Smith v. Champion Inter. Corp.
Decision Date | 26 August 2008 |
Docket Number | Civil Action No. 3:02-cv-212 (CFD). |
Citation | 573 F.Supp.2d 599 |
Court | U.S. District Court — District of Connecticut |
Parties | Harry SMITH, et al., Plaintiffs v. CHAMPION INTERNATIONAL CORPORATION, et al., Defendants. |
Sheila K. Rosenstein, Rosenstein & Barnes, William B. Barnes, Fairfield, CT, Richard B. Harper, Sylva, NC, for Plaintiffs.
Barry J. Waters, Murtha Cullina LLP, New Haven, CT, Bruce M. Steen, Susan P. Dion, McGuire Woods LLP, Charlotte, NC, for Defendants.
RULING ON CROSS MOTIONS FOR SUMMARY JUDGMENT
The plaintiffs, fourteen former employees of defendant Champion International Corporation ("Champion"), brought this action under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., alleging nonpayment of long term disability ("LTD") benefits by Champion, its long term disability plans, its successor International Paper Company, and CORE, Inc., a consultant for Champion.1
In Count One three former salaried employees seek benefits under the Long Term Disability Benefits Plan for Salaried Employees of Champion International Corporation # 506. In Count Two the remaining plaintiffs, former hourly manual laborers and low-to semi-skilled workers at Champion's Canton, North Carolina paper mill, seek benefits under the Long Term Disability Benefits Plan for Hourly Employees of Champion International Corporation # 703. In Count Three the plaintiffs assert violations of 29 U.S.C. § 1133. In Count Four the plaintiffs assert violations of 29 U.S.C. § 1132(a)(3). The plaintiffs and the remaining defendants have filed cross motions for summary judgment.2
Champion was a corporation organized under New York law. Until May 2000, Champion was engaged in the paper manufacturing business and had its headquarters in Greenwich, Connecticut. Defendant International Paper Company is a New York corporation with its principal place of business in Stamford, Connecticut. In June 2000, International Paper acquired Champion's stock and assets through a merger agreement. In December 2000, Champion merged into International Paper.3
Champion had two self-funded long term disability plans (collectively the "plans"): the Long Term Benefits Plan for Salaried Employees of Champion (the "salaried employees plan") and the Long Term Benefits Plan for Hourly Employees of Champion (the "hourly employees plan"). Both plans provide long term disability coverage, calculated as a percentage of monthly earnings, to employees who become "totally disabled" as defined by the plans.
The plans were administered by the Champion Pension and Employee Benefits Committee, which Champion's board of directors appointed. In turn, the Committee appointed the Employee Benefits Department of Champion to be "Plan Supervisor."
The plans began to provide long term disability coverage six months after the onset of disability. During the first thirty months4 after the onset of disability, both plans defined "total disability" as "the inability of an Employee to perform the duties of his employment with the Employer." This is commonly known as "own occupation" disability.
After thirty months, "total disability" is defined as "the inability to engage in any occupation or business for wage or profit for which [the participant] is or may become reasonably qualified by training, education or experience." Salaried Employees Plan at 9; see also Hourly Employees Plan at 8 () An employee is entitled to long term disability benefits as long as he or she remains totally disabled. The Plan Supervisor may require the employee to "undergo a physical examination at periodic intervals" to determine if the employee remains disabled.
Coverage is excluded during any period in "which there is a determination by a Physician selected by the Plan Supervisor that the Participant does not meet the definition of Total Disability."
Under the terms of the plans, Champion had "the power and authority in its sole, absolute and uncontrolled discretion to control and manage the operation and administration of the Plan[s]" including the right to "determine all questions relating to the eligibility of Employees to participate," to "determine the amount and kind of benefits payable to any Employee," and to "interpret[] the provisions of the Plan(s)."
CORE is a Massachusetts corporation with which Champion contracted to assist it in managing its long term disability program. Effective January 1, 1996, CORE and Champion entered into a Services Agreement. The Services Agreement provided, inter alia, (1) that Champion would retain full and sole authority and responsibility for determining who was eligible to receive benefits and the amount of benefits to be paid under any plan sponsored by Champion; (2) that CORE would make written recommendations to Champion concerning employees' eligibility for benefit payments; (3) that CORE would have no responsibility for any benefit or medical care decisions; and (4) that CORE would not be deemed to be the "appropriate named fiduciary" as defined by ERISA or have any other fiduciary duties under ERISA as a result of the Services Agreement. Prior to 1996, a division of The Travelers Companies ("Travelers") provided disability management services to Champion.
CORE used a system called "WorkAbility" to determine the presumed time an employee would be out of work for any given medical condition. According to the plaintiffs, CORE recommended that Champion terminate disability payments if an employee was out of work longer than this presumed time.
Effective January 1, 1999, CORE, Champion, and Sedgwick Claims Management entered into a "SCORE Services Agreement," whereby CORE and Sedgwick furnished disability management services to Champion.
According to the plaintiffs, CORE and SCORE exceeded the scope of the Services Agreement and made all benefits decisions. The plaintiffs maintain that Champion's Plan...
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