Walker v. Wal-Mart Stores Inc ( 1998 )

Revised November 23, 1998
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
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No. 98-60224
Summary Calendar
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SANDRA F. WALKER
Plaintiff - Appellant,
VERSUS
WAL-MART STORES, INC.
Defendant - Appellee.
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On Appeal from the United States District Court for the Southern
District of Mississippi
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November 18, 1998
Before REYNALDO G. GARZA, JOLLY, and WIENER, Circuit Judges.
PER CURIAM:
I. FACTUAL AND PROCEDURAL BACKGROUND
In January of 1990, Sandra Walker (“Walker”) was employed by
Wal-Mart Stores Inc. and was a member of the Wal-Mart Associates
Group Health Plan (“the Plan”), which provided Walker with
medical and dental benefits. The Plan is governed by the
Employee Retirement Income Security Act (“ERISA”).
Beginning January 18, 1990, through January 25, 1990, Walker
underwent dental treatment by Dr. Van R. Simmons, a dentist in
Mississippi. On January 7, 1992, Walker initiated a malpractice
action in state court against Dr. Simmons for dental malpractice.
She alleged that he propped her mouth open excessively, thus
causing her to undergo three inpatient surgeries for repair of
her right and left temporomandibular joints.
Walker’s medical expenses totaled $41,598.59 and were paid
by the Plan. On June 19, 1996, Walker agreed to release Dr.
Simmons of all claims in exchange for a settlement agreement of
$12,500.
On December 13, 1996, Walker instituted a declaratory
judgment action in the Circuit Court of Pike County, Mississippi.
Walker argued that she was entitled to the whole of the
settlement proceeds received in the underlying malpractice
action. On January 21, 1997, the Plan removed the case to
federal court on the basis of federal question jurisdiction.
On March 31, 1998, the United States District Court for the
Southern District of Mississippi granted the Plan’s Motion for
Summary Judgment and ordered the entirety of the $12,500 be paid
to the Plan as reimbursement for its medical expenses. Walker
appealed the lower court’s decision.
II. STANDARD OF REVIEW
In Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115
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(1989), the Supreme Court established that courts must apply a de
novo standard of review in actions brought by ERISA plan
participants who challenge the denial of benefits. However, if
the plan vests the plan administrator with discretionary
authority to make eligibility determinations or construe the
plan’s terms, the appropriate standard of review is for abuse of
discretion. Id.This Court has held Bruch’s principles applicable not only
to benefit determinations brought by plan participants, but also
to plans’ assertions of purported reimbursement and subrogation
rights. Sunbeam-Oster Company, Inc. Group Benefits Plan for
Salaried and Non-Bargaining Hourly Employees v. Whitehurst, 102
F.3d 1368, 1373 (5th Cir. 1991). In Whitehurst, we applied a de
novo standard of review because the parties agreed that the
administrator had not been vested with discretionary authority to
interpret the Plan at the time of the plaintiff’s injuries. Id.Had we found that the administrator had possessed discretionary
authority at the time of the injury, the appropriate standard of
review would have been for abuse of discretion.
Like in Whitehurst, the Plan herein is asserting its
reimbursement and subrogation rights over the plaintiff’s
monetary recoveries from the tortfeasor. In this case, however,
the issue on whether the administrator was vested with
discretionary authority has not been settled and we must look at
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the Plan’s language to determine if any of its provisions vested
the administrator with such authority. The relevant provision,
for determining this issue, reads as follows:
The PLAN herein expressly gives the ADMINISTRATIVE
COMMITTEE discretionary authority to resolve all
questions concerning the administration, interpretation
or application of the PLAN, including without
limitation, discretionary authority to determine
eligibility for benefits or to construe the terms of
the PLAN in conducting the review of the appeal. . . .
This provision clearly vested the Administrative Committee
with the discretionary authority to interpret the terms of the
Plan, therefore, the proper standard of review in this case is
for abuse of discretion.
III. DISCUSSION
There are two issues presented in this case. First, whether
the Plan’s language unambiguously speaks to this dispute and
sufficiently provides for the distribution of settlement proceeds
of the type paid in this case. Second, whether the plaintiff’s
attorney is entitled to deduct his fees and expenses prior to the
Plan being reimbursed under his own reimbursement contract with
the plaintiff.
Walker’s argument, for right of possession over the
settlement money, is three-fold. First, she argues that the Plan
chose not to participate or finance the lawsuit and should
therefore be barred from recovering any of the settlement money.
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Second, Walker maintains that the language of the Plan never
contemplated partial recovery by a participant nor did it ever
consider the issue of attorneys’ fees. Third, Walker contends
that there is no proof that the settlement sum paid was a result
of any malpractice by the tortfeasor and therefore the
reimbursement provision does not apply.
The Plan argues that it is entitled to the right of
subrogation and recovery of all amounts paid. The Plan points
out that it expended $41,498.59 for Walker’s medical treatment
and that the plain language of the Plan gives it the right to
recover benefits that it has previously paid to the extent of any
payments resulting from settlement, regardless of how the parties
chose to designate those payments.
The Plan asserts that the relevant provisions are
unambiguous. Walker, however, claims that they are insufficient
for determining the distribution of the settlement proceeds. The
provisions read as follows:
The PLAN shall have the right to reduce benefits
otherwise payable by the PLAN or recover benefits
previously paid by the PLAN to the extent of any and
all of the following:
A. Any payments resulting from a judgement or
settlement, or other payment or payments,
made or to be made by any person or persons
considered responsible for the condition
giving rise to the medical expense or by
their insurers, regardless of whether the
payment is designated as payment for such
damages including, but no limited [,] to pain
and/or suffering, loss of income, medical
benefits or any other specified damages; or
any other damages made or to be made by any
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person . . .
Congress expressly intended for ERISA Plans to be “written
in a manner calculated to be understood by the average plan
participant,” and need only be “sufficiently accurate and
comprehensive to reasonably apprise such participants and
beneficiaries of their rights and obligations under the plan.
Title 29 U.S.C. § 1022(a)(1). In light of this statute, we have
previously held that ERISA plans should not be held to the same
standard that an insurance contract purchased in an open market
is held to. Jones v. Georgia Pacific Corp., 90 F.3d 114, 116
(5th Cir. 1996). Such a contract is purposefully drafted with
greater particularity because courts usually construe plan terms
strictly in favor of the insured. ERISA, on the other hand,
expressly guards against boilerplate language in its plans and we
must therefore interpret ERISA plans’ provisions as they are
likely to be “understood by the average plan participant,”
consistent with ERISA’s statutory drafting requirements.
We hold that the Plan’s language is unambiguous and that the
administrators’ interpretation of the Plan did not constitute an
abuse of discretion. We agree with the district court in holding
that the “any and all” language plainly means the first dollar of
recovery (any) and 100% recovery (all) of the funds received by
the plaintiff in the settlement, up to full amount of the
benefits paid. The Plan’s unambiguous language does not include
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a provision for reduction of its subrogation lien for payment of
attorneys’ fees or costs. Interpreting the provisions to provide
for attorneys’ fees and expenses would have been wholly improper
by the district court. Furthermore, the fact that the provisions
do not specifically mention attorneys’ fees or set out detailed
distribution procedures, does not constitute silence or ambiguity
on behalf of the Plan. Whitehurst, 102 F.3d at 1375. This Court
has firmly held that an ERISA plan should not be penalized for
lack of technical precision or verbosity by labeling the Plan
“silent” or “ambiguous” when it is simply using the direct
language mandated by ERISA. Id.
IV. CONCLUSION
In sum, we conclude that the administrator’s interpretation
of the plan was legally correct and that the language of the
Plan’s subrogation and reimbursement provisions are clear and
unambiguous. Furthermore, in the absence of any expressly
selected alternative standard, the Plan Priority norm vested the
Plan with unconditional reimbursement for the full amount of the
medical benefits paid to Walker. Therefore, her attorneys are
not entitled to deduct their fees or expenses.
We find that there was no abuse of discretion by the
Administrative Committee and AFFIRM the district court’s decision
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to grant the Plan’s Motion for Summary Judgment.
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