Olson v. Rwc, Inc. Bargaining Employees Pension Plan
ORDER granting 17 Motion for Judgment Affirming Erisa Administrator's Decision and denying 18 Motion for Judgment to Reverse Administorator's Decision. Signed by District Judge Thomas L. Ludington. (SGam)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
Case No. 12-10905
Honorable Thomas L. Ludington
RWC, INC. BARGAINING EMPLOYEES’
ORDER GRANTING DEFENDANT’S MOTION FOR JUDGMENT AFFIRMING
ERISA ADMINISTRATOR’S DECISION AND DENYING PLAINTIFF’S MOTION FOR
JUDGMENT TO REVERSE ADMINISTRATOR’S DECISION
Plaintiff Donald Olson filed a complaint against Defendant RWC, Inc. Bargaining
Employees’ Pension Plan after his requests for disability pension benefits were denied.
Resolution of this case necessarily turns on the interpretation of the pension plan at issue:
specifically, whether employees must be totally disabled for 6 months at the time of their
retirement in order to qualify for disability benefits. Because the plain language of the plan at
issue provides that this is a requirement to qualify for benefits, the Plan Administrator’s decision
to deny Plaintiff’s requests will be upheld.
Plaintiff worked for RWC, Inc. (RWC) for many years. On April 3, 2008, he notified
RWC that he planned to voluntarily retire on April 21. Plaintiff wrote, “I Donald Olson am
terminating my employment at RWC Inc on April 21 2008 and plan on freezing my pension till I
am eligible to receive it at age 62 per current contract. I will also be taking the cobra insurance
that is available.” Admin. R. 57, ECF No. 16. Although his last actual day at work was March
14, 2008, Plaintiff took paid vacation time through April 20, and retired the next day.
Over two years later, in May 2010, Plaintiff applied for disability benefits under the
Social Security Act. On September 22, 2010, Administrative Law Judge John L. Christensen
found that Plaintiff had “been under a disability as defined in the Social Security Act since May
1, 2008, the alleged onset date of disability,” id. at 72, and Plaintiff was granted social security
benefits. He then returned to RWC with the following:
I would like to start drawing my disability pension as of May 1, 2008. I know this
period is retroactive but was just granted social security disability on Sept 29,
2010 [sic] retroactive to the May 1, 2008 date. Which I am aware of as being the
accepted criteria for RWC disability pension.
Id. at 62.
RWC utilizes the RWC, Inc. Bargaining Employees’ Pension Plan (Pension Plan) and the
corresponding Summary Plan Description (SPD) to cover its unionized workforce. The Pension
Plan and the SPD detail how and when employees may draw benefits. Pursuant to Article 8,
which governs payment of retirement benefits, “If a Participant shall retire as of the Participant’s
Normal Retirement Date, the Trustees shall take all necessary steps and execute all required
documents to pay, or arrange to be paid, the Participant’s normal retirement benefit . . . .”
Admin. R. 36. If a Participant retires before their normal retirement date, as Plaintiff did, they
may be eligible for a disability benefit if they satisfy certain requirements. Section 8.2 of the
Pension Plan outlines those requirements:
A Participant shall be eligible for a disability benefit upon such Participant’s
retirement prior to age 65 if at the date of such retirement:
(a) such Participant was then employed by the Employer and has at least 15
years Continuous Service and Years of Credit Service combined; and
(b) such Participant shall have become totally disabled by injury or disease so
as to be prevented thereby from engaging in employment with the
(c) such total disability shall have continued for a period of 6 consecutive
months, and in the opinion of a duly licensed and qualified physician, it
will be permanent and continuous for the remainder of such Participant’s
Id. Section 8 of the SPD entitled “What if I become disabled?” tracks section 8.2 of the Pension
Plan. It provides, “If you are actively employed and have a combined total of at least 15 years of
Continuous Service and Credit Service and you become totally and permanently disabled for at
least six months, you will be entitled to a monthly Disability Benefit.” Id. at 5.
Because Plaintiff’s disability was deemed to have begun on May 1, 2008, along with the
fact that he voluntarily retired on April 21, 2008, Plaintiff’s written request for disability pension
benefits was denied. On October 5, 2010, Plaintiff received a letter from Patty Henika, RWC’s
Human Resource Manager. Ms. Henika established that because Plaintiff was “not employed by
[RWC] on the effective date of [his] disability,” section 8.2 of the Pension Plan foreclosed the
possibility that he qualified for “a Disability Retirement Benefit from RWC.” Id. at 78.
In response to that denial, Plaintiff submitted an affidavit to the Social Security
Administration to amend the onset date of his disability from May 1, 2008 to the last day he
actually worked, March 14, 2008.
Id. at 75.
Administrative Law Judge Christensen
subsequently issued an opinion, dated December 9, 2010, indicating that Plaintiff “has been
under a disability as defined in the Social Security Act since March 14, 2008, the amended
alleged onset date of disability.” Id. at 76.
After receiving this amended opinion from the Social Security Administration, Plaintiff
sent a second written request for disability pension benefits to RWC. In this second request, he
established that he still wished to draw disability pension benefits as of May 1, 2008, but
indicated that “[t]he date of onset of disability was amended to March 14 my last day of work.”
Id. at 74.
Plaintiff’s second request was also denied. On January 4, 2011, William Perlberg, the
Pension Plan Administrator, wrote to Plaintiff, “The information you have provided to RWC has
been reviewed with plan counsel. The finding is that you do not qualify for a disability pension
benefit with the RWC Bargaining Pension Plan. If you wish to discuss this finding further, you
may contact Patty Henika or myself at RWC.” Id. at 79.
Plaintiff, by his union, filed a grievance on January 13, 2011. Pl.’s Compl. 3, ECF No. 1.
RWC denied the grievance on March 30, 2011. Id. As there is no provision for an internal
appeal of a denied grievance, Plaintiff filed this lawsuit against Defendant on February 29, 2012.
Plaintiff alleges that Defendant’s failure to grant and pay Plaintiff disability pension benefits was
wrongful and breached the terms of the Pension Plan. Id. at 5.
Because the Pension Plan is an employee welfare pension benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974 (ERISA), the Court issued an
ERISA scheduling order on April 24, 2012. Both parties were instructed to file standard of
review statements by May 8, 2012; procedural challenge statements by June 22; and Cross
motions by August 3.
On May 7, 2012, Defendant filed a statement of the appropriate standard of review,
calling for an arbitrary and capricious standard. Defendant argued this was appropriate under
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 105 (1989), because the Pension Plan
“confers discretionary authority on the plan administrator to determine eligibility for benefits or
to construe the terms of the plan.” Def.’s Stat. Stand. Rev. 2, ECF No. 8. The next day, Plaintiff
filed his statement. He argued a de novo standard applies because the Pension Plan did not
contain “the required express and clear statement giving the Plan Administrator discretionary
authority” to permit arbitrary and capricious review under Firestone. Pl.’s Stat. Stand. Rev. 1,
ECF No. 9.
On May 24, 2012, the Court ordered supplemental briefing on the issue. In his brief,
Plaintiff again argued that the Pension Plan did not contain the necessary discretionary language
to establish an arbitrary and capricious standard of review, and that de novo review was therefore
appropriate. Pl.’s Supp. Br. 4–5, ECF No. 12. Defendant likewise stuck with its original
argument, claiming the Pension Plan did contain discretionary language, and therefore arbitrary
and capricious review was warranted. Def.’s Supp. Br. 6–7, ECF No. 13. Upon reviewing the
parties’ briefs and arguments, the Court determined that the appropriate standard of review in the
case was arbitrary and capricious, and extended the parties’ deadline for cross motions until
August 24, 2012. Jul. 27, 2012 Order 4, ECF No. 15.
During this time period, both Plaintiff and Defendant established that there were no valid
procedural challenges to the Plan Administrator’s decision in this matter. See Def.’s Stat. Proc.
Chal. 2, ECF No. 11; Pl.’s Stat. Proc. Chal. 1, ECF No. 14.
On August 24, 2012, the parties submitted their respective motions concerning the
ERISA administrator’s decision. Defendant filed a motion for judgment affirming that decision,
while Plaintiff filed a motion for judgment to reverse. Both parties then responded to the other’s
motion on September 6, 2012. The issues raised by the parties in their motions and responses
will now be addressed by the Court.
The preliminary inquiry is outlining the appropriate standard of review to be applied.
Although the Court previously established an arbitrary and capricious standard of review was
appropriate, it appears that because Plaintiff worked in Michigan, a de novo standard should
A participant or beneficiary of an ERISA qualified plan may file suit in federal court to
recover benefits under the terms of a qualified plan. 29 U.S.C. § 1132(a)(1)(B). Courts review
the denial under a de novo standard of review “unless the benefit plan gives the administrator or
fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of
the plan.” Firestone, 489 U.S. at 115 (1989). If a plan includes such discretionary authority,
then a more deferential “arbitrary and capricious” standard applies. Yeager v. Reliance Standard
Life Insurance Co., 88 F.3d 376, 381 (6th Cir.1996).
However, as of July 1, 2007, the Michigan Office of Financial and Insurance Services
(OFIS) prohibited policies authorizing discretionary authority provisions that would implicate an
arbitrary and capricious standard of review. Mich. Admin. Code R. 500.2201-02 (2012). The
(b) [After July 1, 2007], an insurer shall not issue, advertise, or deliver to any
person in this state a policy, contract, rider, indorsement, certificate, or similar
contract document that contains a discretionary clause. This does not apply to a
contract document in use before that date, but does apply to any such document
revised in any respect on or after that date.
(c) [After July 1, 2007], a discretionary clause issued or delivered to any person in
this state in a policy, contract, rider, indorsement, certificate, or similar contract
document is void and of no effect. This does not apply to contract documents in
use before that date, but does apply to any such document revised in any respect
on or after that date.
Mich. Admin. Code R. 500.2202. Discretionary clauses either provide for a standard of review
on appeal that gives deference to the original claim decision, id. at R. 500.2201(c)(vi), or provide
for a standard of review on appeal other than de novo review. Id. at R. 500.2201(c)(vii). The
Michigan code prohibits these clauses in any policy, contract, rider, indorsement, certificate, or
similar contract that is revised after July 1, 2007. Id. at R. 500.2202(b)–(c).
Under its express preemption clause, ERISA “supersede[s] any and all State laws insofar
as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C. § 1144(a). But
ERISA contains a savings provision that maintains, “nothing in this subchapter shall be
construed to exempt or relieve any person from any law of any State which regulates insurance,
banking, or securities.” § 1144(b)(2)(A).
In American Council of Life Insurers vs. Ross, 558 F.3d 600 (6th Cir. 2009), the Sixth
Circuit considered the interplay between ERISA and the Michigan code. The plaintiff, American
Counsel of Life Insurers, filed suit against defendant Ken Ross, the Commissioner of OFIS. The
plaintiff claimed that the Michigan code is preempted by ERISA because it interferes with the
statute’s objectives, and that the rules do not fall within the ambit of ERISA’s savings clause. Id.
at 603. Squarely addressing the present issue, the court determined that the “Michigan rules fall
within the ambit of ERISA’s savings clause and are not preempted by that statute.” Id. at 609.
Accordingly, the court declared that ERISA plans in Michigan are subject to Michigan’s rules, as
outlined above. Id. Therefore, any ERISA plans issued or amended after July 1, 2007 require
“de novo review of denials of ERISA benefits within Michigan.” Gray v. Mut. of Omaha Life
Ins. Co., Case No. 11-15016, 2012 WL 2995469, at *3 (E.D. Mich. July 23, 2012).
Defendant’s Pension Plan is an ERISA-governed Plan.
The Pension Plan itself
establishes that it was “amended and restated effective as of August 1, 2007.” Admin. R. 16.
Because the Pension Plan was amended after July 1, 2007, it is governed by Rule 500.2202.
Therefore, a de novo standard of review applies, regardless of the presence of any discretionary
language. See Pierzynski v. Liberty Life Assur. Co. of Boston, Case No. 10-14369, 2012 WL
3248238, at *4 (E.D. Mich. Aug. 8, 2012).
The de novo standard requires a reviewing court to “determine whether the administrator
made a correct decision.” Hoover v. Provident Life & Accident Ins. Co., 290 F.3d 801, 808–09
(6th Cir. 2002) (internal quotation marks and citation omitted); see also Lipker v. AK Steel Corp.,
698 F.3d 923, 928 (6th Cir. 2012) (quoting Shelby Cnty. Health Care Corp. v. Majestic Star
Casino, 581 F.3d 355, 367–68 (6th Cir. 2009)). Review is confined to the evidence in the
administrative record. Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 616 (6th Cir.
1998). “[T]he administrator’s decision is accorded no deference or presumption of correctness.”
Hoover, 290 F.3d at 809. Based on the record before the plan administrator, “the court must
determine whether the administrator properly interpreted the plan and whether the insured was
entitled to benefits under the plan.” Id. When interpreting ERISA plan provisions, general
principles of contract law apply; unambiguous terms are given their “plain meaning in an
ordinary and popular sense.” Lipker, 698 F.3d at 928 (quoting Farhner v. United Transp. Union
Discipline Income Protection Program, 645 F.3d 338, 343 (6th Cir. 2011)).
Applying the de novo standard of review to the facts contained in the administrative
record, it is apparent that the Pension Plan Administrator made the correct decision when he
denied Plaintiff’s requests for disability benefits. Plaintiff is not entitled to disability pension
benefits under the plain language in the Pension Plan, and the administrator’s decision will be
Although Plaintiff’s motion addressed only the arbitrary and capricious standard of review (in compliance
with the Court’s earlier order), because Plaintiff’s arguments cannot prevail under a de novo standard of review, he
necessarily cannot prevail under an arbitrary and capricious standard.
When Plaintiff originally requested disability benefits in September 2010, he indicated
that he was disabled as of May 1, 2008. According to the language of the Pension Plan, an
employee only qualifies for disability benefits when that individual, “at the date of [his]
retirement . . . shall have become totally disabled by injury or disease.” Admin. R. 36. Because
Plaintiff voluntarily retired on April 21, 2008, prior to his established date of disability, it was
fully appropriate for his benefits request to be denied at that time.
When Plaintiff requested disability benefits a second time, in December 2010, he
indicated that he was disabled as of March 14, 2008 instead of May 1, 2008. With the amended
date of disability, Plaintiff did satisfy the language of the Pension Plan requiring that he be
totally disabled at the time of his retirement to qualify for benefits. Section 8.2(c) of the Pension
Plan, however, provides an additional requirement: to qualify for benefits, “at the date of [his]
retirement . . . [an individual’s] total disability shall have continued for a period of 6 consecutive
months.” Admin. R. 36 (emphasis added). The Pension Plan does not establish that such total
disability will continue for 6 months after retirement, but shall have continued for 6 months upon
the date of retirement. The plain reading of this language is that for Plaintiff to qualify for
disability benefits under the Pension Plan, he must have been totally disabled for 6 continuous
months at the time of retirement.
The evidence in the administrative record establishes that Plaintiff was not so disabled.
Plaintiff was under the care of Tri City Urology, P.C. between January 21 and January 29, 2008.
Plaintiff was cleared to return to work on January 30, 2008 without restrictions or limitations.
Id. at 59. The evidence further establishes that Plaintiff did return to work on or about February
4, 2008, and worked until his last day, March 14, 2008. Id. at 75. Such evidence affirmatively
disqualifies Plaintiff from disability pension benefits under the Pension Plan. At the time of his
retirement, he had not been totally disabled for a continuous 6 months; but merely 6 weeks. It
follows that the Plan Administrator’s decision to deny benefits was the correct decision, wellsupported by the administrative record and the language of the Pension Plan itself.
Plaintiff disagrees, and invites the Court to consider only the following language from
section 8.2 of the Pension Plan: “A participant shall be eligible for a disability benefit [if] . . . (c)
such total disability shall have continued for a period of 6 consecutive months.” Pl.’s Mot. 6–7.
According to Plaintiff, “[t]hat provision is not ambiguous. It says nothing about a total disability
having to preexist for six (6) months as of the date of a retirement.” Pl.’s Mot. 7 (internal
quotation marks and citation omitted). Plaintiff goes on to describe the contrary interpretation as
“unrealistic and tortured.” Id.
But it is Plaintiff’s rendition of the Pension Plan language that is without merit. Plaintiff
has removed the pivotal words that establish the total disability must have existed for 6 months at
the time of retirement: “A Participant shall be eligible for a disability benefit upon such
Participant’s retirement prior to the age of 65 if at the date of such retirement: . . . such total
disability shall have continued for a period of 6 consecutive months.” Admin. R. 37 (emphasis
added). Contrary to Plaintiff’s assertion, the Pension Plan language requires the disability to
have preexisted for 6 months at the time of retirement. The only manner in which Plaintiff could
advance an argument to the contrary was to remove the modifying language entirely. Such an
approach quickly loses traction when the Pension Plan itself is available for review.
Plaintiff further argues that such an interpretation is a “No-win” for participants, as “[n]o
participant would be entitled to benefits if he had to work for six months and at the same time be
totally disabled from working.” Pl.’s Mot. 7. But it is not this Court’s business to assess what
plan provisions should or should not mean when the language is clear. In this case, RWC
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employees are only qualified for disability pension benefits if they have been totally disabled for
6 months at the time of their retirement. Accordingly, the denial of Plaintiff’s disability benefits
request will be upheld.
Plaintiff offers two additional rationales for reversing the Plan Administrator’s decision
in this case: (1) the Plan Administrator did not properly set forth the specific reasons for the
denial of Plaintiff’s request contrary to 29 U.S.C. § 1133(1); and (2) there exists a conflict of
interest on the part of the Plan Administrator, William Perlberg, as he is also the President of
RWC (which would be required to pay benefits if Plaintiff’s request was approved). Section
1133(1) of ERISA provides:
In accordance with regulations of the Secretary, every employee benefits plan
provide adequate notice in writing to any participant or beneficiary
whose claim for benefits under the plan has been denied, setting
forth the specific reasons for such denial, written in a manner
calculated to be understood by the participant, and
29 U.S.C. § 1133(1) (emphasis added). The implementing regulations require that an ERISA
administrator provide a claimant with written notice of any adverse benefit determination,
including “[t]he specific reason or reasons for the adverse determination.” 29 C.F.R. § 2560.5031(g)(1)(i).
Challenges to this requirement are procedural. See McCartha v. National City Corp., 419
F.3d 437, 444 (6th Cir. 2005) (determining whether the requirements of § 1133 have been
satisfied involves the legal question of “whether the procedure employed by the fiduciary in
denying the claim meets the requirements of § 1133.”). See also Houston v. Unum Life Ins. Co.
of Am., 246 F. App’x 293, 299 (6th Cir. 2007) (unpublished table opinion) (“We review de novo
the legal question of whether the procedure employed by a plan administrator in terminating
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benefits meets the requirements of § 1133.”) (citation omitted); Stoll v. W. & S. Life Ins. Co., 64
F. App’x 986, 991 (6th Cir. 2003) (unpublished table opinion) (determinations of whether the
requirements of 29 U.S.C. § 1133 have been satisfied involves “evaluating benefits decisions for
Likewise, Plaintiff’s assertion of bias is a procedural challenge as well. See Wilkins v.
Baptist Healthcare System, Inc., 150 F.3d 609, 618 (6th Cir. 1998) (Gilman, J., concurring) (“an
alleged lack of due process afforded by the administrator or alleged bias on its part” constitutes
“an ERISA claimant’s procedural challenge to the administrator’s decision.”).
Although Plaintiff raises these challenges in his motion, such challenges have already
been waived when he submitted a statement of no procedural challenge on June 22, 2012. As the
Sixth Circuit established in Leffew v. Ford Motor Co., 258 F. App’x 772 (6th Cir. 2007)
(unpublished table opinion),
[P]laintiff’s “Statement of No Procedural Challenge” constituted a waiver of any
claim that plaintiff’s extended disability benefits were terminated in violation of
the procedural requirements of 29 U.S.C. § 1133. Consequently, we do not reach
the question of whether the procedures employed by [the plan administrator]
substantially complied with the requirements of § 1133.
Id. at 777. Because Plaintiff has already established he “is not asserting a procedural challenge
to the decision denying disability retirement benefits,” Pl.’s Stat. Proc. Chal. 1, the issue has
been waived and will not be addressed now.
Accordingly, it is ORDERED that Defendant’s Motion for Judgment Affirming ERISA
Administrator’s Decision is GRANTED.
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It is further ORDERED that Plaintiff’s Motion for Judgment to Reverse Administrator’s
Decision is DENIED.
Dated: January 14, 2013
s/Thomas L. Ludington
THOMAS L. LUDINGTON
United States District Judge
PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing
order was served upon each attorney or party of record
herein by electronic means or first class U.S. mail on
January 14, 2013.
s/Tracy A. Jacobs
TRACY A. JACOBS
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