PERRY v. TOYOTA MOTOR ENGINEERING & MANUFACTURING HEALTH AND WELFARE BENEFIT PLAN

Filing 37

ORDER granting Defendant's 12 Motion for Summary Judgment, denying 28 Plaintiff's Motion for Partial Summary Judgment and denying as moot 31 Plaintiff's Request for Oral Argument. Signed by Judge Richard L. Young on 11/23/2015. (TMD)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
EVANSVILLE DIVISION

TOM PERRY,

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Plaintiff,
vs.
TOYOTA MOTOR ENGINEERING &
MANUFACTURING HEALTH AND
WELFARE BENEFIT PLAN,
Defendant.

3:15-cv-00072-RLY-WGH

ENTRY ON (1) DEFENDANT’S MOTION TO DISMISS OR, IN THE
ALTERNATIVE, MOTION FOR SUMMARY JUDGMENT; (2) PLAINTIFF’S
MOTION FOR PARTIAL SUMMARY JUDGMENT; and (3) PLAINTIFF’S
REQUEST FOR ORAL ARGUMENT
Pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. §
1001 et seq. (“ERISA”), Plaintiff, Tom Perry, brings a claim for medical expenses and
health insurance premiums incurred from July 21, 2009 to November 20, 2014 against
Defendant, Toyota Motor Engineering & Manufacturing Health and Welfare Benefit
Plan. On June 22, 2015, the Plan filed a Motion to Dismiss Plaintiff’s Complaint or, in
the Alternative, Motion for Summary Judgment. Because the Plaintiff relies on evidence
outside of the pleadings, the court will treat this as one for summary judgment. Fed. R.
Civ. P. 12(d). In addition, after Defendant’s Motion was fully briefed, Plaintiff filed a
Motion for Partial Summary Judgment and a Request for Oral Argument. For the reasons
detailed below, the court GRANTS the Defendant’s Motion for Summary Judgment,
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DENIES the Plaintiff’s Motion for Partial Summary Judgment, and DENIES as MOOT
Plaintiff’s Request for Oral Argument.
I.

Undisputed Facts
Plaintiff worked for Toyota Manufacturing Indiana, Inc. (“TMI”) from November

1998 to August 2007. During his employment with TMI, Plaintiff became a Participant
in the Toyota Motor Manufacturing Health and Welfare Benefit Plan (“1997 Plan”), with
an effective date of January 1, 1997. (Filing No. 6, Initial Plan, at 1). The 1997 Plan was
a welfare benefit plan, the purpose of which was to provide, inter alia, medical and
disability benefits. (Id.).
During his employment with TMI, Plaintiff and his dependents received Medical
Benefit coverage under the 1997 Plan. In 2006, Plaintiff suffered a serious health
condition and was forced to stop working. Soon thereafter, Plaintiff applied and received
long-term disability (“LTD”) benefits under the 1997 Plan. Following his termination
from TMI in August 2007, Plaintiff and his dependents continued to receive Medical
Benefit coverage under Section 4.5(i) of the Plan. That Section reads, in relevant part:
A Participant who has been employed by the Company for at least six
continuous months and who is receiving payments under the Long-Term
Disability Insurance Benefit at the time of termination of employment shall
continue to receive Medical Benefit coverage after termination of
employment under the same terms as an Employee until such time as the
Participant is no longer receiving payments under the Long-Term Disability
Insurance Benefit.
(Id. at 11).
Although Plaintiff’s condition did not improve, the Life Insurance Company of
North America (“LINA”), the third-party administrator of the LTD Plan, terminated
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Plaintiff’s LTD Benefits effective July 21, 2009. After Plaintiff’s LTD Benefits were
terminated, the Plan Administrator, the Toyota Employee Benefits Plan Committee
(“Benefits Committee”), terminated Plaintiff’s Medical Benefit coverage. Plaintiff then
acquired COBRA medical coverage from approximately July 21, 2009 to December 31,
2010, and incurred COBRA premium expenses in connection therewith. After Plaintiff’s
COBRA coverage ended, Plaintiff incurred premiums and substantial out-of-pocket
medical expenses for himself and his dependents.
On January 12, 2012, the Plan was amended (“2012 Plan”). (Filing No. 13-1,
2012 Plan). Article 2, Section 2.15 defines the “Effective Date” of the 2012 Plan as
“January 1, 1997, except as otherwise specifically provided herein.” (Id. at 4). Article 1,
Section 2, entitled Applicability of Plan, provides:
The provisions of the Plan shall apply only to persons employed by the
Company on or after the Effective Date. The provisions of any prior plan
maintained by a Company shall apply to Participants who were employed by
the Company prior to the Effective date hereof. Except as otherwise
specifically provided herein, the rights, benefits and obligations of persons
whose participation in the Plan terminated prior to January 1, 2012 shall be
determined under the terms and conditions of the Plan as it existed before the
amendment and restatement.
(Id. at 2).
On November 20, 2014, LINA reinstated Plaintiff’s LTD Benefits and paid him
back benefits for the period of July 21, 2009 through November 20, 2014. (See Filing
No. 17-3, CIGNA letter). In December 2014, Plaintiff requested that the Plan reinstate
him and his dependents’ Medical Benefit coverage and refund him for the COBRA
premiums for the period of July 21, 2009 to December 31, 2010, and other premiums and
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out-of-pocket medical expenses he incurred for the period of August 21, 2009 to
November 20, 2014. The Benefits Committee denied Plaintiff’s request for refunds.
Plaintiff timely appealed the Benefits Committee’s denial on January 10, 2015.
On February 18, 2015, the Benefits Committee denied Plaintiff’s appeal pursuant to
Section 3.3(c) of the 2012 Plan because it constituted a “retroactive” benefit. (Filing No.
13-2, Denial Letter). That Provision amended a Participant’s Medical Benefit coverage
to exclude Medical Benefit coverage for “any such month(s) for which Long TermDisability Benefits are awarded retroactively.” (2012 Plan at 9). This appeal followed.
II.

Standard of Review
Both the 1997 and 2012 Plans give the Benefits Committee discretionary authority

to determine eligibility for Medical Benefits and to construe the Plan’s terms. (1997 Plan
at 27-28; 2012 Plan at 43-44). Thus, under both Supreme Court and Seventh Circuit
precedent, the Committee’s decision is entitled to deference and must be upheld absent
evidence its decision was arbitrary and capricious. See Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 115 (1989); Perlman v. Swiss Bank Corp. Comprehensive
Disability Prot. Plan, 195 F.3d 975, 981-82 (7th Cir. 1999).
III.

Discussion
In opposition to Defendant’s motion, Plaintiff raises two arguments. First,

Plaintiff argues the “Effective Date” of the 2012 Plan is ambiguous. Second, Plaintiff
argues the 2012 Plan may not retroactively amend its plan so as to deny Plaintiff benefits
to which he is otherwise entitled. This second argument is the basis of Plaintiff’s later
filed motion for partial summary judgment.
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A.

The Effective Date of the 2012 Plan

The cover page of the 2012 Plan reads: “Toyota Motor Engineering &
Manufacturing Health and Welfare Benefit Plan, Amended & Restated Effective January
1, 2012.” Section 2.15 of the 2012 Plan defines “Effective Date” as “January 1, 1997,
except as otherwise specifically provided herein.” Plaintiff argues these two provisions
create an ambiguity requiring the court to construe the 2012 Plan’s effective date as
January 1, 2012. Thus, because Plaintiff was “employed by the Company prior to the
Effective Date” pursuant to Article 1, Section 2 of the 2012 Plan (see p. 3), the provisions
of the initial 1997 Plan control.
The definition of “Effective Date” in both the 1997 Plan and the 2012 Plan are
identical. Both Plans unambiguously define the “Effective Date” as “January 1, 1997,
except as otherwise specifically provided herein.” (Compare 1997 Plan, Section 2.10,
with 2012 Plan, Section 21.5 at 3). The date on the cover page uses the term “effective”
to describe the date of the amendment and restatement. The term “effective” is also used
in the preamble to the 2012 Plan:
WHEREAS, Toyota Motor Engineering & Manufacturing North America,
Inc. (the “Sponsoring Company”), . . . , desires to amend and restate the
[Plan] effective January 1, 2012 to incorporate eleven amendments to the
Plan since its original effective date, certain provisions of the Patient
Protection and Affordable Care Act and the Health Care and Education
Reconciliation Act, and other clerical and technical changes; . . . .
NOW, THEREFORE, the Sponsoring Company hereby approves and adopts
the [Plan], as amended and restated January 1, 2012, which shall read as
follows:

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Based on these provisions, the court finds the term “effective January 1, 2012” as used in
this context serves to notify Participants the Plan was amended and restated on January 1,
2012 by approval of the Sponsoring Company. If the term “effective” was meant to
mean “Effective Date” as defined in the Plan, the cover page and preamble would have
read “Effective Date January 1, 2012” and not “effective January 1, 2012.” In short,
there is no ambiguity here. The “Effective Date” of both plans is January 1, 1997.
B.

Medical Benefits Coverage

“Employers and other plan sponsors are generally free under ERISA, for any
reason at any time, to adopt, modify, or terminate welfare plans.” See Curtiss-Wright
Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995). However “courts have generally
rejected attempts by welfare benefit plan sponsors or insurers to apply changes
retroactively so as to deny benefits that had already vested.” Medina v. Time Ins. Co., 3
F. Supp. 2d 996, 1000 (S.D. Ind. 1998) (emphasis in original). “[U]nder ERISA and
general principles of insurance contract law, benefits vest (and cannot be taken away by
retroactive plan amendment) when performance becomes due under the contract.” Id. at
1000-01 (citing Member Servs. Life Ins. Co. v. Am. Nat’l Bank & Trust Co. of Sapulpa,
130 F.3d 950, 956-57 (10th Cir. 1997)).
Plaintiff’s claim to Medical Benefit coverage for the period July 21, 2009 to
November 20, 2014, is premised on LINA’s lump-sum payment of LTD Benefits on
November 20, 2014, to cover the unpaid LTD Benefits for that period of time. He claims
that by virtue of that lump-sum payment, his Medical Benefit coverage was automatically
reinstated for the period July 21, 2009 to November 20, 2014. In that respect, he argues,
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performance “had become due” under the 1997 Plan (for the period July 19, 2009 to
December 31, 2011) and under the 2012 Plan (from January 1, 2012 to November 20,
2014). The court finds no support for this claim in either the 1997 or the 2012 Plan.
1.

The 1997 Plan

The relevant provision of the 1997 Plan is found in Section 3.3, which states, in
relevant part:
3.3
Termination of Participation. A Participant shall discontinue
participation in the Plan upon the earlier of the date: . . . (b) the Participant
terminates his/her employment with the Company. . . . Notwithstanding (b)
above, a Participant who has been employed by the Company for at least six
continuous months and who is receiving payments under the Long-Term
Disability Insurance Benefit at the time of termination of employment shall
continue to participate in the Plan for the purpose of receiving the Medical
Benefit and the Long-Term Disability Insurance Benefit only, until such time
as the Participant is no longer receiving payments under the Long-Term
Disability Insurance Benefit, in which case participation shall cease.
This Section unambiguously provides that a Participant “who is receiving payments”
under the LTD Benefit qualifies as a Participant for purposes of receiving the Medical
Benefit. When a Participant’s LTD Benefit ends, his participation in the 1997 Plan ends
and thus, his Medical Benefit ends. There is no provision indicating the Medical Benefit
will continue during the period following the cessation of LTD Benefit payments, nor a
provision stating that the Plan will be obligated for Medical Benefit following cessation
of LTD Benefit payments if the Participant receives a subsequent lump-sum payment for
LTD Benefits. Accordingly, there is no language in the 1997 Plan to support an ERISA
claim or an insurance contract claim.

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Relatedly, Plaintiff’s claim that his Medical Benefit vested via LINA’s retroactive
payment of his LTD Benefits is likewise without merit. Because Plaintiff had been
terminated from his employment, his Medical Benefits coverage was dependent on his
LTD Benefit. Once he was “no longer receiving payments” pursuant to his LTD Benefit,
his participation in the Plan ceased; meaning, his Medical Benefits coverage ceased.
There is no dispute that LTD Benefits ceased on July 21, 2009, and were not made during
the period July 21, 2009 to December 31, 2011. Thus, by the very terms of the 1997
Plan, there was no “vesting” of Medical Benefit coverage during that period.
2.

The 2012 Plan

The Section of the 2012 Plan at issue states, in relevant part:
3.3

Termination of Participation.

(a)

A Participant shall discontinue participation in the Plan upon the
earlier of the date:
(ii)

the Participant terminates his/her employment with the
Company.

....
(c)

Notwithstanding Sections 3.3(a)(ii) and 3.3(a)(v) above, a Participant
who has been employed by the Company for at least six continuous
months and is receiving Long-Term Disability Insurance Benefit
payments as of the Participant’s termination of employment with the
Company shall remain eligible to participate in the Plan, after
termination of employment, for the limited purpose(s) of receiving:
(i)

Any Long-Term Disability Insurance Benefit payments
authorized by the Insurer, provided that the Participant’s
disability occurred while the Participant was employed by the
Company; and

(ii)

Medical Benefit Coverage as provided in Sections 3.3(c)(ii)(A)
and 3.3(c)(ii)(B).
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A.

Before January 1, 2012. Medical Benefit coverage
(including any Medical Benefit coverage provided to
the Participant’s Dependents as a result of the
Participant’s employment with the Company), if such
Participant became eligible for and began receiving
Long Term-Disability Insurance Benefits prior to
January 1, 2012, (1) for any month in which the
Participant actually received a Long-Term Disability
Insurance Benefits payment (excluding any such
month(s) for which Long Term-Disability Insurance
Benefits are awarded retroactively), . . . .

Like Section 3.3 of the 1997 Plan, this Section of the 2012 Plan unambiguously provides
that, if a terminated Participant became eligible for LTD Benefits and began receiving
LTD Benefits prior to January 1, 2012, he received the Medical Benefit coverage
contemporaneously therewith. The 2012 Plan differs from the 1997 Plan in one
important respect – the Participant is not entitled to Medical Benefit coverage for the
months for which LTD Benefits are awarded retroactively.
It is undisputed that Plaintiff was not eligible for Medical Benefit coverage at the
time the 2012 Plan was published. It is also undisputed that he was awarded LTD
Benefits retroactively. Thus, under the plain language of the 2012 Plan, Plaintiff is not
entitled to the Medical Benefit for the period January 1, 2012 to November 20, 2014.
And for the same reasons as set forth above, Plaintiff’s Medical Benefit did not vest
during that time period. The Benefits Committee’s construction of the Plan at issue may
not seem fair, but it is not arbitrary and capricious. Accordingly, the court must uphold
the decision of the Plan.

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IV.

Conclusion
For the reasons herein set forth, the court finds Plaintiff is not entitled to

reimbursement for COBRA premiums for the period July 21, 2009 to December 31,
2010, and other premiums and out-of-pocket expenses for the period August 21, 2009, to
November 20, 2014. Accordingly, the court GRANTS the Defendant’s Motion for
Summary Judgment (Filing No. 12) and DENIES the Plaintiff’s Motion for Partial
Summary Judgment (Filing No. 28). In light of the court’s rulings, the court DENIES as
MOOT Plaintiff’s Request for Oral Argument (Filing No. 31).

SO ORDERED this 23rd day of November 2015.
__________________________________
RICHARD L. YOUNG, CHIEF JUDGE
United States District Court
Southern District of Indiana

Distributed Electronically to Registered Counsel of Record.

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