Steever v. Bristol-Myers Co.

• Decision Date: 06 November 1989
• Docket Number: Civ. A. No. HAR 88-3075.
• Citation: 727 F. Supp. 986
• Parties: Noel STEEVER, Plaintiff, v. BRISTOL-MYERS COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Maryland

727 F. Supp. 986

Noel STEEVER, Plaintiff, v. BRISTOL-MYERS COMPANY, et al., Defendants.

Civ. A. No. HAR 88-3075.

United States District Court, D. Maryland.

November 6, 1989.

George W. White, Jr., Towson, Md., for plaintiff.

E. Fremont Magee, Piper & Marbury, Baltimore, Md., for defendant.

MEMORANDUM OPINION

HARGROVE, District Judge.

Currently pending before this Court is Defendants Bristol-Myers Company's ("Bristol-Myers") and William F. Flatley's ("Flatley") Motion for Summary Judgment. The issues have been fully briefed. No hearing on this motion is deemed necessary. Local Rule 105.6.

I.

In June, 1979, Steever became employed by Bristol-Myers in its United States Pharmaceutical and Nutrition Group, Mead Johnson, as a sales representative. Her duties in this position required her to do extensive driving and repeated lifting of packages weighing in excess of 20 lbs.

In 1985, Steever began experiencing back and neck pains. She was referred to Dr. Robert C. Abrams, an orthopedic surgeon, who diagnosed her as having cervical disc degenerated disease. Because of her illness, her ability to work was physically restricted. She could no longer perform her job as a sales representative for Mead Johnson Division of Bristol-Myers.

In July, 1985, she was placed on short-term disability status under the "Bristol-Myers Company Long-Term Disability Income Plan" ("Plan"). The Plan is an employee benefit plan as defined by 29 U.S.C. Section 1002(3) of the Employee Retirement Income Security Act of 1974 ("ERISA").

Steever later applied for long-term disability status pursuant to the Plan. In order to obtain long-term disability, it is necessary to be found "totally disabled" under the Plan. The Plan defines "total disability" as:

1.16 "Totally Disabled" or "Total Disability" means (a) during the first year of a Participant's disability, that the Participant is unable to perform each and every duty pertaining to his own occupation and is not engaged in any other occupation, and (b) thereafter, that the Participant is unable to engage in any occupation for which he is qualified by education, training and experience.

Defendant Bristol-Myers' Exhibit A, Paragraph 1.16.

The Plan Administrator determines if a participant qualifies as totally disabled. Defendant's Exhibit A, Paragraphs 5.1, 6.1. Under the Plan, a participant who becomes totally disabled receives two-thirds of his "monthly base earnings," reduced by other income. Defendant's Exhibit A, Paragraph 3.1(b). Monthly base earnings are determined by the employee's salary at the time he became totally disabled. Exhibit A, Paragraph 3.1(c). A participant would be considered totally disabled until such time as he is able to earn more than his disability payment. While on disability, Steever received payments of $973.04 twice monthly, or $23,352.96 annually.

On March 10, 1986, Steever was determined to be totally disabled under paragraph 1.16(a) of the Plan since she could not perform "each and every duty" required under her job as sales representative of Mead Johnson. This entitled her to receive long-term disability benefits for one year. She continued on long-term disability until October 21, 1987, when she was notified by Bristol-Myers that she was no longer considered totally disabled under paragraph 1.16(b) of the Plan. Her benefits were then terminated, although Bristol-Myers did offer to arrange and pay for vocational rehabilitation services. This offer was denied by Steever. An appeal by Steever of the Administrator's decision was denied in March, 1988.

Steever then sued Bristol-Myers in Maryland state court. Bristol-Myers removed the case to this Court claiming jurisdiction under both diversity, 28 U.S.C. Section 1332, and the federal question presented by this ERISA claim. The complaint was later amended to name Flatley, the Plan Administrator and named Fiduciary, as a co-defendant.¹

II.

A threshold question raised by the pleadings is the standard of review that this Court will employ over the decision of the Plan Administrator to deny Plaintiff's benefits. In the past, the Fourth Circuit had limited district court review of the decisions of ERISA plan administrators to determine only if they had acted arbitrarily or capriciously, i.e., whether his decision is supported by substantial evidence. Voliva v. Seafarers Pension Plan, 858 F.2d 195, 196 (4th Cir.1988); Richards v. United Mineworkers Health and Retirement Funds, 851 F.2d 122, 123 (4th Cir.1988); Berry v. Ciba-Geigy Corp., 761 F.2d 1003, 1006-07 (4th Cir.1985). Such review is narrow. "We may not substitute our judgment of the facts in this case for that of the Trustees, for it is the Trustees whose expertise in this area arises from daily and continual experiences." Richards, 851 F.2d at 123. Steever, claims that this Court should exercise de novo review under the recent Supreme Court decision in Firestone Tire and Rubber Company v. Bruch, ___ U.S. ___, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). The Court does not read Firestone as changing the standard of review to be employed in this case, however.

In Firestone, the Firestone Tire and Rubber Company had sold its plastics division to Occidental Petroleum. At the time, Firestone maintained a termination pay plan for its employees. Like the Bristol-Myers plan before this Court, Firestone's termination pay plan was an employee benefit plan as defined by 29 U.S.C. Section 1002(3) of ERISA. Occidental rehired most of the approximately 500 salaried employees in the plastics division following its purchase. Still, several employees who were retained by Occidental following its acquisition filed for termination benefits from Firestone. Their benefits were denied by the Plan Administrator who found that the sale of the plastics division did not constitute a "reduction in work force" under the termination plan. Id., 109 S.Ct. at 951. See also Parsons v. West Virginia Works Hourly Employees Pension Plan, 879 F.2d 130 (4th Cir.1989) (determination by administrator as to who is a "participant" under an ERISA plan is given de novo review).

In Firestone, the Plan Administrator was interpreting the meaning of a clause in the benefit plan itself. Recognizing that this is not the sort of determination generally within the discretion of plan administrators, the Supreme Court ordered the district court to exercise de novo review. In this situation, de novo review is both necessary and proper. Administrators do not have the experience which courts possess in interpreting contractual provisions. This is not an area in which an administrator develops expertise from his usual duties. Hence, de novo review is mandated.

This is totally distinguishable from the situation presented to this Court. Here, the Plan administrator made a decision plainly within his authority as expressed in the Plan itself. Paragraph 5.1 of the Plan states that he "shall have the authority to grant or deny all claims for benefits under the Plan." Defendant's Exhibit A, Paragraph 5.1. Paragraph 6.1 also expressly establishes this authority:

The authority and responsibilities of the Plan Administrator, in addition to those provided elsewhere herein, are: (a) to grant or deny Participants' claims for benefits under the Plan....

Id., Paragraph 6.1. Decisions concerning pension benefits are exactly the type in which administrators gain expertise from "daily and continual experiences." Richards, 851 F.2d at 123.

Steever claims that the authority exercised by the Plan Administrator is not "discretionary" and thus under Firestone must be reviewed de novo. This argument is totally without merit. It is incomprehensible to conclude that the administrator is granted "the authority" under the Plan but does not have "discretion." The fact that the instrument does not include the word "discretion" in its enumeration of the administrator's responsibilities in this area while it does use the word elsewhere does not mean that discretion does not exist. Such a distinction is unworkable. It would be impossible for a plan administrator to exercise any authority in granting or denying benefits without exercising discretion. This is not the type of situation which the Supreme Court has directed the courts to review de novo. Boyd v. Trustees of United Mine Workers Health & Retirement Funds, 873 F.2d 57, 59 (4th Cir.1989). Accordingly, the Court will limit its review to whether the administrator acted arbitrarily or capriciously as directed by the Fourth Circuit. Voliva, supra; Richards, supra.

III.

Summary judgment will be granted when "there is no genuine issue as to any material fact, and if the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). "Factual disputes that are irrelevant or unnecessary will not be counted." Id., 477 U.S. at 248, 106 S.Ct. at 2510. The mere existence of a "scintilla of evidence" is not enough to frustrate a motion for summary judgment. The pleadings must show evidence on which the finder of fact could reasonably find for the party opposing judgment. Id., 477 U.S. at 252, 106 S.Ct. at 2512; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986).

In deciding whether the actions of the Plan Administrator were arbitrary or capricious, this Court will review only those facts available to the Plan Administrator at the time of his decision. Voliva, 858 F.2d at 196. After reviewing the facts available at the time of termination, this Court is satisfied that the actions of the Administrator are supported by substantial evidence and that there was no abuse of discretion.

After Steever was placed on disability in 1986, the Plan requested that she submit a statement of disability from her physician. In response, her physician, Dr. Robert C. Abrams, sent a report dated November 4, 1986. This report stated that Steever could not use her arms for...