United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 09-1719
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Thomas E. Jones, Jr., *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* Western District of Arkansas.
ReliaStar Life Insurance Company; *
ING Employee Benefits, *
*
Appellees. *
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Submitted: January 11, 2010
Filed: August 9, 2010
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Before SMITH and COLLOTON, Circuit Judges, and KORNMANN,1 District Judge.
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COLLOTON, Circuit Judge.
Thomas Jones received long-term disability benefits under an employee welfare
benefit plan governed by the Employee Retirement Income Security Act (“ERISA”),
29 U.S.C. §§ 1001-1461. The plan is administered by ReliaStar Life Insurance
Company (“ReliaStar”) through ING Employee Benefits (“ING”), an internal business
division of ReliaStar. Jones sued ReliaStar and ING after ReliaStar began offsetting
the disability benefits he received under the Plan by the amount of disability benefits
1
The Honorable Charles B. Kornmann, United States District Judge for the
District of South Dakota, sitting by designation.
he collected from the Department of Veterans Affairs (“VA”). The district court2
denied Jones’s motion for leave to conduct discovery, and determined that ReliaStar
did not abuse its discretion in offsetting Jones’s benefits. We affirm.
I.
Jones was employed as a trust officer at Hibernia Corporation until 2001. On
August 1, 2001, Jones applied for long term disability benefits under Hibernia’s
ERISA-governed employee welfare benefit plan (the “Plan”), which was administered
by ReliaStar. Jones’s application for benefits listed his disability as gastroparesis.
Jones’s doctor submitted a letter to ReliaStar that explained that Jones’s disability was
caused by numerous conditions, including type II diabetes mellitus, peripheral
neuropathy, and diabetic gastroparesis. ReliaStar approved Jones’s disability claim
effective May 9, 2001.
Prior to the award of benefits from ReliaStar, Jones received disability benefits
from the VA. Beginning in 1971, the VA continuously paid Jones benefits for a
disability caused by a shrapnel wound to his left shoulder. In 1999, Jones applied for
additional disability benefits from the VA based on diabetes. The VA awarded Jones
the additional benefits on December 27, 2001, with an effective date of November 18,
1999.
On April 19, 2005, ReliaStar informed Jones that it had discovered that he was
receiving disability benefits from the VA because of his diabetes, and explained that
his benefits under the ReliaStar plan would be reduced by the amount of his diabetes-
based VA benefits pursuant to a provision in the plan. Under the ReliaStar plan,
“Other Income is subtracted from the benefit [a participant] would otherwise receive.”
2
The Honorable Jimm Larry Hendren, Chief Judge, United States District Court
for the Western District of Arkansas.
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(Appellant App. 48). “Other Income” is defined as income that a plan participant is
eligible to receive based on “the same or related disability for which [he is] eligible
to receive benefits under the Group Policy.” (Appellant App. 48). Based on these
provisions, ReliaStar concluded that Jones’s diabetes-based benefits from the VA
were “other income” that should be subtracted from the amount of benefits payable
under the ReliaStar plan. Jones brought an administrative appeal, and ReliaStar’s
ERISA Appeal Committee concluded that the offset of the VA benefits was
appropriate.
Jones then filed suit in the district court pursuant to ERISA, 29 U.S.C.
§ 1132(a)(1)(B), and sought discovery. The district court denied Jones’s request for
discovery and dismissed the case, concluding that ReliaStar’s decision to offset
Jones’s benefits was not an abuse of discretion.
II.
Jones first contends that the district court erred by rejecting his argument,
presented by way of a motion in the district court, that the court should apply a less
deferential standard of review than “abuse of discretion” when evaluating ReliaStar’s
decision. We review de novo whether the district court applied the correct standard
of review in evaluating the plan administrator’s decision. See Hackett v. Standard Ins.
Co., 559 F.3d 825, 829 (8th Cir. 2009). When an ERISA plan provides a plan
administrator with discretion to construe the terms of the plan, the court should review
the administrator’s interpretation under an abuse of discretion standard. Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Jones does not dispute that
the Plan gave ReliaStar discretion to interpret the terms of the Plan, and the district
court thus did not err in applying the abuse of discretion standard. Jones’s contention
that a less deferential standard of review should apply because ReliaStar was
operating under a conflict of interest was rejected in Metropolitan Life Insurance Co.
v. Glenn, 128 S. Ct. 2343, 2350-51 (2008).
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Jones next argues that the district court erred in denying his motion for leave
to conduct discovery. We review the district court’s discovery rulings for abuse of
discretion. LaSalle v. Mercantile Bancorporation, Inc. Long Term Disability Plan,
498 F.3d 805, 811 (8th Cir. 2007). In ERISA cases, the general rule is that review is
limited to evidence that was before the administrator, see id., and Jones presents no
convincing reason why this case should be an exception. He emphasizes that
discovery should be allowed to explore ReliaStar’s conflict of interest, but ReliaStar
concedes that it was both insurer and administrator of the plan, so discovery is
unnecessary to establish the existence of a conflict. See Farley v. Ark. Blue Cross &
Blue Shield, 147 F.3d 774, 776 n.4 (8th Cir. 1998). Jones’s challenge to the merits of
ReliaStar’s decision involves an application of policy language to undisputed facts,
and the administrative record is sufficient to permit a fair evaluation of ReliaStar’s
decision. The district court did not abuse its discretion in denying Jones’s request for
discovery.
The central issue in the appeal is whether ReliaStar abused its discretion in
deciding to offset Jones’s disability benefits. Our cases identify several factors that
inform our analysis, including whether the administrator’s interpretation is
“inconsistent with the Plan’s goals, whether it renders language of the plan
meaningless, superfluous, or internally inconsistent, whether it conflicts with the
substantive or procedural requirements of ERISA, whether it is inconsistent with prior
interpretations of the same words, and whether it is contrary to the Plan’s clear
language.” Erven v. Blandin Paper Co., 473 F.3d 903, 906 (8th Cir. 2007). The
ultimate question is whether the administrator’s interpretation was reasonable. King
v. Hartford Life & Accident Ins. Co., 414 F.3d 994, 999 (8th Cir. 2005) (en banc).
The Plan directs ReliaStar to offset the payment of disability benefits by the
amount of benefits that a participant receives from other sources because of “the same
or related disability.” There is no dispute that Jones began to receive benefits from
the VA for a related disability (i.e., diabetes) effective November 1999. The Plan,
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however, also provides an exception that benefits will not be reduced by disability
benefits that the participant receives from a past employer, “if these benefits have been
paid continuously to [him] for more than 2 years before [he] become[s] eligible to
receive benefits under the Group Policy.” (Appellant App. 49).
ReliaStar concluded that the exception did not apply to Jones, because he did
not begin to receive benefits from the VA for a diabetes-related disability more than
two years before he was eligible to receive disability benefits under the Plan.
ReliaStar reasoned that the award of VA benefits that commenced with an effective
date of 1999 based on Jones’s diabetes was “separate and distinct” from the 1971
award of VA benefits based on the shoulder injury. Because the monthly VA benefit
for Jones’s diabetes-related disability had not been paid continuously for more than
two years before Jones was eligible for benefits under the Plan, ReliaStar ruled that
the exception did not apply, and that an offset was appropriate.
Jones argues that ReliaStar abused its discretion, because he had received
disability benefits from the VA continuously since 1971 for his shoulder disability.
He contends that it is irrelevant under the Plan whether the additional VA benefits for
which he became eligible in November 1999 were related to, or a continuation of, the
preexisting shoulder-related benefits. His position is that because he has received VA
benefits continuously for more than two years before he became eligible for benefits
under the Plan, ReliaStar may not reduce his Plan benefits by any of his VA benefits.
We conclude that ReliaStar’s interpretation of the Plan was reasonable. The
Plan requires that “other income” be subtracted from benefits paid under the ReliaStar
policy. The “exceptions” provision then sets forth certain benefits by which the
ReliaStar benefits “will not be reduced.” An “exception” is “one that is excepted or
taken out from others.” Webster’s Third New International Dictionary 791 (2002).
It was reasonable for ReliaStar to construe the “exceptions” provision as a limitation
on the scope of “other income,” given that the exceptions follow immediately after the
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“other income” definitions in the Plan, and there must be some preexisting benefit
reductions from which to make exceptions.
It was also reasonable for ReliaStar to interpret the exception for disability
benefits received continuously for two years from a past employer to mean benefits
received from the employer because of “the same or related disability” for which the
participant is eligible to receive benefits under the Plan. The Plan does not define
“other income” to include disability benefits paid by a former employer because of
unrelated disabilities. There is thus no reason for the plan to except benefits paid for
unrelated disabilities from the definition of “other income,” because those benefits are
not included in the first place. ReliaStar’s resolution of the interplay between “other
income” and the “exceptions” was a reasonable interpretation of the Plan.
The Supreme Court’s decision in Glenn provides that ReliaStar’s admitted
conflict of interest as both insurer and administrator should be considered as a factor
in determining whether the administrator abused its discretion. 128 S. Ct. at 2350-51.
A conflict of interest can “act as a tiebreaker” when the issue is close, id. at 2351, and
can assume “great importance” “where circumstances suggest a higher likelihood that
it affected the benefits decision.” Id. The district court did not expressly weigh the
conflict of interest in its analysis, but our review is de novo, see Norris v. Citibank,
N.A. Disability Plan (501), 308 F.3d 880, 883-84 (8th Cir. 2002), and there is no need
to remand for further consideration. See, e.g., Wakkinen v. Unum Life Ins. Co. of Am.,
531 F.3d 575, 581-82 (8th Cir. 2008).
This is not a close case in which the conflict of interest likely tipped the
balance. In our view, ReliaStar’s reading of the provisions is not only reasonable, but
plainly the better interpretation of the Plan. We therefore conclude that ReliaStar did
not abuse its discretion in deciding to offset Jones’s disability benefits based on his
receipt of diabetes-related disability benefits from the VA.
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The judgment of the district court is affirmed.
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