Saffle v. Sierra Pacific Power Co. Bargaining Unit Long Term Disability Income Plan, 95-15688

• Decision Date: 28 June 1996
• Docket Number: No. 95-15688,95-15688
• Parties: , 20 Employee Benefits Cas. 1358, 8 NDLR P 123, 96 Cal. Daily Op. Serv. 4020, 96 Daily Journal D.A.R. 6516, Pens. Plan Guide P 23921M June SAFFLE, Plaintiff-Appellee, v. SIERRA PACIFIC POWER COMPANY BARGAINING UNIT LONG TERM DISABILITY INCOME PLAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 455

85 F.3d 455

64 USLW 2791, 20 Employee Benefits Cas.

1358, 8 NDLR P 123,

96 Cal. Daily Op. Serv. 4020,

96 Daily Journal D.A.R. 6516,

Pens. Plan Guide P 23921M

June SAFFLE, Plaintiff-Appellee, v. SIERRA PACIFIC POWER COMPANY BARGAINING UNIT LONG TERM

DISABILITY INCOME PLAN, Defendant-Appellant.

No. 95-15688.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 13, 1996.

Decided June 5, 1996.

As Amended June 28, 1996.

Suellen Fulstone, Woodburn, Wedge, Blakey & Jeppson, Reno, Nevada, for defendant-appellant.

Mark A. Kilburn, Langton & Kilburn, Reno, Nevada, for plaintiff-appellee.

Appeal from the United States District Court for the District of Nevada, David Warner Hagen, District Judge, Presiding. D.C. No. CV-92-00743-DWH.

Before: ALARCON, BEEZER and RYMER, Circuit Judges.

RYMER, Circuit Judge:

This appeal requires us to decide what should happen when district courts (or we) conclude that an ERISA plan administrator with discretionary authority to interpret and apply a plan has misconstrued the document and applied an incorrect standard to its benefits determination.

June Saffle applied for occupational disability benefits under the Sierra Pacific Power Company Bargaining Unit Long Term Disability Plan, an employee benefit plan governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., on the basis of being totally disabled from performing each and every duty of her regular occupation. The administrator, with discretion to interpret and apply the Plan, construed its definition of "total disability"--"completely unable to perform each and every duty of [the participant's] regular occupation"--as "unable to perform a substantial portion of her regular job with accommodations that could have been made." It determined that Saffle was not entitled to benefits, but the district court found that this decision was arbitrary and that Saffle was totally disabled. We agree that the administrator abused its discretion by adding a requirement of coverage that conflicts with the plain language of the Plan, but we hold that when, as here, the administrator construes a plan provision erroneously, the court should not itself decide whether benefits should be awarded but rather should remand to the administrator for it to make that decision under the plan, properly construed.

We therefore reverse and remand with instructions to remand to Sierra Pacific's Pension and Benefit Committee for it to determine whether Saffle is entitled to the benefits for which she applied under the Plan interpreted consistently with this opinion.

I

June Saffle was employed by Sierra Pacific Power Company (Sierra Pacific) and was a participant in the Sierra Pacific Power Company Bargaining Unit Long Term Disability Income Plan, which is administered by the Sierra Pacific Power Company Pension and Benefit Committee (Benefit Committee or Committee). Saffle worked as a Customer Services Clerk in the Credit Department, a clerical job which included using computers, the telephone system, and various office machines, as well as interacting with customers.

The Sierra Pacific Plan has a two-tiered disability benefits structure, one for occupational disability and one for general disability. Paragraph 3.2 provides:

[A] Participant shall be considered "Totally Disabled", or to have a "Total Disability", for purposes of the Plan if during the qualifying disability period [180 days] and the first twenty-four (24) months of monthly benefits he is completely unable to perform each and every duty of his regular occupation. Thereafter a Participant shall be considered "Totally Disabled", or to have a "Total Disability" for purposes of the Plan if he is unable to engage, for compensation or profit, in any business or occupation for which he is reasonably fitted by education, training or experience.

In early 1983, a neuroma in Saffle's right foot was surgically removed. Pain continued and there were other complications; eventually, on April 29, 1985, Saffle stopped working. About this time she began to complain of neck and arm pain, apparently exacerbated by an automobile accident in August 1985. On November 5, 1985, Saffle applied for long term disability benefits under the Plan.

Saffle's application included a form from her internist and podiatrist that indicated that she is "totally disabled" from her current job, though not from "any other work." Later she submitted opinions from a neurosurgeon and an orthopedic surgeon that likewise indicated that she is "totally disabled." At the direction of Tom Robertson, Vice President of the Human Resources Department of Sierra Pacific, Saffle agreed to an independent medical examination by Dr. Steven Atcheson. Robertson advised Atcheson of the Plan's definition of "total disability" during the first 180 days of disability and the first 24 months of disability; described Saffle's "regular job" as that of a Customer Services Clerk which is "mostly sedentary"; said that she was seated at least 80% of the time; and indicated that "[w]e also had/have work available for which she is qualified that would have enabled her to work with her feet elevated. At that task, she would have been seated except for breaks and any other movement of a personal nature." Atcheson was asked for his opinion regarding whether Saffle was "totally disabled, i.e., unable to perform every duty of her regular job?" Atcheson responded that Saffle "has not been totally disabled at any time since November 1985. This is assuming that she can remain seated with her right leg elevated and would not have to do any walking except for brief periods of time."

Equifax Services, the Plan's claims processing agency, determined that Saffle was not totally disabled since she is seated at least 80% of the time in her regular job as Customer Services Clerk, and "a position is available to enable her to work with her feet elevated." Saffle was told to return to work consistent with the limitations noted in Dr. Atcheson's report.

Saffle appealed Equifax's determination to the Benefit Committee, which directed Equifax to supply Saffle's physicians with the same information Robertson furnished to Atcheson. All but one, who continued to believe she was "totally disabled," responded that Saffle might be able to perform some portion of her job with modifications.

The Benefit Committee interpreted p 3.2 to mean "the inability to perform substantial portions of the employee's regular job," and determined that Saffle was not totally disabled because "the weight of the medical opinion is that you could perform a substantial portion of your regular job with the accommodations that could have been made."

Saffle then filed suit for benefits. After reviewing the administrative record, the district court concluded that the Committee's interpretation of the Plan's definition of "total disability" to include accommodations that could be made in Saffle's current job, and of the clause "completely unable to perform each and every duty of his regular occupation" to mean "the inability to perform substantial portions of the employee's regular job" were contrary to the plain language of the Plan. The court further found that the Benefit Committee's decision that Saffle was not totally disabled was not supported by substantial evidence, and that the weight of the evidence demonstrates that she was totally disabled. It therefore reversed the Benefit Committee's decision and remanded "for a determination of benefits due plaintiff under the Plan, from October 29, 1985, to the present."

Sierra Pacific timely appealed.

II

Where, as here, an ERISA plan vests the administrator with discretionary authority to determine benefit eligibility, "a district court may review the administrator's determination only for an abuse of discretion." Winters v. Costco Wholesale Corp., 49 F.3d 550, 552 (9th Cir.) (citation omitted), cert. denied, --- U.S. ----, 116 S.Ct. 276, 133 L.Ed.2d 197 (1995). The court of appeals in turn "reviews the district court's application of this standard and the conclusion that the [plan] administrator abused its discretion de novo." Id.

III

Sierra Pacific argues that the Benefit Committee acted within its discretion in not interpreting the language of the Plan literally. It emphasizes that the Committee is charged with administration of the Plan, and that it made a reasonable and common sense decision that Saffle was not totally disabled on the grounds that four out of five doctors who examined her were of the opinion that she could do a "substantial portion" of her job duties with some accommodations.

An ERISA plan administrator abuses its discretion if it construes provisions of the plan in a way that "conflicts with the plain language of the plan." Taft v. Equitable Life Assur. Soc., 9 F.3d 1469, 1472 (9th Cir.1993) (citations omitted). "Our inquiry is not into whose interpretation of the plan documents [i.e., the administrator's or the district court's] is most persuasive, but whether the plan administrator's interpretation is unreasonable." Winters, 49 F.3d at 553 (quoting Barnett v. Kaiser Found. Health Plan, Inc., 32 F.3d 413, 416 (9th Cir.1994)).

A

Sierra Pacific first argues that it would have been impossible for Saffle to satisfy the literal language of the Plan's definition of total disability (requiring that she be unable to perform "each and every" duty) because she had a clerical job, and her own doctors indicated that she was only moderately impaired and was capable of performing clerical, sedentary activity. It suggests that an inability to perform "each and every" duty means "all" the duties of the job, but that it was reasonable for the Committee to determine that such a definition, as literally applied, was too onerous and that Saffle should only have to show that she was unable to perform "substantial portions" of her duties. Saffle counters that "each and every" unambiguously...