NORMAN K. MOON, District Judge.
This action pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 ("ERISA"), is before the Court upon consideration of the parties' cross-motions for summary judgment (docket nos. 13 and 15), the ensuing responses and replies, and the parties' arguments in support of their motions, presented by counsel at a hearing on September 29, 2008. For the reasons stated herein, I will grant Plaintiff's motion for summary judgment and deny Defendant's motion for summary judgment. Furthermore, Plaintiffs motion includes a request for an award of attorney's fees and costs, which I will grant; accordingly, I will direct Plaintiffs counsel to file a complete petition for attorney's fees and costs. I
I. FACTUAL AND PROCEDURAL BACKGROUND
Christopher McIntyre ("Plaintiff") was diagnosed in 2005 with Type I diabetes (and consequent insulin dependence). Until that diagnosis, he earned a living as an airplane pilot, most recently working for Gannett Co., Inc. ("Gannett"), through which he was covered by a long-term disability ("LTD") plan (also "the Plan") that was administered initially by Prudential, and later by Defendant, Aetna Life Insurance Company.
Plaintiff is a 39-year-old married man and father of a toddler. He was employed as an airplane pilot by Gannett from April 2000 to May 6, 2005, his last day of work before diabetes forced him off the job. The record indicates that Plaintiffs sole duty was to fly executives of Gannett to their chosen destinations. In late 2004, while he was still a pilot for Gannett, Plaintiff incorporated and began to operate a side business, a screen-printing company called Ink Works, which has always operated at a loss.
Subsequent to his diagnosis as an insulin-dependent diabetic, Plaintiff was permanently grounded by the Federal Aviation Administration ("FAA"), and lost his aviation career and livelihood forever. The FAA refuses licensure to anyone with Plaintiffs medical condition. (M027,) An endocrinologist opined that Plaintiff "can perform any work except for flying an airplane. He has no restrictions related to his physical capacity."
Plaintiff was an eligible participant in Gannett's LTD plan.
The Plan states, in Section III, "Synopsis of Plan": "An eligible employee who becomes disabled will receive a benefit commencing after 26 continuing weeks of his or her disablement in an amount equal to 60 percent of his or her basic monthly compensation, including other disability benefits to which he or she becomes entitled." (M-018.) The Plan includes the following
(M-017-18; emphasis added.)
Plaintiff applied for LTD benefits with Prudential, Defendant's predecessor as the Plan Administrator. In a letter dated January 26, 2006, Prudential informed Plaintiff that it had determined that he was eligible for benefits effective November 5, 2005.
(M-033.) Plaintiff was informed that the payment of LTD benefits would continue for the periods established by the Plan, one of which was until "the date of disability ceases."
Prudential continued to monitor Plaintiff's situation. On March 25, 2006, in response to a vocational rehabilitation inquiry from Prudential, asking "How long have you been actively searching for a job?" Plaintiff responded, "Am starting my own business, operates at a loss." (M-50.) The Plan required Plaintiff to apply for Social Security Administration ("SSA") disability benefits; the Plan contains specific language stating that it offsets its award by the amount of other disability benefits. (M-016.) On March 31, 2006, Plaintiffs claim for SSA benefits was disapproved on the ground that Plaintiff was capable of engaging in substantial gainful activity, given that his monthly earnings averaged over $860. (M-257; M-127-123; M56-61.) On May 3, 2006, Prudential's internal notes observe that Plaintiff has "his own business which is currently operating at a loss." (M-092.) Prudential's notes, for May 3, 2006, also indicate Prudential's intention to refer Plaintiff for job placement because it had determined that he "will likely qualify for occupations such as electronic and electromechanical assembly and microcomputer support specialist" with "[a]nticipated wages between $14 to $22/hr."
On August 28, 2006, Prudential's notes indicate that Plaintiff "can't be a pilot because he can't renew his license while using insulin. He is disabled for his own occupation under the Gannett plan." (M-086.) Prudential further noted that Plaintiff had informed them that "he was performing self employment" and that it intended to "request an [sic] evaluate 2005 tax information." Prudential requested— and obtained—the tax information. Prudential also initiated a surreptitious investigation; the investigator reported, inter alia, that a requested "gym canvass" had led to "no information ... suggesting the possibility that [Plaintiff] works out at a gym." (M-96-101.) The investigator recommended "conducting a weekend day of surveillance in an attempt to see him maintaining his lawn or property."
On October 17, 2006, Prudential informed Plaintiff that it had determined that, even though Plaintiffs screen printing company was not profitable, the fact that the company had reported income rendered Plaintiff ineligible for benefits because Plaintiff was "working for wage or profit."
In the ensuing months, Gannett terminated its relationship with Prudential and selected Aetna as its new Plan Administrator. Plaintiff hired counsel and initiated an administrative appeal, arguing that the "specific definition of disability applying solely to airplane pilots who [have] lost their necessary licensure due to a medical issue does not include requirements either that they not be working at any job for wage or profit or that they be under the regular care of a physician"; rather, Plaintiff argued, "[t]hose are requirements in the general ... definition of disability, but not the specific one applying directly to [Plaintiff]." Plaintiff further argued that, even were he subject to the general definition of disability spelled out in the first paragraph of the Plan's "Definition of Disability," he would meet those requirements as well, because he was not "working at any job for wage or profit." He acknowledged that he had the "tiny" screen printing business, but that he had it "before he became disabled," and that "it has never returned a dime of profit to [Plaintiff]." Thus, according to Plaintiff, he met the general definition of disability because he "did not earn a wage or profit from his little company...." (M-142-45.)
The appeal was denied by Aetna on August 13, 2007. (M-257.) After confirming that Plaintiffs first date of disability was May 7, 2005, and that he had received LTD benefits until October 31, 2006, Aetna stated that Prudential had terminated Plaintiffs coverage because it had "received notification that [Plaintiff] was self employed and working," and that Aetna was upholding the denial of benefits. Aetna stated that it could not change its position until it received "[p]roof that [Plaintiff] is not working," reasoning that, "even though [Plaintiffs] company is losing money, he is still working toward making a wage or profit." Aetna added the following statement "regarding Prudential's interpretation of disability found within the Plan": "You base this appeal on your interpretation that airplane pilots are only subject to the one paragraph. This is not the case. All employees eligible for benefits under this Plan are subject to the definition of disability in its entirety."
Plaintiff appealed further, reemphasizing, inter alia, that the Administrator's reasoning "read[s] the specific section on [the disability of] pilots out of existence," that "it makes sense that the plan would have a special definition for airplane pilots" because they are often "medically unable to do their jobs for reasons that would not disable someone from doing many other regular occupations," and that "[n]o airplane pilot would value a disability policy if he would not be covered despite the FAA's grounding him for medical reasons." (M-298-301.) Plaintiffs final appeal was denied for the same reasons the Administrator had previously given. (304-06.) This lawsuit ensued.
II. STANDARDS OF REVIEW
A. Cross Motions for Summary Judgment
Federal Rule of Civil Procedure 56(c) provides that a court shall grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If both parties have moved for summary judgment, a court should consider "each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law." Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (citation omitted). For each motion, "the court must take care to `resolve all factual disputes and any competing, rational inferences in the light most favorable' to the party opposing that motion." Id. (quoting Wightman v. Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir. 1996)). The party who bears the burden of proof on an issue at trial, however, cannot survive summary judgment without forecasting evidence sufficient to sustain his or her burden of proof on that point. Celotex, 477 U.S. at 327, 106 S.Ct. 2548.
In enacting ERISA, Congress established procedural safeguards to ensure that fiduciaries would administer employee benefit plans "solely in the interest of the participants and beneficiaries." 29 U.S.C. §§ 1104(a)(1) & 1001(b); see also Makar v. Health Care Corp. of the Mid-Atlantic, 872 F.2d 80, 83 (4th Cir.1989). When reviewing a plan administrator's decision, courts should be guided by principles of trust law and "in doing so, it should analogize a plan administrator to the trustee of a common-law trust; and it should consider a benefit determination to be a fiduciary act (i.e., an act in which the administrator owes a special duty of loyalty to the plan beneficiaries)." Metropolitan Life Insurance Company v. Glenn, ___ U.S. ___, 128 S.Ct. 2343, 2347-48, 171 L.Ed.2d 299 (2008). Trust law principles require courts to review a denial of plan benefits de novo unless the plan provides to the contrary. Id. When, as is the case here, a plan grants the administrator discretionary authority to determine eligibility for benefits, "a deferential standard of review [is] appropriate." Id. Nevertheless, that standard must be modified when the administrator is acting under a conflict of interest; if the administrator is acting under a conflict of interest, "[t]rust law continues to apply a deferential standard of review ... while at the same time requiring the reviewing judge to take account of the conflict when determining whether the trustee, substantively or procedurally, has abused his discretion." Id. at 2350.
In determining whether a fiduciary of an employee benefits plan covered by ERISA has abused its discretion in making a decision, a court may consider, but is not limited to, such factors as (1) the language of the plan, (2) the purposes and goals of the plan, (3) the adequacy of the materials considered to make the decision and the degree to which they support it, (4) whether the fiduciary's interpretation was consistent with other provisions in the plan and with earlier interpretations of the plan, (5) whether the decision-making process was reasoned and principled, (6) whether the decision was consistent with the procedural and substantive requirements of ERISA, (7) any external standard relevant to the exercise of discretion, and (8) the fiduciary's motives and any conflict of interest it may have. Booth v. Wal-Mart Stores, Inc. Associates Health and Welfare Plan, 201 F.3d 335, 342-43 (4th Cir.2000); Employee Retirement Income
Ellis v, Metropolitan Life Ins. Co., 126 F.3d 228, 233 (4th Cir.1997). The modified standard deviates from the usual abuse of discretion review "only to the extent necessary to counteract any influence unduly resulting from the conflict [of interest]." Id.
When reviewing the discretionary decision of a plan administrator to deny employee benefits, judicial review is limited to the body of evidence before the administrator at the time it rejected the claim. Elliott v. Sara Lee Corp., 190 F.3d 601, 608-09 (4th Cir.1999). A Plan Administrator's decision will not be disturbed if it "is the result of a deliberate, principled reasoning process and if it is supported by substantial evidence." Brogan v. Holland, 105 F.3d 158, 161 (4th Cir.1997). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion," Mastro v. Apfel, 270 F.3d 171, 176 (4th Cir.2001) (citation omitted), and consists of "more than a mere scintilla of evidence but may be somewhat less than a preponderance," Laws v. Celebrezze, 368 F.2d 640, 642 (4th Cir.1966). To determine whether an administrator's decision was reasonable and based on substantial evidence, the Court may consider the non-exhaustive list of eight factors set forth by the United States Court of Appeals in Booth, 201 F.3d at 342-43.
Plaintiff states that the Plan has a specific definition of disability for pilots, and that no one disputes that he satisfies that definition, given the loss of his FAA medical certificate and licensure because of his status as an insulin-dependent diabetic. Plaintiff contends that the Administrator's interpretation of the Plan, which requires that pilots must meet both the general definition of disability and the pilot-specific definition, is untenable because it would render the specific language regarding pilots meaningless and superfluous. Plaintiff argues that there would be no need for a specific paragraph defining disability for pilots if they were subject to the general definition of disability, because fulfilling the three-prong general definition of disability would render the pilot unable to maintain the requisite FAA certification; thus, it makes sense for the Plan to have a special definition for pilots, because they are often medically unable to do their jobs for reasons that (i) would not disable others from performing their occupations and (ii) would not fulfill the requirements of the general definition of disability. "No airplane pilot," plaintiff adds, "would value a disability policy if he would not be covered despite the FAA's grounding him for medical reasons." Plaintiff maintains that there must be a reason for the additional language regarding pilots, and that the only sensible interpretation is that it is intended to protect pilots who might lose licensure for medical reasons. Plaintiff adds that pilots spend years and large sums of money to become licensed, but controllable medical issues, which have no effect on the abilities of others to earn money, can end a pilot's career and render his training useless. In Plaintiff's view, the Plan specifically contemplates this possibility, and the language in the Plan is intended to supplant the general three-prong
Plaintiff further contends that, even were the general three-prong definition of disability applicable to him, he would still qualify for disability under the Plan because his business never turned a profit, and the clause of the general three-prong definition that the Administrator relied upon to find him ineligible states that the claimant may not be "working at any job for wage or profit." Plaintiff maintains also that Aetna operates under a conflict of interest requiring a lessening of deference to Aetna because Aetna, as a paid Plan Administrator, "surely wishes to continue [its] relationship with Gannett and therefore has incentive to minimize the payments Gannett must make to satisfy claims." In support of this contention, Plaintiff adds that the Plan provides that the Administrator is to attempt to improve the fund's liquidity.
Defendant contends that the paragraph regarding the disability of pilots does not stand alone as the sole criteria that a pilot must fulfill in order to prove disability under the Plan.
I have already observed that the Plan grants the Plan Administrator discretion to determine eligibility for benefits; thus, the issue in this case is whether the Plan Administrator abused its discretion in denying LTD benefits to Plaintiff. For the following reasons, I find that the Plan Administrator abused its discretion in determining that airplane pilots covered under Gannett's LTD Plan are required to fulfill the terms of both the general threeprong definition of disability and the airplane pilot-specific definition.
Defendant cannot escape the language of the Plan.
This ambiguity is underscored by defense counsel's contention at oral argument that the pilot-specific definition is intended merely as a "jump start" for pilots. It is not in any way discernible how the pilot-specific definition is intended to provide a "jump start" for pilots, or that it could be reasonably construed to provide only a "jump start" for pilots who apply for LTD. Nor does the pilot-specific definition contain any proviso that it is to be considered "in addition to" the three-prong definition set forth in the first paragraph, or as a substitute for any element laid out in those three prongs. To be sure, the pilot-specific definition does not state, "This provision sets aside any requirements set forth elsewhere in this `Definition of Disability.'"
Contracts are interpreted under the law of the state in which the contract was made. See Seabulk Offshore, Ltd. v. American Home Assur. Co., 377 F.3d 408, 419 (4th Cir.2004). Under Virginia law, where the subject contract was consummated, the rules of contract interpretation apply to the construction of insurance agreements. Id. When the contract language is ambiguous and the intentions of the parties are not clear from the writing, "the policy must be strictly construed against the insurer and liberally in favor of the insured." Id. (citing St. Paul Fire & Marine Ins. Co. v. S.L. Nusbaum & Co., 227 Va. 407, 316 S.E.2d 734, 736 (1984)). Moreover, it is well-settled that "[a]ny ambiguity in an ERISA plan `is construed against the drafter of the plan, and it is construed in accordance with the reasonable expectations of the insured.'" Gallagher v. Reliance Standard Life Ins. Co., 305 F.3d 264, 269 (4th Cir.2002) (quoting Bynum v. Cigna Healthcare of North Carolina, Inc., 287 F.3d 305, 313-14 (4th Cir.2002)); see also Tester v. Reliance Standard Life Ins. Co., 228 F.3d 372, 375 (4th Cir.2000). Here, to the extent the Plan language is ambiguous, the ambiguity must be construed against Aetna and in accordance with Plaintiffs reasonable expectations.
Plaintiff reasonably expected that, in his circumstances, he would be covered by the LTD Plan because he satisfied the Plan's "Definition of Disability," which states, that, "[i]n the case of airline pilots, the loss of a First Class medical certificate, the failure to pass a required physical examination and the loss of necessary licensure are included within the definition of disability." Defendant attempts to hang its hat upon two words—"included within"— while disregarding the rest of the pilotspecific definition, including the introductory phrase of the fourth paragraph: "In the case of airline pilots...." I agree with Plaintiff that, "[i]n the case of airline pilots," the circumstances set forth in the fourth paragraph of the "Definition of Disability" results in the claimant being qualified for LTD benefits under the Plan, the general three-prong definition notwithstanding. To read the "Definition of Disability" any other way would, as Plaintiff contends, render the pilot-specific definition superfluous and meaningless; indeed, Defendant's interpretation of the "Definition of Disability" does, as Plaintiff contends, "read [the pilot-specific definition of disability] out of existence."
The pilot-specific definition must have been placed in the "Definition of Disability" to assure pilots that coverage under Gannett's LTD Plan would protect against the complete loss of a pilot's income should an eligible pilot lose the "necessary licensure" for a medical reason.
C. Attorney's Fees, Costs, and Pre- and Post-Judgment Interest
Regarding Plaintiffs motion for attorney's fees and costs, the Court is completely within its discretion to order them. See 29 U.S.C. § 1132(g); Quesinberry v. Life Insurance Company of North America, 987 F.2d 1017, 1028 (4th Cir.1993). The record is clear that Plaintiff has been denied his LTD benefits; while the payment of attorneys' fees could be a serious hardship to Plaintiff, Aetna likely has the ability to satisfy an award of attorneys' fees. The record indicates that the merits of Plaintiff's position have been strong and consistent throughout the proceedings below. Additionally, the matter is relatively modest in terms of dollars, and if fees were not awarded in cases such as these, they typically would not be brought. This would be a danger to all participants, to the public, and to the remedial purposes of ERISA itself. Moreover, the resolution of this issue provides a benefit to other Plan participants, given that it provides clarity regarding the Plan's "Definition of Disability" applicable to pilots. In sum, the relevant factors weigh in favor of awarding fees and costs. Quesinberry, 987 F.2d at 1029 ("[t]his five factor approach is not a rigid test, but rather provides general guidelines for the district court in determining whether to grant a request for attorneys' fees" (citation omitted)); Cox v. Reliance Standard Life Insurance Company, 235 F.Supp.2d 481, 483 (E.D.Va.2002). Accordingly, Plaintiffs counsel will be directed to file a complete petition for attorney's fees and costs.
Plaintiff's counsel will also be directed to submit a proposed order of judgment calculating the exact back benefits and interest due and owing as of the date of judgment. Regarding pre-judgment interest, the award and rate of prejudgment interest is within the discretion of the Court, and the Fourth Circuit, in an ERISA disability case, has explicitly approved of a federal court's reliance upon the Virginia judgment rate. See Quesinberry, 987 F.2d at 1030-31; Va.Code § 6.1-330.54. Pre-judgment interest will be awarded here, at the Virginia rate, because Plaintiff has been deprived of the use of this money since the predecessor Plan Administrator reversed its initial award and cut off Plaintiffs LTD benefits, and Defendant upheld the denial of his benefits. Regarding post-judgment interest, the Court is required to award it pursuant to 28 U.S.C. § 1961, and that post-judgment interest should apply to the entire amount awarded, including the pre-judgment interest. Quesinberry, 987 F.2d at 1031-32.
For the reasons stated herein, Plaintiffs motion for summary judgment will be granted, and Defendant's motion for summary judgment will be denied. Furthermore, Plaintiffs request for an award of attorney's fees and costs will be granted; accordingly, Plaintiffs counsel will be directed
The Clerk of the Court is hereby directed to send a certified copy of this Memorandum Opinion and the accompanying Order to all counsel of record.
(M-017-18; emphasis added.)
Considering the pilot-specific provision, it is clear that the purposes and goals of the Plan encompassed a reassurance to pilots that, after the requisite time in Gannett's employment, they would be qualified for LTD under the pilot-specific definition, the general threeprong definition notwithstanding. See Booth, 201 F.3d at 342-43 (setting out factors to consider in determining whether an ERISA fiduciary has abused its discretion, including the purposes and goals of the plan and whether the fiduciary's interpretation is consistent with other provisions in the plan). I note also that a survey of cases suggests that plans often specifically state that there are provisions "for persons other than pilots, co-pilots, and crew of an aircraft." See, e.g., Robilotta v. Fleet Boston Financial Corp. Group Disability Income Plan, 2008 WL 905883 (E.D.N.Y. Mar. 31, 2008); Doyle v. Liberty Life Assur. Co. of Boston, 511 F.3d 1336 (11th Cir.2008) (superseded on rehearing by 542 F.3d 1352 (11th Cir.2008)); Turner v. Fresenius Medical Care North America, 2006 WL 2805160 (S.D.Miss. Sept. 25, 2006); Denmark v. Liberty Life Assur. Co. of Boston, 2005 WL 3008684 (D.Mass. Nov. 10, 2005); Ayer v. Liberty Life Assur. Co. of Boston, 382 F.Supp.2d 162, 177 (D.Me.2005); see also Arfsten v. Frontier Airlines, Inc. Retirement Plan for Pilots, 967 F.2d 438, 440-41 (10th Cir.1992) ("the Plan defines disability as ... the permanent inability of a Participant to pass the periodic FAA Physical Examination required for a pilot in his status, by reason of accident, sickness, or natural deterioration, excluding, however, intentionally self-inflicted injury or habitual use of narcotics").