United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
April 9, 2004
FOR THE FIFTH CIRCUIT
_____________________ Charles R. Fulbruge III
Clerk
No. 02-20966
_____________________
GENA BAKER, Individually and as
Executor of the Estate of Keith Baker;
BURLINGTON RESOURCES INC.,
Plaintiffs - Appellants,
versus
METROPOLITAN LIFE INSURANCE COMPANY,
Defendant - Appellee.
__________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
_________________________________________________________________
Before JOLLY, WIENER, and BARKSDALE, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
This ERISA case presents an appeal of a denial of benefits
claimed by Gena Baker under a life insurance policy covering her
deceased husband, Keith Baker. Gena Baker and Burlington Resources
Inc., Keith Baker’s employer (who paid the benefits to Gena Baker
acquiring her right to the proceeds of this action), sued
Metropolitan Life Insurance Company for these life insurance
benefits. The complaint also alleged state law claims for breach
of contract and violations of TEX. INS. CODE ANN. art. 21.21 et seq.
and TEX. BUS. & COM. CODE ANN. § 17.46 et seq.1 The district court
granted summary judgment in favor of Metropolitan Life Insurance
Co. and entered a final take-nothing judgment against Gena Baker
and Burlington Resources Inc., disposing of their ERISA and state
law claims.
This appeal requires us to determine the degree of deference
the Plan insurer, Metropolitan Life Insurance Company, is required
to give the named Plan administrator, Burlington Resources Inc.,
under the terms of the Metropolitan Life Plan. However, this
inquiry is substantially complicated by the fact that Mr. Baker
made his benefits election before the Plan had become effective and
died after the effective date of the Plan but before the Plan had
actually been drafted. Nevertheless, we hold that the district
court was correct to uphold Metropolitan Life Insurance Company’s
denial of benefits under the Plan, but that it prematurely
dismissed the state law claims.
I
A
Keith Baker was hired by Burlington Resources Inc.
(“Burlington”) on October 31, 1986. He initially enrolled in
1
Baker and Burlington’s state law claims also included claims
for fraud, negligent misrepresentation, unjust enrichment, breach
of the duty of good faith and fair dealing, estoppel, and breach of
fiduciary duty. Additionally, they requested other state law
relief including reformation, exemplary damages, and a declaratory
judgment under the Texas Declaratory Judgment Act, TEX. CIV. PRAC. &
REM. CODE ANN. § 37.009 et seq.
2
Burlington’s group life insurance plan (“Burlington Plan”) and on
November 2, 1997, elected to receive both basic and supplemental
life insurance benefits equal to one-time his annual salary in
basic benefits and one-time his annual salary in supplemental
benefits. In 1997 Burlington acquired the Louisiana Land and
Exploration Company, which had its own employee benefit plan.
Burlington sought an insurer that would take over its parallel
benefit programs as a new uniform program to cover all employees.
To this end, in April 1998, Burlington directed its agent and
broker, William Mercer, Inc., to submit a Request for Proposal to
numerous life insurance companies, including Metropolitan Life
Insurance Company (“MetLife”), inviting them to bid on Burlington’s
life insurance program.
In the meantime, Mr. Baker’s health was deteriorating. On
October 15, 1998, he left work after developing skin cancer and on
October 19, 1998, he was classified by Burlington as short-term
disabled. After he went on short-term disability, enrollment
notices were sent by Burlington to all “active” employees to allow
them to enroll in the new MetLife benefits Plan.2 Mr. Baker’s name
was carried on Burlington’s list of active employees and Burlington
sent him an enrollment notice. Burlington employees who received
this notice were allowed to increase their life insurance coverage
2
It is unclear who deemed employees to be “active” for the
purposes of this initial enrollment. However, Burlington had
consistently considered short-term disabled individuals to be
active, but not long-term disabled individuals.
3
during the initial enrollment period. Consequently, on November 5,
1998, Mr. Baker called Burlington’s human resources department and
increased his life insurance coverage to six-times his annual
salary.3 He was sent a letter by Burlington confirming this
election, but the letter noted that any change in benefits would
not become effective until January, 1, 1999, the date the Plan
would become effective.
Mr. Baker never returned to work. He died on January 15,
1999. At the time of his death, the final MetLife Plan had not been
completed. The Plan was not finalized until October 1999, and its
effective date was made retroactive to January 1, 1999. The
beneficiary of Mr. Baker’s life insurance policy, his wife Gena
Baker (“Baker”), submitted a claim for $757,080 -- six-times Mr.
Baker’s salary.4 MetLife paid her $126,180 -- one-time Mr. Baker’s
salary – but refused to pay the additional $630,900.5 In March
3
Baker elected both Basic and Supplemental Life Insurance
equal to three-times his annual salary or a total of six-times his
annual salary.
4
As discussed infra, to is not clear whether Mrs. Baker’s
claim was first submitted to Burlington or MetLife. Based upon our
discussion infra, however, our resolution of this appeal is not
affected by this discrepancy.
5
As previously noted, Mr. Baker initially enrolled in the
Burlington Plan and on November 2, 1997, elected to receive both
basic and supplemental life insurance benefits equal to one-time
his annual salary in basic benefits and one-time his annual salary
in supplemental benefits. MetLife did not pay the supplemental
benefits under the Burlington Plan, contending that Mr. Baker had
failed to qualify for these benefits as well. This determination
does not appear to be contested; however, to the extent that it is
contested it has been abandoned as inadequately briefed. See FED.
4
2000, Burlington gave Mrs. Baker a nonrecourse loan for the amount
alleged to be due under the Plan and Baker assigned the proceeds of
her causes of action to Burlington.
B
On April 25, 2001, Burlington and Baker filed this suit
asserting ERISA and state law claims. The district court ordered
the parties to submit an agreed chronology and a “binder of not
more than twelve documents showing the evolution of their
arrangement through January 15, 1999” and provided that “[t]he
parties have through September 21, 2001 to move for judgment as a
matter of law on what the plan says.”
Both parties then filed cross-motions for summary judgment.
The district court held that “[t]he beneficiary is bound by the
plan as it ultimately existed or by the plan before the switch, and
in neither case was the participant allowed unilaterally to
increase his life coverage to six times his salary while on leave
with a terminal illness.” The district court reasoned that such an
increase was not allowed because Baker was not actively at work
when he made this election and did not return to active service
before his death. The court reasoned that Mr. Baker could not have
been actively at work in November 1998 because he was known to have
been terminally ill. Moreover, even if he were deemed actively at
work at this time, he would have been eligible only to continue his
R. APP. P. 28(a)(9)(A); L & A Contracting Co. v. Southern Concrete
Servs., 17 F.3d 106, 113 (5th Cir. 1994).
5
benefits under the October 1999 Plan, and not to increase them.
Second, the district court held that Mr. Baker was ineligible to
increase his life insurance benefits because he had not provided
proof of insurability. The court concluded by noting that all
parties -- the employer, insurer and participant -- are all bound
by the Plan, not preliminary negotiations, and the Plan did not
allow Mr. Baker to increase his life insurance benefits. Finally,
the court made a common-sense observation that “[n]o fully-informed
disinterested person would expect an insurance company to allow a
terminally ill participant to increase his life insurance
coverage.”6 Accordingly, the district court entered a take-nothing
judgment in favor of MetLife disposing of Burlington and Baker’s
ERISA and state law claims.
II
This appeal challenges the district court’s grant of summary
judgment in favor of MetLife upholding MetLife’s decision denying
Baker’s claim for benefits under the Plan and holding that
Burlington’s state law claims are preempted by ERISA.
This Court reviews summary judgments de novo, applying the
same standards applied by the district court. Performance Autoplex
6
Burlington challenges this conclusion as erroneous (because
there is nothing in the record regarding the seriousness of Mr.
Baker’s condition) and MetLife does not seem to dispute that
contention. However, our disposition of this case obviates the
need for us to pass on the alleged error of the district court’s
conclusion.
6
II Ltd. v. Mid-Continent Casualty Co., 322 F.3d 847, 853 (5th Cir.
2003). A grant of summary judgment is proper if there is no
genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. Id.; FED. R. CIV. P. 56(c). In
evaluating the existence of a genuine issue of material fact, we
review the evidence and inferences drawn from that evidence in the
light most favorable to the non-moving party. Daniels v. City of
Arlington, Tex., 246 F.3d 500, 502 (5th Cir. 2001).
III
“Any review of an ERISA benefit determination must begin with
the relevant plan language.” Aboul-Fetouh v. Employee Benefits
Committee, 245 F.3d 465, 468 (5th Cir. 2001). First we will
evaluate the terms of the Plan as they relate to Mr. Baker and then
we will turn to evaluate the relationship between Burlington and
MetLife under the Plan.7
The Plan -- completed in October 1999, approximately ten
months after Mr. Baker’s death -- indicates that Mr. Baker failed
to meet the eligibility requirements for the increased benefits
because he was not actively at work when he increased his benefits.
The MetLife Plan provides:
If you make a request to be covered for
Personal Benefits during the first annual
enrollment period in which you can elect
7
Because by its terms Mr. Baker’s November 1998 enrollment did
not become effective until the Plan became effective on January 1,
1999, we will not discuss the Burlington Plan in existence before
January 1, 1999.
7
coverage, your Personal Benefits will become
effective on the first day of the calendar
year following the annual enrollment period,
subject to the Active Work Requirement.
Mr. Baker enrolled in “in the first annual enrollment period in
which [he could] elect coverage” -- November 1998 -- and his
benefits should have “become effective on the first day of the
calendar year following the annual enrollment period” -- January 1,
1999 -- provided that the Active Work requirement was met.
The Active Work Requirement provides:
You must be Actively at Work in order for your
Personal Benefits to become effective. If you
are not Actively at Work on the date when your
Personal Benefits would otherwise become
effective, your Personal Benefits will become
effective on the first day after you return to
Active Work.
Mr. Baker’s entitlement to benefits thus turns on whether he
was actively at work on January 1, 1999 or sometime thereafter.
The Plan defines active work as “performing all of the material
duties of your job with the Employer where these duties are
normally carried out.” Mr. Baker was on short-term disability and
not attending work on January 1, 1999. Under the terms of the
Plan, he was not “actively at work” on that date. Accordingly, his
increased benefits never became effective under the MetLife Plan
unless the Plan includes some exception to the Active Work
requirement applicable to Mr. Baker.
Burlington argues that it was permitted to deem Mr. Baker
“active” and to allow him to increase his benefits under the Plan.
8
This contention is not supported by the language of the Plan, which
only provides: “If you are not Actively at Work as an Employee
because of a situation set forth below, the Employer may deem you
to be in Active Work as an Employee ... in order that certain
benefits under This Plan may be continued.”8 In this case the only
dispute centers around whether Mr. Baker’s benefits may be
increased; this provision does not allow Burlington to deem Baker
to be active for the purpose of increasing his benefits under the
Plan.
In addition to the Active Work requirement, the Plan requires
participants in certain situations to provide proof of good health.
Pertinent to Mr. Baker, the Plan explicitly provides:
If you make a request, during an annual
enrollment period, to increase your Basic Life
and Optional Life Benefits to an option of the
Plan providing more than the next higher level
of benefits, you must give us evidence of your
good health.
Mr. Baker provided no certificate of health when he increased
both his basic and supplemental life insurance benefits by more
than one level, which also precludes his recovery under the Plan.
IV
Although ERISA authorizes a district court to review denials
of claims (29 U.S.C. § 1132(a)(1)(B)), the statute does not specify
the appropriate standard of review. Vega v. Nat’l Life Ins. Serv.
8
The Plan sets forth sickness, injury or leave of absence for
a period of no longer than three months as situations where the
employee can be deemed active.
9
Co., 188 F.3d 287, 295 (5th Cir. 1999)(en banc). Our cases,
however, make clear that “when an administrator has discretionary
authority with respect to the decision at issue, the standard of
review should be one of abuse of discretion.” Id. at 295; see also
Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989).9
This deferential standard is recognized by the Plan, which
provides that:
In carrying out their respective
responsibilities under the Plan, the Plan
administrator and other Plan fiduciaries shall
have discretionary authority to interpret the
terms of the Plan and to determine eligibility
for and entitlement to Plan benefits in
accordance with the terms of the Plan. Any
interpretation or determination made pursuant
to such discretionary authority shall be given
full force and effect, unless it can be shown
that the interpretation or determination was
arbitrary and capricious.
(Emphasis added).10
9
Although the Plan describes this deferential standard of
review as arbitrary and capricious, we “detect only a semantic, not
a substantive, difference” between it and Firestone’s “abuse of
discretion” standard. Wildbur v. ARCO Chemical Co., 974 F.2d 631,
635 n.7 (5th Cir. 1992).
10
This paragraph indicates that MetLife, which was reviewing
Burlington’s decision, was required to accept Burlington’s decision
unless it was arbitrary and capricious. Although in this appeal we
review MetLife’s decision denying the benefits, as a practical
matter we are determining whether Burlington’s decision granting
the benefits was arbitrary and capricious.
Moreover, we recognize that because MetLife “potentially
benefits from every denied claim,” its decision is accorded “less
than full deference.” Gooden v. Provident Life & Acc. Ins. Co.,
250 F.3d 329, 333 (5th Cir. 2001) (quoting Vega, 188 F.3d at 295);
see also Vega, 188 F.3d at 299; Bratton v. Nat’l Union Fire Ins.
Co., 215 F.3d 516, 521 n.4 (5th Cir. 2000) (describing a “sliding
10
Although we suggested in Wildbur v. ARCO Chem. Co., 974 F.2d
631, 337 (5th Cir. 1992), that evaluating an administrator or
fiduciary’s denial of benefits under the abuse of discretion
standard may be a two-step process, and although this two-step
process has been followed in several cases for which such analysis
was appropriate, see, e.g., Abraham v. Exxon Corp., 85 F.3d 1126,
1131 (5th Cir. 1996); Pickrom v. Belger Cartage Serv., 57 F.3d 468,
471 (5th Cir. 1995), we have also made clear that this two-step
analysis is not applicable in every case. Duhon v. Texaco, Inc.,
15 F.3d 1302, 1307 n.3 (5th Cir. 1994).11 For example, if the
administrator’s interpretation and application of the Plan is
legally correct, then our inquiry ends because obviously no abuse
of discretion has occurred. See Spacek v. Maritime Ass’n, 134 F.3d
283, 292 (5th Cir. 1998). Furthermore, “if an administrator
interprets an ERISA plan in a manner that directly contradicts the
plain meaning of the plan language, the administrator has abused
his discretion even if there is neither evidence of bad faith nor
of a violation of any relevant administrative regulations.”
scale” approach to be employed in case where the administrator has
conflicted interests, “giving less deference to the administrator
in proportion to the administrator’s apparent conflict”).
11
In Wildbur this court described this two step process as
requiring a court to first determine the whether the administrator
gave the plan a legally correct interpretation and, if not, whether
the administrator’s decision was an abuse of discretion. Wildbur,
974 F.3d at 637.
11
Gosselink v. AT&T, Inc., 272 F.3d 722, 727 (5th Cir. 2001); see
also Wilbdur, 974 F.2d at 638.
The application here of these otherwise intelligible
principles is somewhat confused by the fact that MetLife, as an
insurer, is a Plan fiduciary and is also entitled to exercise
discretionary authority under the Plan.12
A
Thus, our next step in resolving this appeal is to determine
what effect, if any, Burlington’s decision approving Baker’s claim
for benefits must be given under the Plan.13 MetLife is required
by the Plan to give Burlington’s discretionary decision approving
12
Although Burlington is designated by the Plan as
administrator, it is not disputed that MetLife is a Plan fiduciary
and is also afforded discretionary authority under the Plan. In
its brief Burlington states that “[t]he determinations of MetLife,
as a Plan fiduciary, are entitled to much less deference” than the
decisions of Burlington. Moreover, under ERISA, “a person is a
fiduciary with respect to a plan to the extent ... he has any
discretionary authority or discretionary responsibility in the
administration of such plan.” 29 U.S.C. § 1002(21)(A) (2003)
(emphasis added). MetLife clearly possesses discretionary
authority under the Plan and is properly considered a Plan
fiduciary. See infra note 14.
13
Once again, we note that the record is unclear regarding the
precise claims process. Burlington contends that Mrs. Baker
submitted her claim to Burlington, which approved it, and forwarded
it to MetLife for payment. This interpretation is perhaps
consistent with the Plan that requires beneficiaries to submit the
claims to Burlington “who will then certify that [they] are insured
under the Plan and will then forward the claim form” to MetLife.
MetLife, however, argues that under the Plan it is entitled to
review all submitted claims and make its own independent
eligibility determination. For the purposes of this appeal, we
need not resolve this dispute and will assume that Burlington’s
contentions are correct.
12
Baker’s claim full force and effect as long as that decision is not
arbitrary and capricious. See supra note 10; see also 29 U.S.C. §
1104(a)(1)(D) (requiring a fiduciary to discharge his duties “in
accordance with the documents and instruments governing the plan”).
Burlington contends that its decision is not arbitrary and
capricious -- and entitled to full force and effect under the Plan
-- because, it argues, Mr. Baker’s claim involves two distinct
agreements: “one regarding the initial open enrollment period and
one governing the parties’ obligations on a going forward basis,
after the initial enrollment period” -- i.e., the Plan. As already
discussed, Mr. Baker’s increased benefits never became effective
under the Plan; thus, any entitlement to benefits must originate in
the asserted collateral agreement governing the initial enrollment
period.
Burlington contends that this collateral agreement is embodied
in an e-mail sent by MetLife on August 7, 1998, which stated:
For employees currently covered for either
Basic or Optional Life, we will allow an
increase of one level (1 X Salary) without
having to provide a statement of health. The
only exception to this [one-level increase
limit] rule is for this enrollment where we
will allow current employees who have less
than 3 X Salary to increase coverage to 3 X
salary without providing a statement of
health.
According to Burlington, this e-mail waived all requirements
-- Active Work and Proof of Health -- and allowed Mr. Baker to
increase his benefits to three times his salary. Burlington
13
contends that this collateral agreement supports its decision
approving Baker’s benefits and its decision is, therefore, not
arbitrary and capricious and entitled to full force and effect.
Assuming that Burlington is correct about the ultimate legal
effect of this correspondence, it is clear that Burlington’s
interpretation of this correspondence is not entitled to deference
under the Plan. Under the Plan, the only determinations entitled
to deference are those “made pursuant to [Burlington’s]
discretionary authority” and the Plan only gives Burlington the
discretionary authority to “determine eligibility for and
entitlement to Plan benefits in accordance with the terms of the
Plan” (emphasis added).
As discussed above, Mr. Baker’s benefits increase was never
given effect under the Plan. Moreover, even if Baker’s increased
benefits are effective under the collateral agreement -- and we do
not judge that claim today –- Burlington’s consideration of that
agreement in approving Baker’s claim exceeded its discretionary
authority under the Plan. Thus, Burlington’s resort to an
agreement extraneous to the Plan and its determination that Baker
was entitled to the increased benefits are in direct conflict with
the terms of the Plan; as such, Burlington’s decision is arbitrary
and capricious and not entitled to “full force and effect” under
the Plan. See Gosselink, 272 F.3d at 727; see also Wildbur, 974
F.2d at 638 (stating that an interpretation in direct conflict with
14
the explicit language of the Plan indicates that the interpretation
is arbitrary and capricious).
B
Having decided that the Plan did not require MetLife to give
Burlington’s interpretation of the Plan full force and effect, we
are now required to determine if MetLife’s denial of Baker’s claim
for benefits was an abuse of discretion. As noted above, because
MetLife is the insurer of the Plan, we will review its denial of
benefits with less than full deference. See supra note 10.
Because we have already determined that Mr. Baker’s election
to increase his benefits during the initial enrollment period never
became effective under the terms of the Plan, MetLife’s decision
denying those benefits is legally correct and does not constitute
an abuse of discretion. See Spacek v. Maritime Ass’n, 134 F.3d
283, 292 (5th Cir. 1998). Accordingly, the district court’s entry
of a take-nothing judgment against Burlington and Baker with
respect to their ERISA claims is AFFIRMED.14
V
14
When the Plan speaks specifically of a review of Burlington’s
decision, it only says that a beneficiary may seek review of a
claim denied by Burlington. When, however, the Plan is construed
as a whole in the light of its other provisions, the Plan cannot be
read as restricting MetLife’s authority to interpret the Plan in
cases such as the instant one. The fact that the Plan provides for
appeal of a denial of a claim to MetLife does not negate the fact
that the Plan grants MetLife administrative authority, as Plan
fiduciary, to “interpret the terms of the Plan and to determine
eligibility for and entitlement to Plan benefits”.
15
We now turn to address the district court’s holding that
Burlington’s state law claims are preempted by ERISA. As discussed
above, the district court directed that “[t]he parties have through
September 21, 2001 to move for judgment as a matter of law on what
the plan says” (emphasis added). In compliance with this command,
Burlington and MetLife submitted summary judgment motions and
limited their respective arguments to the meaning of the Plan.
The district court, however, without the benefit of any
briefing by the parties, held that “[b]ecause this benefit arises
in an employee plan, the claims beyond seeking the correct benefit
are vacuous.” Particularly in the light of our opinion today,
which leaves open any claim Burlington may have on the pre-Plan
correspondence and negotiations, this conclusion does not seem so
certain.
Moreover, “a district court may not grant summary judgment sua
sponte on grounds not requested by the moving party.” John Deere
Co. v. American Nat’l Bank, 809 F.2d 1190, 1192 (5th Cir. 1987);
FED. R. CIV. P. 56. In the instant case, in compliance with the
district court’s command, neither party sought summary judgment on
Burlington’s state law claims and the district court’s holding that
they were preempted was, therefore, premature. Accordingly, the
district court’s grant of summary judgment with respect to
Burlington and Baker’s state law claims is VACATED, and those
claims are REMANDED for further proceedings.
VI
16
Based on the above, the district court’s entry of a take-
nothing judgment in favor of MetLife is AFFIRMED with respect to
Burlington and Baker’s ERISA claims and VACATED and REMANDED with
respect to their state law claims.
AFFIRMED in part; VACATED and REMANDED in part.
17
WIENER, Circuit Judge, specially concurring:
I concur with the Court’s decision and write separately only
to clarify two points that I believe deserve further amplification
to assist future courts in reviewing claims for denial of ERISA
benefits.
A. The “Direct-Contradiction Exception” to the Wildbur Two-
Step Framework
As the panel opinion recognizes,15 we announced in Wildbur v.
ARCO Chem. Co. the two-step test that courts in our circuit should
employ when analyzing a challenge to the denial of ERISA benefits
by a plan administrator vested with broad discretion to interpret
and apply the plan.16 Under Wildbur, the court first must decide
whether the plan administrator’s interpretation of the plan is
legally correct. If it is, the inquiry ends because no abuse of
discretion could have occurred; but if the administrator’s
determination is found not to be legally correct, the court must
determine whether the administrator’s legally incorrect decision
also rose to the level of abuse of discretion,17 which in this
context is equivalent to an “arbitrary and capricious” decision.18
15
See Maj. Op. at ____ & n.11.
16
974 F.2d 631, 637-638 (5th Cir. 1992).
17
Id.
18
See Maj. Op. at ____ n.9.
18
Although it is true that reviewing courts are not “rigidly
confined” to the Wildbur test in every case,19 that framework ——
calculated to ensure that proper deference is accorded to a plan
administrator’s interpretation and application of an ERISA plan ——
should be used by reviewing courts unless compelling circumstances
justify a departure. The purpose of this two-step analysis is to
minimize judicial intrusion into the ERISA plan administration
process and to manage the often-competing interests and
constituencies involved in ERISA plans.
Today’s panel opinion, however, employs a method that is an
exception to the Wildbur framework and concludes that Burlington
reached an interpretation that was not merely “legally incorrect,”
but did so “in a manner that directly contradicts the plain meaning
of the plan language.”20 Our post-Wildbur jurisprudence recognizes
that in the exceptional instance when the plan administrator’s
decision is such a direct contradiction of the plan’s plain
language that there is no room to support the plan administrator’s
discretionary interpretation, a reviewing court can short-circuit
the Wildbur process and refuse to give any effect to the plan
19
Duhon v. Texaco, Inc., 15 F.3d 1302, 1307 n.3 (5th Cir.
1994) (relying on Wildbur’s notation that “[a]pplication of the
abuse of discretion standard may involve [the] two-step process.”
(quoting Wildbur, 974 F.2d at 637 (adding emphasis))). Accord
Gosselink v. AT&T, Inc., 272 F.3d 722, 727 (5th Cir. 2001);
Threadgill v. Prudential Securities Group, Inc., 145 F.3d 286, 292
n.12 (5th Cir. 1998).
20
Gosselink, 272 F.3d at 727 (emphasis added).
19
administrator’s interpretation.21 This is not only efficient but
also avoids reaching “the anomalous finding that a Plan
administrator’s interpretation which directly violates the plain
meaning of the plan language is not an abuse of discretion simply
because the plan language has always been interpreted in the same
manner and there are no inferences of bad faith.”22
For the reasons already stated in the panel opinion,23 this
exception —— which clearly constitutes a substantial departure from
the well-established base rule of Wildbur —— is warranted on the
unique facts of this case in light of the language of the ERISA
plan here at issue. I write separately to emphasize that courts
should be chary about resorting to application of this direct-
contradiction exception to the Wildbur framework: Just because a
court disagrees with the plan administrator’s interpretation of the
plan by finding it legally incorrect does not necessarily mean that
the administrator has been arbitrary or capricious.
B. Choosing Between Two ERISA Entities Entitled to Exercise
Discretionary Authority under the Plan
21
Id.
22
Id.
23
Maj. Op. at ____ (“Burlington’s resort to an agreement
extraneous to the Plan and its determination that Baker was
entitled to the increased benefits are in direct conflict with the
terms of the Plan.”).
20
Although the Wildbur framework and the direct-contradiction
exception to it that we employ today are relatively
straightforward, this case poses an additional question, because
the plan at issue extends discretionary authority to interpret the
plan to two ERISA entities —— the plan administrator (Burlington)
and another plan fiduciary (MetLife).24 On the peculiar facts of
this case, the task of selecting between competing interpretations
by these two entities became a non-issue because the direct-
contradiction exception to Wildbur vitiates the need to accord any
deference to the interpretation by Burlington as plan
administrator. If, however, we had merely determined that
Burlington’s interpretation was legally incorrect but not arbitrary
or capricious, we would have been required to defer to Burlington
and credit its interpretation over MetLife’s for two reasons.
First, when an ERISA plan administrator has discretionary authority
concerning the decision at issue, we presume that the
administrator’s interpretation of the plan is correct unless the
presumption is overcome under the Wildbur test. The second reason
that Burlington’s interpretation would have trumped MetLife’s is
that, under Vega v. Nat’l Life Ins. Svcs. Co.,25 Burlington did not
24
Maj. Op. at ____ n.12.
25
188 F.3d 287, 297 (5th Cir. 1999) (en banc) (“[W]e reaffirm
today that our approach to this kind of case is the sliding scale
standard articulated in Wildbur. The existence of a conflict is a
factor to be considered in determining whether the administrator
abused its discretion in denying a claim. The greater the evidence
of conflict on the part of the administrator, the less deferential
21
labor under a conflict of interest whereas because MetLife
“potentially benefits from every denied claim,” its decision would
have been entitled to “less than full deference.”26 Thus, had we
been forced to choose between an unconflicted plan administrator
and a Vega-conflicted plan fiduciary, we would have been
constrained to defer to the administrator.
To summarize, I concur specially only to expand our guidance
on two points: First, the direct-contradiction exception to
application of the two-step Wildbur framework should be used by
reviewing courts sparingly and with restraint. Second, when a
reviewing court must choose between, on the one hand, an
interpretation made by an unconflicted plan administrator that is
legally incorrect but is not arbitrary or capricious, and, on the
other hand, an interpretation made by a Vega-conflicted plan
fiduciary, the court must side with the plan administrator.
our abuse of discretion standard will be.”). See also Wildbur, 974
F.2d at 638-42 (5th Cir. 1992) (“We note that the arbitrary and
capricious standard may be a range, not a point. There may be in
effect a sliding scale of judicial review of trustees’
decisions——more penetrating the greater is the suspicion of
partiality, less penetrating the smaller that suspicion is....”).
26
Maj. Op. at ___ n.10.
22