Schultz v. Metropolitan Life Ins. Co.
| Decision Date | 12 May 1989 |
| Docket Number | No. 88-3658,88-3658 |
| Citation | 872 F.2d 676 |
| Court | U.S. Court of Appeals — Fifth Circuit |
| Parties | Barbara and Christopher SCHULTZ, Individually and on Behalf of Their Minor Daughter, Rachel, Plaintiffs-Appellants, v. METROPOLITAN LIFE INSURANCE COMPANY, et al., Defendants, Hart Schaffner & Marx, (Hartmarx Corporation), Defendant-Appellee. and Barbara SCHULTZ/Christopher Schultz, Individually and on Behalf of Their Minor Daughter, Rachel Schultz, Plaintiffs-Appellants, v. HART SCHAFFNER & MARX SUBSIDIARY and AFFILIATED COMPANIES GROUP LIFE INSURANCE and MEDICAL PLAN (The Plan), Hart Schaffner & Marx, Defendants-Appellees. |
Edward F. Downing, III, Gauthier, Murphy, Sherman, Chehardy & Ellis, Metairie, La., for plaintiffs-appellants.
Gary D. Ashman, Chicago, Ill., Jerry C. Paradis, Metairie, La., and Carey M. Stein, and Margaret F. Woulfe, Hartmarx Corp., Chicago, Ill., for defendants-appellees.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before CLARK, Chief Judge, and RUBIN and DAVIS, Circuit Judges.
Barbara and Christopher Schultz (collectively "Schultz") appeal from the summary judgment entered against them by the district court. We affirm.
On July 9, 1982 a Pan American Airlines jet crashed into the Schultz home. One of the Schultz children was killed, and Mrs. Schultz and another Schultz child were injured. At the time of the accident, Mr. Schultz was employed by Porter-Stevens, Inc., a subsidiary of Hart, Schaffner & Marx ("HSM"). Schultz participated in a family health insurance plan entitled the Hart Schaffner & Marx Subsidiary and Affiliated Companies Group Life and Medical Plan (the "Plan").
A few days after the accident, the representative of Pan Am's insurance carriers, United States Aviation Underwriters, Inc. (USAU), contacted Mr. Schultz and advised him that arrangements had been made to pay for all reasonable and necessary medical expenses required by the Schultz family. USAU further instructed Schultz to forward all medical invoices to USAU for direct payment. HSM was informed of this arrangement, and accordingly forwarded all medical invoices it received to USAU for payment. In November 1982, Mr. Schultz terminated his employment without electing to continue Plan coverage.
USAU paid a total of $321,838.88 for medical expenses incurred by the Schultz family. Pan Am and its insurers ultimately settled with the Schultz family for $7.2 million in addition to the medical expenses.
Two years after the accident, Schultz requested Plan coverage for $173,564.52 in medical expenses which had already been paid by Pan Am's insurers. The request was denied on the grounds that the Plan did not provide for double coverage. Schultz exhausted available administrative remedies by appealing to the Plan's Claims Appeal Committee, which also denied coverage. Schultz brought this action against HSM and the Plan alleging that the claim for medical expenses had been wrongfully denied. The district court entered summary judgment for the defendants.
We first address the appropriate standard of judicial review for benefit determinations by plan administrators under the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1001, et seq. The Supreme Court has recently held that "a denial of benefits challenged under Sec. 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire and Rubber Co. v. Bruch, --- U.S. ----, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989). This action to recover benefits denied by the Plan administrator comes under 29 U.S.C. Sec. 1132(a)(1)(B). Neither party has pointed to any provision in the Plan which gives the administrator discretionary authority to determine benefit eligibility or to construe the plan terms. Accordingly, the district court's review of the administrator's denial of the Schultz claim will be tested here based on a de novo review standard.
The district court found that the Plan administrator acted properly in finding that the medical expenses submitted by Schultz were not covered by the Plan. The court cited the "coordination of benefits" provision contained in the Plan:
If a person is eligible for medical benefits under any other plan of coverage:
the benefits of this Plan may be reduced so that during the calendar year up to, but not more than, 100% of the person's medical expenses (at least a portion of which is covered under one or more of such Plans) will be paid by all such Plans.
Schultz argues that this clause provides for coordination of benefits only between medical insurance plans, not between medical insurers and liability insurers. The question is one of contract interpretation. The coordination of benefits clause is not restricted by its language to coordinating benefits among medical insurers. The clause is open to the interpretation that Pan Am's liability insurance is a plan of coverage "required or provided by law" which should be coordinated with the benefits under the Plan. See 14 C.F.R. Sec. 205.5(a).
When a contract is reasonably subject to different interpretations, the conduct of the...
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