United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 10-2850
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James Riley, *
*
Appellant, *
*
v. *
* Appeal from the United States
Sun Life and Health Insurance * District Court for the District
Co., formerly known as Genworth * of Nebraska.
Life and Health Insurance Co.; *
Group Long Term Disability *
Insurance, *
*
Appellees. *
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Submitted: May 10, 2011
Filed: October 7, 2011
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Before MURPHY, BEAM, and COLLOTON, Circuit Judges.
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BEAM, Circuit Judge.
James Riley appeals the district court's adverse grant of summary judgment in
favor of Sun Life in this Employee Retirement Income Security Act (ERISA), 29
U.S.C. §§ 1001 et seq., benefits case. The sole issue is whether Sun Life is entitled
to offset from Riley's employer-provided long-term disability benefits the amount that
Riley receives in Department of Veterans Affairs (VA) benefits each month. The
district court upheld Sun Life's decision to offset Riley's VA benefits from his long-
term disability award. We reverse.
I. BACKGROUND
Riley worked for Sumaria Systems until his multiple sclerosis (MS) symptoms
precluded him from performing his job duties. Sun Life provided an ERISA-qualified
long-term disability plan (the Plan) for Sumaria employees. When Riley became too
disabled by his MS symptoms to work, he made a claim for long-term disability
benefits under the Plan. Sun Life approved the claim and began paying benefits in
January 2005. It is undisputed that Riley is entitled to these long-term disability
benefits due to his MS.
Riley is a veteran of the Vietnam War and receives monthly disability benefits
pursuant to the Veterans' Benefits Act, 38 U.S.C. §§ 101 et seq., (VBA) as a result of
his MS. The administrative record indicates that Riley's MS is considered a service-
related disability contracted during a period of war.1 In 2007, in the process of
updating Riley's records, Riley completed a supplemental questionnaire from Sun Life
disclosing his receipt of these VA benefits. After gaining this knowledge, Sun Life
took the position that it was entitled to offset the amount that Riley received in VA
benefits. The Plan provides that monthly disability payments can be reduced by
"other income," and, as relevant and relied upon by Sun Life, the Plan defines "other
1
Medical evidence contained in the administrative record indicates that Riley
began complaining of difficulty using his hands, a not uncommon symptom of MS,
during his active duty service time in 1973 and 1974. The medical examiner found
that in light of these active duty medical reports, and other medical reports indicating
early MS symptoms dating to at least as early as 1981, Riley had incurred MS during
his period of active service. See 38 U.S.C. § 1112(a)(4) (stating that any veteran who
developed MS within seven years from the date of separation from service during a
period of war shall be presumed to have incurred or aggravated the MS during the
period of service).
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income" as "[a]ny amount of disability or retirement benefits under: a) the United
States Social Security Act [SSA] . . . ; b) the Railroad Retirement Act [RRA]; c) any
other similar act or law provided in any jurisdiction." Sun Life recalculated Riley's
benefits offsetting his VA benefits and claimed a net overpayment of $20,831.06 for
the years that Riley received both VA and Plan benefits without offset.
Riley timely appealed the Plan's determination, and Sun Life denied his appeal,
again citing the Plan's "other income" language quoted above. Riley timely appealed
this determination to the district court. The district court found that because MS was
the same disability underlying both Plan and VA benefits, the VA benefits qualified
as "other income" and should be offset. Riley appeals.
II. DISCUSSION
We review de novo the district court's grant of summary judgment regarding
an ERISA plan administrator's benefits determination. Manning v. Am. Republic Ins.
Co., 604 F.3d 1030, 1038 (8th Cir.), cert. denied, 131 S. Ct. 648 (2010). If, as here,
the Plan reserves discretionary power to construe Plan terms or make eligibility
determinations, the administrator's decisions concerning those matters are reviewed
for an abuse of discretion. Id. However, as in this case, "where a plan's decision . .
. is based on its construction of existing law, the plan's interpretation of a controlling
principle of law is reviewed de novo." Meyer v. Duluth Bldg. Trades Welfare Fund,
299 F.3d 686, 689 (8th Cir. 2002).
The Plan cites High v. E-Systems Inc., 459 F.3d 573 (5th Cir. 2006), and Jones
v. ReliaStar Life Insurance Co., 615 F.3d 941 (8th Cir. 2010), in support of its
arguments that its decision to offset VA benefits was reasonable and not an abuse of
its discretion. In High, the plan language stated in relevant part that long-term
disability benefits could be offset by "benefits payable under any other group
disability plan." 459 F.3d at 578. The High plan administrator found, and the
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reviewing courts agreed, that under that broad plan language, VA disability benefits
could be offset. Id. at 578. But see Williams v. Group Long Term Disability Ins., No.
07-6022, 2008 WL 2788615, at *3 (N.D. Ill. July 17, 2008) (disagreeing with High
and holding that even though the plan language was identical to the plan language in
High, VA benefits could not be offset because VA benefits were not specifically
spelled out as an offset and, because VA benefits are "different," the court was
"hesitant" to take away VA benefits unless it was "clear to the [employer] at the
outset" that VA benefits would be offset).
Likewise, in Jones, we upheld the Plan's discretionary decision to offset VA
benefits from the employee's long-term disability benefits. 615 F.3d at 946.
However, the Jones plan language defined "other income" that could be offset as
income based upon "the same or related disability for which [the participant is]
eligible to receive benefits under the Group Policy." Id. at 944 (quotation omitted).
High and Jones are thus wholly distinguishable from the instant case based on the
different language of the plans at issue. The Jones plan language required an other-
income offset for benefit payments based upon the same or related disability. The
High plan very broadly allowed offsets for payments from "any other group disability
plan." The most that one can conclude from both High and Jones is that VA benefits
may not always be entitled to protection simply by virtue of their status as veterans'
benefits. But, in any event, High and Jones do not inform the outcome of this case
because they both involve plan language quite different from the Plan language relied
upon here.2
The "other income" section of the Plan at issue here provides that an other-
income offset should occur if benefits are received from the SSA or the RRA or "any
other similar act or law provided in any jurisdiction." Although the Plan administrator
2
We also agree with Judge Andersen's analysis of High in Williams that
Veterans' benefits established by Congress can hardly be defined as "a group disability
plan." Williams, 2008 WL 2788615, at *3.
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must have ultimately determined that the VBA was similar to the SSA and/or the RRA
since Riley's VA benefits were offset, we can find no evidence in the record that the
Plan administrator undertook a meaningful analysis of this federal legislation in
making this determination. Instead, the Plan administrator simply informed Riley that
he was "on notice" that his VA benefits could be offset because Riley's original
application for long-term benefits contained an inquiry as to what other disability
income benefits he was receiving, and VA benefits were included as an example of
possible income in the inquiry. However, all that can be gleaned from the
application's language is that Sun Life was interested in knowing what other sources
of income were available to Riley. The application did not describe the other sources
of income as "offsets." Nor did the actual Plan (as opposed to the application) contain
any other provision expressly putting Riley on notice that VA benefits would be
offset.3
Accordingly, we disagree with the Plan administrator's decision to offset Riley's
VA benefits. Those benefits, for a wartime service-related disability, as a matter of
statutory construction, do not derive from an act that is "similar to" the SSA or RRA.
The SSA and RRA disability benefits'4 programs are both federal insurance programs
based upon employment and the amount of an award under their terms depends upon
how much has been paid in. See generally Hisquierdo v. Hisquierdo, 439 U.S. 572,
573-74 (1979) (discussing the history and purpose of the RRA, including the
3
To the contrary, Sun Life was on notice that at least one of its exemplar federal
statutes, the SSA, does not permit offset of United States Code Title 38 Veterans'
benefits, the source of Riley's disputed payments, against Social Security disability
awards. See 42 U.S.C. § 424a(a)(2)(B).
4
The RRA has a two-tier system of benefits. The upper tier, or Tier I, benefits
are tied to earnings and career service, and are available to railroad employees with
at least ten years of service in the industry. 45 U.S.C. § 231a(a)(1). The lower
benefits tier, Tier II, corresponds to the benefits an employee would receive were he
covered by the SSA. Id. § 231b(a)(1).
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similarities of RRA's "second tier" insurance and disability program to the SSA
system); Yost v. Schweiker, 699 F.2d 438, 440 (8th Cir. 1983) (noting the overlap
between the SSA and RRA insurance programs); 42 U.S.C. §§ 401 et seq. (SSA); 45
U.S.C. §§ 231 et seq. (RRA). This correlation is necessary because the funding for
SSA and RRA disability benefits derives from a tax on both the employee and
employer. 26 U.S.C. §§ 3101, 3111(a) (setting forth basic Social Security tax); 26
U.S.C. §§ 3201, 3221 (setting forth basic Railroad Retirement tax).
Conversely, the VA benefits Riley is entitled to receive are not from an
"insurance" program, but instead are considered obligatory compensation for injuries
to service men and women during military duty. Since 1789, "after every conflict in
which the Nation has been involved Congress has, in the words of Abraham Lincoln,
'provided for him who has borne the battle.'" Walters v. Nat'l Ass'n of Radiation
Survivors, 473 U.S. 305, 309 (1985). Riley's benefits were awarded based solely on
service5 during a time of war6 plus an injury. These benefits are unrelated to length
of service (subject to a ninety-day floor for the latent diseases and conditions), rank,
or amount of pay received while serving. 38 U.S.C. §§ 1110, 1112. Instead, the
amount of benefits depends upon the extent of the veteran's injury. Id. § 1114. VBA
benefits are funded by Congress through the VA's budget instead of by a tax on
members of the military. Additionally, the VBA sets forth a much easier road for the
disabled veteran than the SSA or RRA claimant. 38 U.S.C. § 5107 provides that the
Secretary of Veterans Affairs must consider all lay and medical information, and when
the evidence is in equipoise, "the Secretary shall give the benefit of the doubt to the
5
Service-based VA benefits are awarded, as previously noted, when a veteran
is injured either while serving during a period of war, or for certain latent diseases and
conditions, within one to seven years of separation from service during a period of
war. 38 U.S.C. §§ 1110, 1112(a).
6
There are also disability benefits available for members of the military service
who are injured while on active duty but not during a period of war. 38 U.S.C. §
1131.
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claimant." Id. § 5107(b). Compare Moore v. Astrue, 572 F.3d 520, 523 (8th Cir.
2009) (noting that the burden is on the claimant to prove SSA disability from past
relevant work before the burden shifts to the Commissioner to show there are jobs in
the national economy that claimant can perform) and Reter v. R.R. Ret. Bd., 465 F.3d
896, 898 (8th Cir. 2006) (same for RRA disability), with 38 U.S.C. § 5107; see also
Henderson ex rel. Henderson v. Shinseki, 131 S. Ct. 1197, 1200, 1205 (2011)
(describing the unique character of veterans' benefits, including features that
distinguish VA benefits' cases from any other type of litigation and noting, "'[t]he
solicitude of Congress for veterans is of long standing'") (quoting United States v.
Oregon, 366 U.S. 643, 647 (1961)); Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663,
666-67 (Tex. 1987) (construing an insurance policy with the same language as the
instant case and concluding that the VBA is not "similar" to the SSA and/or the RRA,
in large part because of the different objectives for which the three acts were created
and the manner in which they are implemented).
As the Henderson Court recently noted, "[t]he contrast between ordinary civil
litigation . . . and the system that Congress created for the adjudication of veterans
benefits claims could hardly be more dramatic." 131 S. Ct. at 1205-06. Indeed, "[t]he
[VBA benefits] process is designed to function throughout with a high degree of
informality and solicitude for the claimant." Walters, 473 U.S. at 311. SSA and RRA
claimants are not nearly so fortunate. The differing burdens, funding, and most
especially, policy purposes of the VBA versus the SSA and/or the RRA indicate that
as a matter of statutory construction, the VBA is in no relevant way similar to the SSA
or the RRA.
III. CONCLUSION
We reverse and remand to the district court with directions to enter judgment
in favor of Riley.
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COLLOTON, Circuit Judge, dissenting.
The question presented on this appeal is whether Sun Life and Health Insurance
Company reasonably interpreted the long term disability Plan under which James
Riley receives a monthly benefit. The Plan provides that in calculating a monthly
benefit, the administrator should subtract “Other Income” that Riley is eligible to
receive from other sources. “Other Income” includes “any amount of disability or
retirement benefits under” the Social Security Act (“SSA”), the Railroad Retirement
Act (“RRA”), or “[a]ny other similar act or law provided in any jurisdiction.” The
parties dispute whether Sun Life abused its discretion when it concluded that the
Veterans’ Benefits Act (“VBA”), under which Riley receives a disability benefit, is
a “similar act or law.”
“Similar” means “having characteristics in common.” Webster’s Third New
International Dictionary 2120 (2002). The court cites differences between the VBA
and the SSA and RRA, but largely ignores many similarities. All three acts “are (1)
governmental or legislative plans providing for (2) periodic payment (3) to qualified
individuals (4) who have suffered a physical disability (5) without regard to fault. In
addition, all provide death benefits, have anti-assignment clauses, and are
administered by independent agencies.” Barnett v. Aetna Life Ins. Co., 723 S.W.2d
663, 666 (Tex. 1987). Contrary to the court’s blanket statement that VBA benefits are
“considered obligatory compensation for injuries to service men and women during
military duty,” ante, at 6, the VBA also provides for benefits based on non-service-
connected disabilities suffered at any time by a “veteran of a period of war.” 38
U.S.C. § 1521. Those VBA benefits, like benefits under the SSA and RRA, are
essentially based on employment. And because the Plan calls for comparison of the
“act or law,” not a particular section on which benefits are based, application of the
“Other Income” provision must be the same whether a claimant receives VBA benefits
based on a service-connected or non-service-connected disability.
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The Plan’s reference to “similar act or law” is ambiguous. See Barnett, 723
S.W.2d at 665. Under the terms of this Plan, the administrator has discretion to
construe ambiguous terms. J.A. 136. Unlike a case arising under certain state laws
applicable to insurance policies, where ambiguities must be construed against an
insurer, e.g., Barnett, 723 S.W.2d at 665, the law of ERISA requires that we must
uphold an administrator’s interpretation if it is reasonable. Conkright v. Frommert,
130 S. Ct. 1640, 1646 (2010); Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,
111 (1989). The administrator considered the principal authorities cited by Riley,
Barnett and Williams v. Group Long Term Disability Insurance, No. 07-6022, 2008
WL 2788615, at *2-3 (N.D. Ill. July 17, 2008), both of which analyze the relevant
federal legislation, before concluding that disability benefits under the VBA should
be treated as “Other Income” under this Plan. Given that the VBA has a number of
relevant characteristics in common with the SSA and RRA, it was not an abuse of
discretion for the administrator to conclude that the VBA is a “similar act or law”
under the Plan, and to offset Riley’s monthly disability benefit based on disability
benefits received under the VBA. Cf. High v. E-Systems, Inc., 459 F.3d 573, 578-79
(5th Cir. 2006) (holding that where ERISA plan defined “other income benefits” to
include benefits payable under the SSA or “any other group disability plan,”
administrator did not abuse its discretion in concluding that VBA benefits were “other
income benefits”).
The court avoids this conclusion by answering a different question. The
majority eschews the abuse-of-discretion standard of review that is dictated by
Conkright and Firestone, and embraced by both parties. Appellant’s Br. 12;
Appellees’ Br. 13. The court instead reviews the administrator’s interpretation of the
Plan de novo, on the premise that it is simply construing “existing law.” Ante, at 3.
But the question presented here is not merely the meaning of a statute, as in Meyer v.
Duluth Building Trades Welfare Fund, 299 F.3d 686, 689 (8th Cir. 2002). The issue
is whether the relevant acts, properly understood, are “similar” within the meaning of
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the Plan. Whether three different laws are “similar” involves a determination about
the scope of an ambiguous term in the Plan.
Freed of the restraint demanded by abuse-of-discretion review, the court makes
a reasonable case on de novo review that dissimilarities outweigh the similarities of
the VBA to the SSA and RRA. Yet there is a reasonable case on the other side too.
Applying the correct standard of review in the ERISA context, the administrator’s
decision should not be disturbed. I would affirm the judgment of the district court.
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