Williams v. Midwest Operating Engineers Welfare Fund

• Decision Date: 30 September 1997
• Docket Number: No. 96-3889,96-3889
• Parties: 21 Employee Benefits Cas. 1788 Monroe WILLIAMS, Plaintiff-Appellant, v. MIDWEST OPERATING ENGINEERS WELFARE FUND, and Larry W. Bushmaker, as Administration Manager of the Midwest Operating Engineers Welfare Fund, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1138

125 F.3d 1138

21 Employee Benefits Cas. 1788

Monroe WILLIAMS, Plaintiff-Appellant, v. MIDWEST OPERATING ENGINEERS WELFARE FUND, and Larry W.

Bushmaker, as Administration Manager of the

Midwest Operating Engineers Welfare

Fund, Defendants-Appellees.

No. 96-3889.

United States Court of Appeals, Seventh Circuit.

Argued April 21, 1997.

Decided Sept. 30, 1997.

Nick Katich (argued), Lucas, Holcomb & Medrea, Merrillville, IN, for Plaintiff-Appellant.

Alan H. Auerbach, James M. Neuman, Pasquale A. Fioretto, Catherine Chapman (argued), Stephen J. Rosenblat, Baum, Sigman, Auerbach, Pierson & Neuman, Chicago, IL, for Defendant-Appellee.

Before BAUER, CUDAHY and DIANE P. WOOD, Circuit Judges.

CUDAHY, Circuit Judge.

Monroe Williams was shot five times in the legs by a Gary, Indiana police officer. His medical bills amounted to over $200,000, all of which his health insurance plan, the Midwest Operating Engineers Welfare Fund (Fund), refused to cover. The Fund interpreted Plan language and found that it does not cover Williams' claim; Williams interpreted Summary Plan language and believes that it does cover his claim. ¹ We are called upon to decide whether Summary language or Plan language should govern the terms of Williams' coverage, and other related issues.

Williams was shot on September 26, 1992. Williams wanted to visit his girlfriend, Mechie Chisholm, but she refused to let him enter her sister's apartment where she was staying. After she refused to open the door, Williams became angry and began to kick and knock against the door. Officer Roger Paul Smith was dispatched to Chisholm's apartment in response to Chisholm's sister's call reporting an unwanted person with a possible weapon. Officer Smith spoke with Williams upon his arrival, and Williams told him that he lived in the building and that his wife was inside the apartment. Both Officer Smith and Williams entered the apartment. Chisholm told Smith that Williams was not her husband, did not live in the apartment and was not welcome there. Smith then informed Williams that he would have to leave, at which point Williams apparently became hostile and aggressive towards Chisholm. Smith placed himself between Chisholm and Williams and began to escort Williams from the apartment. Williams knocked Smith out of his way and grabbed Chisholm; she broke free, ran into a bedroom and shut the door. Williams, apparently repeating "I'm bad, I'm bad," approached Officer Smith and lunged in a way that Smith interpreted as a threat. Smith fired five times into Williams' legs, stopping him. Officer Smith called for an ambulance and performed a search of Williams, which produced no weapon.

I. The Fund's Decision

As with most ERISA-governed plans, the participants in the Fund's Plan received only a Plan Summary. The Plan Summary does not purport to convey every detail of the Plan, but does promise to be consistent with the Plan. The Summary which Williams received stated that the Fund would cover hospital "charges for room and board ... if required for hospitalization or treatment due to a non-occupational injury or illness .... [and] miscellaneous expenses during hospital confinement [including] ... hospital supplies and services, X-rays, charges for ambulance service, emergency room, anesthetist, radiologist, pathologist...." Summary at 12. Under "What Is Not Covered" the Summary lists

an illness or injury that is covered under Workers' Compensation, or that is recoverable from a responsible third party; any treatment or services not prescribed by an eligible provider ...; an illness or injury resulting from war or any act of war; illness or injury for anyone who is serving in the Armed Forces of the United States or any other government

as well as other circumstances unrelated to Williams' claim. Id. at 20. The Summary does not define "injury." The Plan, on the other hand, defines both "injury" and "accident," as follows:

Injury means bodily harm resulting from an accident. Accident, as used in the foregoing, means an undesirable or unfortunate happening, unintentionally caused, resulting in harm.

Plan at II-33. Based on the definitions of "injury" and "accident" in the Plan and the facts surrounding Williams' injury, the Fund's Review Panel concluded that Williams' injuries were not covered because they did not result from an "accident," because they were not "unintentionally caused." The Fund's reasoning was that "the term 'accident' does not include circumstances where a person intentionally commits an unlawful action and the injury is a reasonably foreseeable consequence of that action." August 17, 1993 Review Panel Decision at 4; January 7, 1994 Review Panel Decision at 2-3.

II. The District Court Decision ²

Williams filed suit seeking coverage, and both he and the Fund filed motions for summary judgment. The district court granted summary judgment in favor of the Fund, holding that the Fund's decision not to cover Williams' injuries was legitimate on three different grounds: (1) that since Williams had not relied on the Summary, its terms were not binding, (2) that the Fund's interpretation of the Plan itself was not arbitrary and capricious and (3) that to cover Williams' injuries would "reward him for committing illegal acts." When an ERISA governed plan gives the administrator or fiduciary of the plan discretionary authority to determine eligibility for benefits or to construe the terms of the plan, we may review the administrator's decisions only to ensure that they are not arbitrary and capricious. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989); Russo v. Health, Welfare & Pension Fund, 984 F.2d 762, 764-65 (7th Cir.1993). In this case, the Fund gave its Board of Trustees, as plan administrator, discretionary authority to determine eligibility for benefits and to resolve questions of plan interpretation. However, an interpretation based on the Plan when the Summary should govern would involve an error of law, and we review matters of law de novo. See Casey v. Uddeholm Corp., 32 F.3d 1094, 1096 (7th Cir.1994).

Williams argues that the discrepancy between the Summary and the Plan entitles him as a matter of law to claim the coverage described in the Summary in preference to the coverage described in the Plan. While the district court agreed that "the common understanding of injury does not require it to be accidental" and thus, that there was a discrepancy between the Summary and the Plan, the court believed that Williams' interpretation would "reward him for committing illegal acts," which would in turn void the insurance contract. Memo. Order at 15. And because the court also believed reliance on the Summary to be a necessary condition of enforcement of the Summary terms, the court found that Williams could not enforce the Summary.

The district court then decided that the Trustees "could reasonably conclude that Williams caused the shooting by intentionally resisting arrest and threatening a police officer." Id. at 12. The district court elaborated: "[p]eople can intentionally act to cause happenings which they do not desire," meaning that Williams did not need to intend to be shot, but merely to act in a threatening manner to the police officer for the incident to be something other than an "accident." Id. at 13-14. We reverse.

III. Plan vs. Summary

A summary must be "written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan." 29 U.S.C. § 1022(a)(1). In particular, a summary must list "circumstances which may result in disqualification, ineligibility, or denial or loss of benefits." § 1022(b). Williams' first argument for enforcing the Summary language over the Plan language is that the Summary language is binding upon both the insured and the insurer. See, e.g., Senkier v. Hartford Life & Accident Ins. Co., 948 F.2d 1050, 1051 (7th Cir.1991) ("in the event of a discrepancy between the coverage promised in the summary plan document and that actually provided in the policy, [the insured] is entitled to claim the former"); Hansen v. Continental Ins. Co., 940 F.2d 971, 982 (5th Cir.1991) ("this Court holds that the summary plan description is binding, and that if there is a conflict between the summary plan description and the terms of the policy, the summary plan description shall govern"); Edwards v. State Farm Mut. Auto. Ins. Co., 851 F.2d 134, 136 (6th Cir.1988) (holding that the summary governs over the plan when there is a discrepancy); Price v. Provident Life & Accident Ins. Co., 2 F.3d 986, 988 n. 1 (9th Cir.1993) (same); McKnight v. Southern Life & Health Ins. Co., 758 F.2d 1566, 1570 (11th Cir.1985) (same). This is especially the case where, as here, the summary contains a rather glaring omission.

Here, the Plan's definition of "injury," as interpreted by the Fund, incorporates an arguable basis for denial of coverage; namely, that the injury resulted from something other than an accident--an unintentionally caused unfortunate occurrence. This qualification is not found in the Summary, which does not define "injury" or "accident." Thus, Williams contends that the Summary should control and the Fund should be estopped from using Plan language to deny coverage.

We agree with the district court that the common meaning of injury does not include a requirement that the injury-causing event be unintentional. ³ Presumably, then, because as an undefined term in the Summary, "injury" is given its common meaning, Williams' injury is covered and the Fund must pay his medical bills. The Fund argues, however, that unless Williams relied on the Summary language in question, Williams is still bound to the Plan language.

IV. Reliance by Insured

The Fund argues that Summary language is binding only if...