John Bickhart v. Carpenters Health and Welfare ( 2018 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 17-2834
____________
JOHN D. BICKHART,
Appellant
v.
CARPENTERS HEALTH AND WELFARE FUND OF PHILADELPHIA AND
VICINITY; THE BOARD OF ADMINISTRATION OF THE MEMBERS
CARPENTERS HEALTH AND WELFARE FUND OF PHILADELPHIA AND
VICINITY AND ITS INDIVIDUAL MEMBERS; EDWARD CORYELL; THOMAS
BRESLIN; EDWARD CORYELL, JR.; MICHAEL HAND; MICHAEL MORROW;
ROBERT NAUGHTON; JAMES R. DAVIS; FRANK BOYER; JOSEPH CLEARKIN;
JACK HEALY; FRANK LUTTER; PHILIP RADOMSKI; PIOTR TONIA, Fund
Coordinator and Coordinator of Benefit Funds for the Carpenters Health and Welfare
Fund of Philadelphia and Vicinity
____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(E. D. Pa. No. 5-15-cv-05651)
District Judge: Honorable Jeffrey L. Schmehl
____________
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
April 10, 2018
Before: CHAGARES, VANASKIE and FISHER, Circuit Judges.
(Opinion Filed: May 7, 2018)
____________
OPINION*
____________
FISHER, Circuit Judge.
John D. Bickhart, a retired carpenter, had his medical benefits terminated by the
Carpenters Health and Welfare Fund of Philadelphia and Vicinity. Following exhaustion
of his administrative remedies, Bickhart sued, seeking reinstatement of his medical
benefits and monetary damages under the Employee Retirement Income Security Act of
1974 (ERISA), 29 U.S.C. § 1001, et seq. Following discovery, the District Court granted
summary judgment for the defendants. For the reasons that follow, we will affirm the
judgment of the District Court.
I
Bickhart retired as a carpenter in 2007 and began receiving a monthly pension as
well as medical benefits for him and his wife. The medical plan imposed severe
restrictions on post-retirement work. At the time, Section 3.04 of the plan provided that
all benefits would terminate if:
(a) The Retiree returns to work in any phase of the construction industry
and works more than 40 hours in Covered Employment for which
contributions to the Fund are required in a calendar month.
(b) A Retiree works in the construction industry in work, which is not
Covered Employment for one (1) or more hours in a calendar month.1
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
2
Section 3.04 required retirees to report any post-retirement work to the Fund. The section
also authorized retirees to seek an advance determination of whether prospective
employment would trigger termination of benefits. If the work in question would lead to
termination, retirees could seek a limited waiver of the work restriction “in case of labor
need.”2
When Bickhart retired, he signed a form acknowledging his obligation to report
any post-retirement work to the Fund.3 Bickhart also received an annual notice in the
mail from 2009 to 2015 reiterating the work prohibition, explaining what kinds of work
would trigger termination, and detailing the process for seeking a waiver. In February
2008—roughly one year after his retirement—Bickhart petitioned the Fund for a
determination that his employment as a consultant for Turner Construction did not violate
the work prohibition. In the alternative, Bickhart requested a waiver to exceed the 40
hour per month limit. Bickhart’s request was denied by Edward Coryell, Sr., the
Executive Secretary-Treasurer/Business Manager of the Carpenters Regional Council and
Co-chair of the Fund’s Board of Administration. Bickhart then notified his employer that
he could not go back to work. Several months later, Turner Construction requested—and
1
App. 669. “Covered Employment” refers to work for an employer with a Union
contract. Such employers are still required to make contributions for any hours worked by
a retiree.
2
Id.3
App. 535. This particular reporting obligation was specifically tied to the terms
of Bickhart’s pension payments, not his medical plan.
3
received—a short, one-week waiver for Bickhart in August 2008, but two subsequent
requests by the company in September were denied. Bickhart did not request any further
waivers, nor did any employer acting on his behalf.
Each year from 2007 to 2014, Bickhart signed a declaration stating that he was in
compliance with all post-retirement work restrictions and continued to be entitled to
benefits. On each form, Bickhart indicated that he was unemployed.
In early 2009—following the 2008 recession and consequent contractions in the
construction industry—Section 3.04 was amended to eliminate the provision permitting
covered employment of less than 40 hours per month. As amended, Section 3.04
prohibited all post-retirement construction work of any kind or quantity. The waiver
provision remained unaltered. Advance notice of the change was sent to all active and
retired carpenters. The notice expressly cautioned that working even one hour a month
would jeopardize a retiree’s benefits and warned that terminated benefits would not be
restored.
In June 2015, a Carpenters Union agent observed Bickhart working at a
construction site for International Management Consultants, Inc.—a non-union
employer—and notified Coryell. Coryell, in turn, told Piotr Tonia, the Benefits
Coordinator for the Fund, whose job included making decisions regarding the termination
of retiree medical benefits. Shortly thereafter, Tonia terminated Bickhart’s medical
benefits and sent him a letter notifying him of this decision. The letter cited Section 3.04
4
as the basis for the determination and enclosed a copy of the pre-2009 version of the
provision. The letter also demanded payment of more than $21,000 for claims paid by the
Fund since Bickhart’s retirement. Tonia’s letter, which was labeled an initial
determination, informed Bickhart of his right to appeal to the Board of Administration.
Bickhart appealed, not contesting that he had violated the work prohibition, but instead
pledging to “never engage in work in the construction industry again.”4
As part of the appeal process, Bickhart provided his tax returns from 2010 to 2014,
which showed income from construction work ranging from $8,000 to $46,000 annually.
Tonia helped prepare a memo for the Appeal Committee recommending denial of
Bickhart’s appeal. The Appeal Committee, comprising voting members Coryell and
James Davis, endorsed Tonia’s recommendation. The matter was then forwarded to the
full Board of Administration, which adopted the recommendation of the Appeal
Committee. The Board informed Bickhart of its decision in writing, again referencing the
pre-2009 version of Section 3.04.
Bickhart filed suit in the Eastern District of Pennsylvania against the Fund, the
Board, each of the individual Board members, and Tonia. Bickhart’s complaint seeks
reinstatement of his retiree medical benefits and monetary damages of at least $21,000
pursuant to several ERISA provisions: 29 U.S.C. § 1102 (lack of specificity in employee
benefit plan), 29 U.S.C. § 1104 (breach of fiduciary duty), and 29 U.S.C. § 1132(a)(1)(B)
4
App. 519.
5
(enforcement of right to benefits). The defendants filed an answer,5 and following
discovery both parties moved for summary judgment. The District Court denied
Bickhart’s motion and granted the defendants’ motion. Bickhart timely appealed.
II
The District Court had jurisdiction under 29 U.S.C. § 1132(e). We have
jurisdiction under 28 U.S.C. § 1291. We review a grant of summary judgment under a
plenary standard.6 Summary judgment is appropriate when there are no genuine disputes
as to material facts and the moving party is entitled to judgment as a matter of law.7
III
Bickhart raises three principal arguments on appeal. First, he argues that he is
entitled to his retiree medical benefits under ERISA. Second, he argues that the District
Court erred in holding that Section 3.04’s waiver provision satisfies ERISA’s specificity
requirement. And third, he argues that the District Court erred in denying him equitable
relief stemming from Appellees’ alleged fiduciary breaches.
A. Claim for Benefits
Bickhart claims an entitlement to benefits under 29 U.S.C. § 1132(a)(1)(B), which
authorizes civil actions “to recover benefits due . . . under the terms of [a] plan.” In
evaluating Bickhart’s claim, the District Court first had to determine the appropriate
5
The defendants also filed, but eventually dismissed, a counter-claim for recovery
of medical claims paid since Bickhart’s retirement.
6
Giles v. Kearney, 571 F.3d 318, 322 (3d Cir. 2009).
7
Id.6
standard of review to apply to the Board of Administration’s termination decision. As we
review under a plenary standard, our task is the same.
When a participant challenges a denial of benefits under ERISA, the denial is
“reviewed under a de novo standard unless the benefit plan gives the administrator or
fiduciary discretionary authority to determine eligibility for benefits or to construe the
terms of the plan.”8 In the latter case, the decision is reviewed under an arbitrary and
capricious standard.9 Whether an administrator is empowered to wield such discretion
“depends upon the terms of the plan,”10 and while there are certainly phrases and
formulations that present a close call, this is not one of them. Section 5.10 states, in part,
that “[a]ny determination, interpretation, or construction by the Board of Administration
is final, conclusive and binding on all parties . . . to the maximum deference permitted by
law.”11 In interpreting these unmistakably clear terms, the District Court properly
concluded that the Board of Administration’s decision is entitled to the more deferential
arbitrary and capricious standard of review.
“An administrator’s decision is arbitrary and capricious if it is without reason,
8
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989).
9
Viera v. Life Ins. Co. of N. Am., 642 F.3d 407, 413 (3d Cir. 2011) (citing Metro.
Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008)).
10
Luby v. Teamsters Health, Welfare, & Pension Tr. Funds, 944 F.2d 1176, 1180
(3d Cir. 1991).
11
App. 684–85.
7
unsupported by substantial evidence or erroneous as a matter of law.”12 The Board’s
decision here was supported not by merely substantial, but indeed overwhelming
evidence, a conclusion Bickhart leaves largely unassailed. Specifically, the Board had
evidence that Bickhart was caught working for a non-union employer, it had his tax
returns showing several years of disqualifying employment, and it had Bickhart’s own
admissions that he had been improperly working in the construction industry since his
retirement.
Bickhart raises two primary and nearly a dozen supplementary arguments against
the Board’s decision, but to no avail. First, Bickhart argues that Tonia, rather than the
Board, made the decision to terminate his benefits. This conflates Tonia’s initial
determination with the final decision rendered by the Board. When considering a benefits
determination under ERISA, we focus on the final, post-appeal decision.13 Second,
Bickhart argues that the Board’s decision is not entitled to any deference because both
Tonia and the Board relied on the pre-2009 version of Section 3.04, so neither
determination was based on the current plan language. Setting aside the question of
which version of Section 3.04 should apply in this case, it is sufficient to note that the
Board applied the language that is unquestionably more favorable to Bickhart in reaching
12
Miller v. Am. Airlines, Inc., 632 F.3d 837, 845 (3d Cir. 2011) (internal quotation
marks omitted) (quoting Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 45 (3d Cir.
1993)).
13
Funk v. CIGNA Grp. Ins., 648 F.3d 182, 192 n.11 (3d Cir. 2011) (citing 29
C.F.R. § 2560.503-1(h)) abrogated on other grounds by Montanile v. Bd. of Trs. of Nat’l
Elevator Indus. Health Benefit Plan, 136 S. Ct. 651 (2016).
8
its determination. Any error, therefore, was less than harmless.
Following these two arguments, Bickhart launches a fusillade of “due process”
objections to the Board’s decision. These arguments (eleven in total) range from the petty
to the absurd, e.g., that the Board failed to provide the basis for its decision, that the
Board failed to conduct a thorough investigation, and that the Board failed to articulate
the precise details of the disqualifying work performed by Bickhart. When a benefits
determination is supported by “an abundance of evidence,” even “procedural
irregularities” in the decision-making process cannot normally render an administrator’s
decision arbitrary and capricious.14 Here, Bickhart has not demonstrated any such
irregularities, but even assuming such a showing, the abundance of evidence in this
case—starting with his own admissions—would still foreclose a finding that the Board’s
decision was arbitrary and capricious.
B. ERISA’s Specificity Requirement
ERISA requires covered plans to “specify the basis on which payments are made
to and from the plan.”15 Bickhart claims that Section 3.04 is fatally ambiguous—thus
violating the specificity requirement—because it permits waivers of the work prohibition
for, in Bickhart’s view, “broadly characterized and undefined reasons.”16 Section 3.04(f)
provides, in part, that “[t]he Board of Administration, or one or more members on their
14
Miller, 632 F.3d at 846 (quoting Estate of Schwing v. The Lilly Health Plan, 562
F.3d 522, 526 (3d Cir. 2009)).
15
29 U.S.C. § 1102(b)(4).
16
Appellant Br. 47.
9
behalf, may waive the work rules on termination on the basis of labor need or other
considerations relevant to the purposes of the termination rules.”17 That this provision
contemplates discretion in the approval of waivers raises no concerns under ERISA. We
have consistently held that ERISA permits case-by-case benefits determinations so long
as the plan documents make this feature clear.18 But more importantly, neither Section
3.04(f)’s specificity nor its practical implementation are remotely relevant to Bickhart’s
case because he never so much as requested a waiver in the seven years that preceded the
termination of his benefits, during which time he was actively employed in the
construction industry. The terms of the plan make clear—and pellucidly so—that, absent
a waiver, the work Bickhart engaged in (confessedly and perennially) would result in
forfeiture of his benefits. At the very least, therefore, the terms of the plan satisfy
ERISA’s specificity requirement as applied to Bickhart.
C. Breach of Fiduciary Duty
Finally, Bickhart alleges that the Board of Administration, its members, and Tonia
violated ERISA’s standard of care for fiduciaries.19 At its core, this claim is
indistinguishable from the entitlement to benefits claim. It alleges nearly identical
misconduct—e.g., inadequate notice about the termination rule, insufficient investigation,
and inadequate justification—and seeks nearly identical relief—e.g., an injunction
17
App. 669.
18
Hamilton v. Air Jamaica, Ltd., 945 F.2d 74, 77–78 (3d Cir. 1991).
19
29 U.S.C. § 1104(a).
10
preventing the Board from enforcing its decision against Bickhart, restoration of
Bickhart’s benefits, and monetary damages. This Court is wary of fiduciary breach claims
under ERISA that, as here, are “actually [claims] based on denial of benefits under the
terms of [a] plan.”20 In such instances, the alleged fiduciary breaches are inseparable from
the claim for benefits, and do not afford a free-standing basis for relief.21 Bickhart’s claim
fits this description perfectly, so the District Court properly entered judgment in favor of
the Board and others for the same reasons as those justifying summary judgment on
Bickhart’s claim for benefits.22
IV
We will affirm the District Court’s judgment.
20
D’Amico v. CBS Corp., 297 F.3d 287, 291 (3d Cir. 2002).
21
Id.; see Varity Corp. v. Howe, 516 U.S. 489, 515 (1996) (describing equitable
relief as not “appropriate” where Congress has otherwise provided adequate relief under
ERISA).
22
The equitable relief sought in the First Amended Complaint focuses solely on
Bickhart and his benefits. No doubt hoping to put some daylight between his fiduciary
claim and his benefits claim, Bickhart now offers several ideas for more broadly
applicable equitable relief, e.g., training for the Board, clarifications to the Retiree
Booklet, etc. These efforts are in vain, however, as Bickhart’s complaint leaves no doubt
as to the common core of the two claims.
11