiffs-Appellants, v. HY-VEE EMPLOYEE BENEFIT PLAN AND TRUST; Hy-Vee Food Stores, Inc., Defendants-Appellees.

No. 95-2747.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 14, 1995.

Decided June 7, 1996.

Gregg Geerdes, Iowa City, IA, argued, for appellant.

Kathleen L. Nutt, argued (Kermit B. Anderson, on brief), Des Moines, IA, for appellee.

Before BOWMAN and LOKEN, Circuit Judges, and WOLLE, ^* Chief District Judge.

LOKEN, Circuit Judge.

Martha and Jeff Ravenscraft challenge the denial of benefits under a health care plan governed by the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq. ("ERISA"), claiming that Martha's employer improperly amended the plan and then terminated coverage of medical expenses for infertility treatments. The district court ¹ granted summary judgment dismissing their ERISA claims, and the Ravenscrafts appeal. We affirm.

Martha Ravenscraft is employed by Hy-Vee Food Stores, Inc. ("Hy-Vee"). She and her husband Jeff are eligible for health benefits under the Hy-Vee Benefit Plan and Trust (the "Plan"), an employee welfare benefit plan under ERISA. See 29 U.S.C. § 1002(1). Martha underwent a tubal ligation sterilization procedure in 1986, but by the Spring of 1992 the Ravenscrafts had decided they would like to have another child.

Because the Plan does not cover medical expenses to reverse voluntary sterilization, Martha inquired whether the Plan would cover in vitro fertilization ("IVF") treatment, a procedure that in some cases has achieved conception without surgically reversing prior sterilization. The Plan's Benefit Coordinator responded, "it appears the treatment would be a covered benefit [under] our plan, subject to all plan provisions." The Ravenscrafts then began IVF treatment at the University of Iowa Hospitals. Between May and August 1992, they completed one unsuccessful IVF treatment cycle and terminated a second cycle due to an unrelated health problem. The parties agree that each IVF cycle is a separate treatment that may or may not result in pregnancy.

In the Fall of 1992, Hy-Vee's Board of Directors concluded that it is inconsistent to cover IVF expenses but not sterilization reversal expenses. Accordingly, they amended the Plan to provide that no benefits would be paid to promote conception if the patient previously underwent voluntary sterilization. The Ravenscrafts received notice of this amendment in December 1992, and Jeff telephoned to complain about the change in coverage. The amendment took effect on January 1, 1993, and the Ravenscrafts cancelled IVF procedures scheduled for January 8. On January 12, their attorney wrote the Plan Director demanding that the Plan "restore infertility treatment benefits." She responded that Hy-Vee had properly exercised its right to change the terms of the Plan.

The Ravenscrafts commenced this action in state court in February 1994 against Hy-Vee and the Plan. Defendants removed, and both sides moved for summary judgment. The district court granted defendants' motion, dismissing the complaint in its entirety. The Ravenscrafts appeal the dismissal of their ERISA claims.

1. In the district court, the Ravenscrafts argued that the Plan amendment eliminating coverage of IVF treatment expenses is invalid because Hy-Vee's disclosure that it reserves "the right to change or terminate the Plan at any time" does not comply with ERISA's disclosure requirement. See 29 U.S.C. § 1102(b)(3). On appeal, the Ravenscrafts concede that this argument is foreclosed by Curtiss-Wright Corp. v. Schoonejongen, --- U.S. ----, ---- - ----, 115 S.Ct. 1223, 1228-29, 131 L.Ed.2d 94 (1995), which held that a disclosure generally reserving the employer's right to amend the plan satisfies § 1102(b)(3). However, the Ravenscrafts argue that defendants nonetheless violated ERISA disclosure obligations because they did not disclose that the Plan's trustees must finally approve Plan amendments that "change substantially the powers, duties, or liabilities of the Trustees," including amendments changing Plan benefits.

We doubt that the proper remedy for such a disclosure violation would be to invalidate the plan amendment. But we put that question aside because the Ravenscrafts' disclosure theory fails on the merits. The Plan discloses that "the Company" may amend the Plan. A company acts through its officers and agents--in this case Hy-Vee's Board of Directors--not through independent Plan trustees. See Schoonejongen, --- U.S. at ----, 115 S.Ct. at 1229. Moreover, the Plan's separate Trust Agreement provides that the trustees must pay benefits according to the "Plan Document," which in turn is defined as the schedule of benefits "as may from time to time be amended." Thus, the trustees have no role in amending the Plan, and their duties are not substantially changed by amendments to the Plan's schedule of benefits. The district court correctly dismissed the Ravenscrafts' ERISA disclosure claim.

2. The Ravenscrafts next argue that Hy-Vee abused its discretion by amending the Plan to terminate coverage for IVF treatments. ERISA does not provide a right to benefits under an employee welfare benefit plan, and an employer does not act as an ERISA fiduciary in adopting or amending that type of plan. Schoonejongen, --- U.S. at ----, 115 S.Ct. at 1228. Thus, absent a contrary contractual commitment, "[a]n employer may unilaterally modify or terminate health benefits." John Morrell & Co. v. United Food & Commercial Workers Int'l Union, 37 F.3d 1302, 1303-04 (8th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 2251, 132 L.Ed.2d 259 (1995). Here, Hy-Vee retained complete discretion to amend the Plan. Its decision to amend the Plan to eliminate the benefits in question is not subject to judicial review for abuse of discretion.

3. The Ravenscrafts next argue that defendants were arbitrary and capricious in applying the January 1993 Plan amendment to deny their claim for continuing IVF benefits. That broad issue was presented in counsel's demand letter to the Plan Director--he asserted that the Benefit Coordinator obligated the Plan to provide those benefits for as long as the Ravenscrafts continued IVF treatments when the Benefit Coordinator wrote to inform Martha that IVF treatments were covered. Defendants denied this claim, explaining that each IVF treatment cycle is a separate medical procedure and therefore the amendment precludes coverage for IVF cycles that begin after its effective date.

In their summary judgment memorandum to the district court, however, the Ravenscrafts argued a more limited and factually different theory. They submitted an affidavit that Martha had begun a third cycle of IVF treatments in November 1992 and would have continued that cycle in January 1993 had the Plan amendment not caused her to cancel. Pointing to defendants' interrogatory answer admitting that "if a member was in a treatment cycle prior to a change in plan coverage, said member would be allowed to complete that particular treatment cycle," and to a Trust Agreement provision that no amendment to that Agreement may result in a reduction of benefits payable on account of a pre-existing "sickness," the Ravenscrafts now argued that defendants were arbitrary and capricious in invoking the amendment to terminate coverage of their on-going third IVF treatment cycle.

There is certainly support for this theory in the ERISA case law. See Lutheran Med. Ctr. v. Contractors Health Plan, 25 F.3d 616, 621-22 (8th Cir.1994) (an "unreasonable inconsistency" in paying health benefits is evidence of arbitrary and capricious action). The problem is that it was never presented to the Plan administrators; it grew out of discovery and the summary judgment process in the district court. In support of their motion for summary judgment, defendants submitted an affidavit by the...