Susan Jones v. Life Ins. Co. of N. Am. ( 2017 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 17 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SUSAN RENE JONES, No. 16-16172
Plaintiff-Appellant, D.C. No. 5:08-cv-03971-RMW
v.
MEMORANDUM*
LIFE INSURANCE COMPANY OF
NORTH AMERICA; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Ronald M. Whyte, District Judge, Presiding
Submitted November 14, 2017**
San Francisco, California
Before: GOULD and MURGUIA, Circuit Judges, and GRITZNER,*** District
Judge.
Plaintiff-Appellant Susan Rene Jones appeals the district court’s summary
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable James E. Gritzner, United States District Judge for the
Southern District of Iowa, sitting by designation.
judgment decision in favor of Defendant-Appellees Merck Sharp & Dohme, Merck
& Co., Inc., Long Term Disability Plan MSD Medical, Dental, and Long Term
Disability Plan, and Life Insurance Company of North America. Jones previously
worked for Merck & Co., Inc. (now known as Merck Sharp & Dohme Corp.)
(“Merck”) until 2001. Under Merck’s self-funded welfare benefit plan, Jones was
entitled to long-term disability (“LTD”) benefits, which she began receiving in
2001. The issue for the Court is whether the district court properly upheld Merck’s
claim administrator’s decision that Jones’ LTD benefits were offset by the
dependent social security benefits (“DSSDI”) she began receiving in 2009.
The Court reviews the “district court’s decision on coverage provided by” an
Employee Retirement Income Security ACT (“ERISA”) plan de novo. Harlick v.
Blue Shield, 686 F.3d 699, 706 (2012). As part of its de novo review, the Court
must determine whether the district court correctly reviewed the plan
administrator’s denial of benefits. Typically, when a district court reviews an
ERISA plan administrator’s denial of benefits, the default standard of review is de
novo. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). However,
if the plan confers discretionary authority to the claim administrator, the standard
of review shifts to abuse of discretion. Abatie v. Alta Health & Life Ins. Co., 458
F.3d 955, 963 (9th Cir. 2006).
Here, the district court correctly determined that Merck’s welfare benefit
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plan confers discretionary authority to the claim administrator Life Insurance
Company of North America (“LINA”) because the plan documents in place when
Jones first began receiving LTD benefits, and the plan documents in place during
her appeal, both confer the claim administrator with discretionary authority.
Therefore, the district court correctly applied the abuse of discretion standard in
reviewing LINA’s decision. See Id.“Under the abuse of discretion standard, an administrator’s denial of benefits
must be upheld ‘if it is based upon a reasonable interpretation of the plan’s terms
and if it was made in good faith.’” Moyle v. Liberty Mut. Ret. Benefit Plan, 823
F.3d 948, 957–58 (9th Cir. 2016) (citation omitted). Here, the relevant plan
provision states: “Any benefit payable under the Plan shall be reduced by: (i)
Social Security Benefits, effective at the time the Participant becomes entitled to
benefits.” Despite Jones’ assertions to the contrary, LINA’s determination that the
offset provision applied to Jones’ DSSDI benefits when she began receiving the
DSSDI benefits in 2009 is based on a reasonable interpretation of the plain
language of the plan in effect at that time. See Boyd v. Bert Bell/Pete Rozelle NFL
Players Ret. Plan, 410 F.3d 1173, 1178 (9th Cir. 2005)
(“An ERISA administrator abuses its discretion only if it (1) renders a decision
without explanation, (2) construes provisions of the plan in a way that conflicts
with the plain language of the plan, or (3) relies on clearly erroneous findings of
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fact.”). Because LINA construed the plan provision consistent with its plain
language and did not otherwise abuse its discretion, the district court properly
upheld LINA’s decision that Jones’ LTD benefits were offset by her DSSDI
benefits.1
Jones also contends that the offset provision is void under California
Insurance Code § 10127.15. Section 10127.15 provides:
Any provision contained in a policy of disability insurance
or a self-insured employee welfare benefit plan for a
reduction of loss of time benefits during a benefit period
because of an increase in benefits payable under the
federal Social Security Act, as amended, shall be null and
void with respect to any such increase which occurs on or
after the effective date of this section.
However, ERISA preempts § 10127.15. See 29 U.S.C. § 1144(a) (“any and all
State laws insofar as they may now or hereafter relate to any employee benefit
plan” are superseded by ERISA, subject to exceptions not relevant here).
Therefore, Merck’s offset provision is not barred by § 10127.15.
Jones also contends that she is entitled to penalties under 29 U.S.C. § 1132because Defendant-Appellees failed to timely provide her with a complete
administrative record. Section 1132(c) states that “any administrator . . . who fails
1
Jones contends that the statute of limitations bars LINA’s application of the
plan’s offset provision to her LTD benefits. However, there is no authority to
support Jones’ argument. Defendant-Appellees have not brought any claims
against Jones. Jones filed this lawsuit seeking reinstatement of her LTD benefits
without the DSSDI offset.
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or refuses to comply with a request for any information” which the administrator is
statutorily required to produce, may be required to pay penalties. However,
Defendant-Appellees were not statutorily required to provide Jones with a
complete administrative record. The statute only requires the administrator to
provide, upon request, a copy of the latest updated summary plan description, and
the latest annual report, any terminal report, the bargaining agreement, trust
agreement, contract, or other instruments under which the plan is established or
operated. 29 U.S.C. § 1024(b)(4). The administrative record is not a document that
Defendant-Appellees statutorily were required to produce. Therefore, Jones is not
entitled to penalties under 29 U.S.C. § 1132.
Lastly, Jones contends that she should be able to add MetLife as an
additional defendant. The question of whether to allow a party to amend a pleading
after a responsive pleading has been filed is left to the trial court’s discretion.
Gabrielson v. Montgomery Ward & Co., 785 F.2d 762, 765 (9th Cir. 1986). Here,
the district court denied Jones’ motion to amend her pleadings to add MetLife
because LINA replaced MetLife as the claims administrator, and MetLife no
longer has authority to resolve Jones’ claims or pay Jones benefits. No evidence in
the record supports Jones’ claim that the district court abused its discretion by
denying her motion to add MetLife as a defendant. Therefore, Jones is not entitled
to add MetLife as a defendant at this point in the proceedings.
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AFFIRMED.
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