United States Court of Appeals,
Eleventh Circuit
No. 96-6215.
Barbara Johnson BUCKLEY, Plaintiff-Appellant,
v.
METROPOLITAN LIFE; Hoffman-La Roche, Inc.; Roche Biomedical Laboratories, Inc.;
Shyrese Langston, Defendants-Appellees.
June 24, 1997.
Appeal from the United States District Court for the Southern District of Alabama. (No. 94-0947-
CV-S), Charles R. Butler, Jr., Judge.
Before EDMONDSON, Circuit Judge, and KRAVITCH and HENDERSON, Senior Circuit Judges.
PER CURIAM:
Barbara Johnson Buckley initially brought this action in the Circuit Court of Mobile County,
Alabama against Metropolitan Life Insurance Company, Hoffmann-La Roche Inc., Roche
Biomedical Laboratories, Inc. and Shyrese Langston alleging in three counts violations of Alabama
law for wrongfully terminating her long term disability benefits arising out of her employment with
Roche Biomedical Laboratories, Inc., then a subsidiary of Hoffmann-La Roche, Inc. The defendants
removed the action to the United States District Court for the Southern District of Alabama,
claiming that Buckley's causes of action were preempted by the Employee Retirement Income
Security Act ("ERISA"), and the defendants, Hoffmann-La Roche Inc. and Roche Biomedical
Laboratories, Inc., also asserted a counterclaim for an overpayment of benefits. Buckley filed an
amended complaint which added Counts Four and Five seeking relief under ERISA. The district
court eventually granted the defendants' motion for summary judgment and Buckley filed this appeal
from the final judgment. For the reasons set forth below, we affirm the judgment of the district
court.
I. FACTS
In 1986, Buckley was hired as a service representative by Roche Biomedical Laboratories,
Inc. Beginning in late 1987, Buckley was forced to miss substantial time from work due to chronic
sarcoidosis, a pulmonary disease. Her disease worsened to the point that she was unable to carry
out her assigned duties. On November 1, 1988, the Hoffmann-La Roche Welfare Benefits
Committee ("Committee") approved Buckley's claim for disability benefits under the Hoffmann-La
Roche Long Term Disability ("LTD") Plan, which provides partial replacement of earnings for
employees who become totally disabled and which is administered for Hoffmann-La Roche, Inc. by
the defendant, Metropolitan Life Insurance Co. ("Metlife").
Section 4.4(b) of the Plan provided that a recipient of disability income might "be required
not more often than semi-annually to undergo a medical examination by a physician or physicians
appointed by the Committee and/or submit evidence of continued Total Disability satisfactory to the
Committee." The Plan further stipulated that "if the Member refuses to submit to a medical
examination or to submit evidence of Total Disability as required by the Committee, his disability
income under the Plan shall cease as of the date of such determination or refusal."
Buckley complied with all the defendants' requests under this provision until the summer of
1992. In February of that year, Dr. William C. Gewin examined Buckley and executed a Certified
Consultant's Evaluation Summary Form. Responding to a followup request from Metlife, Dr. Gewin
wrote a letter to defendants on May 13, 1992 stating his opinion that Buckley was permanently and
totally disabled. On June 23 and July 21, 1992, Metlife issued computer-generated letters to
Buckley requesting that she submit a current statement of her functional capacity from her attending
physician.1 On August 24 of that year, Metlife claims reviewer Anderson advised Buckley that her
benefits would be terminated effective September 1, 1992 if she did not return a Functional Capacity
form executed by her physician within 30 days. Buckley claims that Dr. Marc S. Gottlieb executed
the required form on September 21, 1992 and that she immediately forwarded it to the defendants.
1
The defendants were unable to produce copies of these letters, and Buckley's affidavits are
inconsistent as to whether she received them. In an affidavit dated October 24, 1995, Buckley
stated that, upon receiving an August 24, 1992 letter from Kay Anderson requesting the overdue
form, she called Shyrese Langston to inquire if the Functional Capacity form she had previously
executed and remitted had been received. Since Buckley could not have completed and returned
the form unless she had received at least one of these letters, this statement suggests that she had
received one or both of them. In a second affidavit dated November 29, 1995, however, Buckley
states that she had not received any forms during the summer of 1992 prior to the August 24,
1992 letter from Anderson.
Buckley also contends that she spoke with Shyrese Langston, a Roche representative, in late
September about the form. She maintains Langston promised to contact her if the form was not
received. Langston denies that any such conversation ever took place. In any event, the defendants
did not receive the form until late January 1993.
In the interim, on December 8, 1992, the Committee met and determined that Buckley's LTD
benefits were due to be terminated for her failure to submit evidence of continuing total disability.
On January 7, 1993, Roche notified Buckley that her benefits had been discontinued effective
August 31, 1992 for her violation of § 4.4(b) of the Plan. Buckley requested an appeal of that
decision pursuant to § 8.7(b) of the Plan, which permits a rehearing of a beneficiary's claim by the
Committee. The Committee affirmed its decision to terminate the benefits on March 10, 1993.
Several years earlier, on June 5, 1990, the Social Security ("SS") Administration found that
Buckley was entitled to monthly disability benefits, retroactive to February 1988. Shortly thereafter,
Buckley received a lump-sum payment from SS of $10,890.70, which did not include $3,496.30
withheld to cover her attorney's fees. Under § 5.3 of the Plan, a member who receives retroactive
SS benefits must repay the Plan. Anderson wrote Buckley seeking reimbursement of the
overpayment in the amount of $14,158.98. Buckley agreed to reimburse the Plan in monthly
installments and, between August 1990 and October 1991, made payments totalling $335.00, leaving
a balance due of $13,823.98.
As stated earlier, Buckley filed this action in Alabama state court against Metlife, the Roche
defendants and Langston. The defendants removed the case to federal court and filed a counterclaim
for the unpaid balance of the overpayment resulting from the lump-sum payment from SS. Buckley
eventually stipulated to the entry of summary judgment in favor of Metlife and Langston on all
claims and in favor of the Roche defendants on all but Count IV of the amended complaint, which
charged the Roche defendants with wrongful termination of the LTD benefits. The district court
granted the defendants' motion for summary judgment on that count and on their counterclaim
seeking reimbursement of the overpayment. In the same order, the district court denied the
plaintiff's cross motion for summary judgment. Buckley appeals from that final judgment.
The district court's grant of summary judgment is subject to plenary review. We therefore
apply the same legal standards that bound the district court. See Brown v. Blue Cross & Blue Shield
of Alabama, Inc., 898 F.2d 1556, 1559 (11th Cir.1990).
II. DISCUSSION
A. Standard of Review for Fiduciary's Decisions.
The district court applied the arbitrary and capricious standard to reviewing both the
defendants' plan interpretations and their factual findings in affirming their decisions to terminate
Buckley's benefits and to reject her appeal of that determination. The court concluded that there was
no conflict of interest which would warrant the application of the heightened arbitrary and capricious
standard to this case.
On appeal, Buckley urges that the district court erred by failing to follow the heightened
arbitrary and capricious standard of review applicable when there exists a conflict of interest.
According to Buckley, there is a conflict of interest here because Hoffmann-La Roche ("HLR")
funds the LTD Plan and, thus, has a financial stake in minimizing benefits paid under the Plan, and
because the HLR Board of Directors appoints and controls the Committee which administers the
LTD Plan. She also contends that a conflict exists because the Committee which makes the initial
determination concerning payment of benefits also hears the appeal from that assessment.
In response, HLR asserts that the district court correctly applied the arbitrary and capricious
standard because the Plan administrator is granted discretion in making benefits' determinations and
because no conflict of interest exists in this case. HLR points out that its fixed, nonreversionary
contributions to the Plan are held by a separate trustee and that benefits are paid from assets of the
trust rather than the assets of HLR. Further, it maintains that the fact that HLR controls the
Committee which makes benefit decisions is immaterial because, under ERISA, a corporation's
officers may also serve as fiduciaries of its benefits plan. Finally, it alleges that the Committee may
also hear the appeal so long as the applicant has a full and fair opportunity for review of the initial
decision.
ERISA does not provide a standard to review decisions of a plan administrator or fiduciary.
The Supreme Court has held that a range of standards may apply to benefits determinations under
the statute. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109, 109 S.Ct. 948, 953, 103
L.Ed.2d 80 (1989). Accordingly, this court has adopted the following standards for reviewing
administrators' plan interpretations: (1) de novo where the plan does not grant the administrator
discretion, (2) arbitrary and capricious when the plan grants the administrator discretion; and (3)
heightened arbitrary and capricious where there is a conflict of interest. Marecek v. BellSouth
Telecommunications, Inc., 49 F.3d 702, 705 (11th Cir.1995).
In this case, the parties agree that the Plan vests the Committee with discretion in making
benefits determinations. The Third Circuit has also reached that conclusion with respect to HLR's
LTD Plan. See Abnathya v. Hoffmann-La Roche, Inc., 2 F.3d 40, 45 (3d Cir.1993). Therefore,
unless there is a conflict of interest, the arbitrary and capricious standard should be applied at least
to the Committee's interpretations of the Plan provisions. Buckley argues that this court's holding
in Brown v. Blue Cross & Blue Shield of Alabama, Inc., 898 F.2d 1556, supports her claim that a
conflict of interest exists in this case. In Brown, a panel of this court held that the heightened
arbitrary and capricious standard must be used when the plan was administered by an insurance
company which paid benefits out of its own assets. "Because an insurance company pays out to
beneficiaries from its own assets rather than the assets of a trust, its fiduciary role lies in perpetual
conflict with its profit-making role as a business." Id. at 1561. As the district court found, however,
that is not the case here. Under the Plan, benefits are paid from a trust funded through periodic,
nonreversionary contributions by HLR. As the Third Circuit noted with respect to this Plan,
"Hoffmann ... incurs no direct expense as a result of the allowance of benefits, nor does it benefit
directly from the denial or discontinuation of benefits." Abnathya, 2 F.3d at 45 n. 5. Thus, the
district court correctly accepted the arbitrary and capricious standard as its guide in judging the
defendants' plan interpretations.
Buckley also challenges the district court's application of the arbitrary and capricious
criterion to the administrator's factual determinations. In her view, such decisions should be
reviewed under a de novo standard. In Marecek, this court declined to decide what standard of
review should be followed in evaluating an administrator's factual findings. See 49 F.3d at 707.
Some courts have concluded that Firestone deals only with plan interpretations and have applied the
deferential arbitrary and capricious standard to all factual findings. See, e.g., Pierre v. Connecticut
General Life Insurance Co., 932 F.2d 1552 (5th Cir.), cert. denied, 502 U.S. 973, 112 S.Ct. 453, 116
L.Ed.2d 470 (1991). Other courts have held that Firestone controls and, therefore, that the de novo
and arbitrary and capricious standards are to be used, depending on whether the administrator is
granted discretion in making benefits determinations. See, e.g., Luby v. Teamsters Health, Welfare
and Pension Trust Funds, 944 F.2d 1176 (3d Cir.1991). Given that the LTD Plan at issue here vests
the administrator with discretion, the district court properly employed the arbitrary and capricious
guidelines in judging the administrator's factual conclusions.
B. Benefits Determinations.
Buckley argues that the district court erred in holding that the Committee's initial
termination of her LTD benefits was reasonable. As in the district court, she disputes the
Committee's interpretation of the Plan provisions in two respects. First, she claims that her failure
to timely submit evidence of continuing disability did not constitute a "refusal" to provide the
required information under § 4.4(b) of the Plan. She would engraft a mens rea component onto the
Plan's requirement that the applicant submit continuing evidence of disability. In her view, since
she did not intend to refuse to provide the necessary information, the Committee was not justified
in terminating her benefits.
In evaluating such a challenge, the court must first resolve whether the applicant has
proposed a sound reading of the plan to rival that of the administrator. Lee v. Blue Cross/Blue Shield
of Alabama, 10 F.3d 1547, 1550 (11th Cir.1994). If so, the court must then decide whether the
administrator was arbitrary and capricious in adopting a different version. Id. In this case,
Buckley's understanding of the term "refusal" in § 4.4(b), which would require the Committee to
inquire into the subjective motivation of any applicant who failed to submit the necessary
documentation, is not sound or workable. As the district court observed, it would lead to logistical
and practical problems which would render the provision unenforceable. Moreover, the Committee's
interpretation, that the required documentation must actually be received by the administrator in time
for the semi-annual reconsideration of the applicant's continuing disability, is clearly rational and
helps ensure the smooth functioning of the Plan. Therefore, Buckley's protest to the Committee's
interpretation of this provision must fail.
Second, Buckley asserts that the Committee also misconstrued § 4.4(b)'s provision that the
beneficiary "may be required not more often than semi-annually to ... submit evidence of continued
Total Disability." She apparently contends that this provision is satisfied so long as the beneficiary
submits any evidence of disability within six months of the termination of benefits, even if it is not
current. Thus, she reasons that Dr. Gewin's May 13, 1992 letter, in response to a Committee inquiry
about his February 1992 examination of Buckley, discharged her obligation through August of that
year and meant that she was not required to submit any additional documentation in the summer of
1992. Yet, if this suggestion were accepted, beneficiaries could comply with § 4.4(b) by submitting
non-current information every six months. This notion is not sound because it would deprive the
Committee of the information necessary for it to make the periodic determinations of continuing
disability required by the Plan. The district court did not err in rejecting this argument.
Finally, as a factual matter, Buckley urges that the Committee incorrectly terminated her
benefits. She maintains that, in response to the August 24, 1992 letter from Metlife claims reviewer
Anderson, she had Dr. Gottlieb execute the required form and she forwarded it to the defendants.
She also claims to have spoken with Shyrese Langston about the overdue form, although Langston
contends that this conversation never took place. It is undisputed that the defendants did not receive
the form until January, 1993.
In reviewing a termination of benefits under the arbitrary and capricious standard, the
function of a reviewing court is to discern whether there was a reasonable basis for the decision,
relying on the facts known to the administrator at the time the decision was made. See Jett v. Blue
Cross and Blue Shield of Alabama, Inc., 890 F.2d 1137, 1139 (11th Cir.1989). It is important to
understand that Buckley's benefits were not terminated because the Committee found that she was
no longer disabled, but because she had failed to submit the required proof of her continuing
disability. At the time the Committee voted to terminate Buckley's benefits on December 8, 1992,
it had not received the required form attesting to Buckley's continuing disability or any other written
communication regarding the matter from Buckley since the previous May. Based on those facts,
the Committee's decision was clearly not arbitrary and capricious. Therefore, the district court
correctly rejected Buckley's arguments on these points.2
C. Defendants' Affidavits.
Finally, Buckley complains that the district court impliedly denied her motion to strike
certain portions of the affidavits of Kay Anderson and Shyrese Langston. With respect to
Anderson's affidavit, Buckley states that ¶ 10, which refers to the computer-generated June and July
1992 letters requesting submission of evidence of continuing disability, should have been stricken
because Anderson lacked personal knowledge that the letters were actually issued to or received by
her. This argument is without merit. The district court noted Buckley's position on these letters and
observed that the defendants had been unable to produce copies of them. Further, the court's
disposition of this case did not rest on the contested statement regarding the computer-generated
letters. It is undisputed that Buckley received the August 24, 1992 letter from Anderson warning
that her benefits would be terminated effective September 1, 1992 if the required form was not
received and that, notwithstanding this clear warning, the form was not received by the defendants
until late January 1993, after she had been notified on January 7, 1993 that her benefits had been
terminated.
Buckley's attack on Langston's affidavit centers on WW 2, 3, 4, 5 and 8 which she contends
should have been stricken, either because they also refer to the computer-generated letters or
because they relate to the content of the "vote package," the written materials provided to members
of the Committee when they considered Buckley's claim. The first objection was dealt with above.
2
The district court and the defendants in their brief point out that Buckley made inconsistent
statements—regarding her receipt of the computer-generated letters sent to her in June and July
1992 and her submission of a completed form prior to the August 24, 1992 letter from
Anderson—in affidavits submitted to the district court in support of her motion for summary
judgment. Since those affidavits were not before the Committee while it was considering her
claim, they would appear to be irrelevant in evaluating its decisions.
The second has no relevance because the district court did not refer to, much less rely on, the content
of the "vote package" in reaching its decision.
For the forgoing reasons, the judgment of the district court is AFFIRMED.