SUHRHEINRICH, J., delivered the opinion of the court, in which BOYCE F. MARTIN, Jr., C.J., KENNEDY, DAVID A. NELSON, RYAN, ALAN E. NORRIS, SILER, and BATCHELDER, JJ., joined. BOGGS, J. (pp 558-561), delivered a separate dissenting opinion, in which MERRITT, NATHANIEL R. JONES, DAUGHTREY, MOORE, and COLE, JJ., joined.
SUHRHEINRICH, Circuit Judge.
The matter before the en banc court today stems from a panel decision by this Court reversing Aetna Life Insurance Company's ("Aetna") decision to terminate disability benefits to Benito Perez, Jr., ("Perez") under a plan governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461. The panel held that the language "[Aetna] shall have the right to require as part of the proof of claim satisfactory evidence ... that [the claimant] has furnished all required proofs for [receipt of] benefits" did not vest discretion in Aetna to make benefits determinations.
The panel's decision in Perez conflicted with a prior panel's decision in Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376 (6th Cir.1996). The Yeager panel held that similar plan language vested discretion in the plan administrator to make benefits determinations. Id. at 380.
To resolve this conflict, we voted to rehear the case en banc to address two specific issues: 1) whether the Plan language grants Aetna discretion; and 2) whether the de novo standard of review announced in Firestone applies to both fact determinations and plan interpretation, or only to plan interpretation. Perez v. Aetna Life Ins. Co., 106 F.3d 146 (6th Cir.1997). For the following reasons, we conclude that the Plan language grants Aetna discretionary authority to make benefits determinations. We therefore do not reach the issue of whether the de novo standard announced in Firestone applies to factual determinations made by a plan administrator.
For sixteen years, Perez worked for the Motor Wheel Corporation, a division of Goodyear
In 1987, Perez enrolled in Lansing Community College to pursue an associate's degree in business management.
On April 8, 1991, Aetna informed Perez by letter that his benefits would extend "through June 30, 1991, or until such time as [he] secured employment, but not beyond June 30, 1991." J.A. at 330. In accordance with this letter, Perez has received no disability benefits from Aetna since June 30, 1991.
On June 24, 1991, Perez enrolled in a computer training course scheduled to last 12 weeks. In subsequent letters, Perez sought review of Aetna's decision to terminate his benefits and requested an extension of his coverage until he could complete additional training to make him employable. J.A. at 291-92, 310. Perez's rehabilitation counselor, in an unsigned March 18, 1992, letter addressed to Aetna, described Perez's situation as follows:
J.A. at 441-42.
In response to Perez's repeated requests for an extension of his benefits, Aetna wrote to Perez on February 26, 1992:
J.A. at 125-26.
This letter became Aetna's final determination that Perez was able to engage in a reasonable occupation and therefore no longer totally disabled under the Plan.
In addition to his benefits from Aetna, Perez collected workers' disability compensation from the State of Michigan until December 5, 1992. On that date, Perez was offered employment as a lab technician with the Laboratory of Clinical Medicine of Michigan State University. He began working there on December 7, 1992, but quit after only one full week on the job. After quitting, Perez applied for reinstatement of his worker's compensation benefits. In an administrative hearing, a Michigan worker's compensation magistrate denied Perez's request for reinstatement of his benefits, concluding that Perez could and did perform work as a lab technician.
Perez sued Aetna under ERISA "to recover benefits due to him under the terms of his plan...." Id. § 1132(a)(1)(B). The district court granted summary judgment to Aetna and denied Perez's cross-motion for summary judgment. Perez then moved to alter or amend the judgment under Fed.R.Civ.P. 59(e), which the district court denied. Perez appealed the district court's grant of summary judgment for Aetna and also its denial of his motion to amend the judgment. The original panel of this court reversed the district court's decision and we granted this en banc review.
II. STANDARD OF REVIEW
We generally review a denial of a motion to alter or amend the judgment under Rule 59(e) for abuse of discretion. Huff v. Metropolitan Life Ins. Co., 675 F.2d 119, 122 (6th Cir.1982). However, when the Rule 59(e) motion seeks review of a grant of summary judgment, as in the case at bar, we apply a de novo standard of review. Columbia Gas Transmission Corp. v. Limited Corp., 951 F.2d 110, 112 (6th Cir.1991) (citing Huff, 675 F.2d at 122-23 n. 5).
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate when there is no genuine issue of material fact for trial, and the moving party is entitled to judgment as a matter of law. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing Fed.R.Civ.P. 56(e)). In ruling on a motion for summary judgment, all reasonable inferences must be drawn in favor of Perez, the non-moving party. Timmer v. Michigan Dep't of Commerce, 104 F.3d 833, 842 (6th Cir.1997) (citation omitted).
III. COLLATERAL ESTOPPEL
Before turning to the principal issue on appeal, we must dispose of Aetna's argument that the refusal by a Michigan worker's compensation magistrate to reinstate Perez's worker's compensation benefits collaterally estops Perez from challenging Aetna's termination of his benefits. Specifically, Aetna contends that the magistrate's conclusion that Perez could and did perform the lab technician job precludes him from asserting that no reasonable occupation exists for which he is qualified.
Although Aetna raised collateral estoppel in its motion for summary judgment, the district court granted summary judgment without deciding this issue. Typically, we will not address issues unless ruled upon by the trial court below. Maldonado v. National Acme Co., 73 F.3d 642, 648 (6th Cir.1996)
We decline to invoke this extremely narrow exception in this case because it is not "beyond doubt" that Aetna's collateral estoppel argument would prevail. Under Michigan law, Aetna "must also have been a party, or a privy to a party" in the state court proceeding to invoke the doctrine of collateral estoppel against Perez.
IV. DISCRETIONARY AUTHORITY UNDER THE PLAN
We now reach the primary issue in this case: whether the Plan vests discretionary authority in Aetna, the plan administrator. If it does, we must apply the arbitrary and capricious standard of review to Aetna's decision to terminate benefits. Wendy's Int'l, Inc. v. Karsko, 94 F.3d 1010, 1012 (6th Cir.1996) (citing Firestone, 489 U.S. at 111, 109 S.Ct. 948).
We begin our analysis with the proposition that "`[t]he Court in Firestone ... did not suggest that "discretionary authority" hinges on incantation of the word "discretion" or any other "magic word."'" Johnson v. Eaton Corp., 970 F.2d 1569, 1572 n. 2 (6th Cir.1992) (quoting Block v. Pitney Bowes, Inc., 952 F.2d 1450, 1453 (D.C.Cir.1992)). "Rather, the Supreme Court directed lower courts to focus on the breadth of the administrators' power—their `authority to determine eligibility for benefits or to construe the terms of the plan.'" Block, 952 F.2d at 1453 (quoting Firestone, 489 U.S. at 115, 109 S.Ct. 948). While "magic words" are unnecessary to vest discretion in the plan administrator and trigger the arbitrary and capricious standard of review, this circuit has consistently required that a plan contain "a clear grant of discretion [to the administrator] to determine benefits or interpret the plan." Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir.1994). See, e.g., Tiemeyer v. Community Mut. Ins. Co., 8 F.3d 1094, 1099 (6th Cir.1993) (absence of a clear grant of discretion dictates a de novo standard of review); Anderson v. Great West Life Assurance Co., 942 F.2d 392, 395 (6th Cir.1991) (same); Brown v. Ampco-Pittsburgh Corp., 876 F.2d 546, 550 (6th Cir.1989) (same).
Arguing that the Plan contains the requisite clear grant of discretion to the plan administrator, Aetna points to the following Plan language:
J.A. at 32 (emphasis added).
Perez counters that this language does not constitute a clear grant of discretion because it does not specify to whom the written proof
Numerous federal courts, including our own, have held that language similar to that contained in the Plan clearly grants discretion to the plan administrator. Yeager, 88 F.3d at 380-81 (claimant must submit "satisfactory proof of Total Disability to us"); Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 983 (6th Cir.1991) (disability determined "on the basis of medical evidence satisfactory to the Insurance Company"); Snow v. Standard Ins. Co., 87 F.3d 327, 330 (9th Cir.1996) (company must be presented with what it considers to be satisfactory proof of the claimed loss); Patterson v. Caterpillar, Inc., 70 F.3d 503, 505 (7th Cir.1995) ("benefits will be payable only upon receipt by the Insurance Carrier or Company of ... due proof ... of such disability"); Donato v. Metropolitan Life Ins. Co., 19 F.3d 375, 379 (7th Cir.1994) ("[a]ll proof must be satisfactory to us"); Bali v. Blue Cross & Blue Shield Ass'n, 873 F.2d 1043, 1047 (7th Cir.1989) (disability "determined on the basis of medical evidence satisfactory to the Committee"); Caldwell v. Life Ins. Co. of North America, 959 F.Supp. 1361, 1365 (D.Kan.1997) (benefits paid upon receipt of "due proof" that employee is disabled); Miller v. Auto-Alliance Int'l, Inc., 953 F.Supp. 172, 175 (E.D.Mich.1997) (benefits paid "when [insurer] receive[s] notice and satisfactory proof of loss") (citing Miller and Yeager, supra); Bollenbacher v. Helena Chem. Co., 926 F.Supp. 781, 786 (N.D.Ind.1996) (benefits paid "[w]hen the Company receives proof that the individual is disabled"); Scarinci v. Ciccia, 880 F.Supp. 359, 361 (E.D.Pa.1995) (to qualify for benefits, employee must "furnish certification satisfactory to the Company of disability"). Perez distinguishes these cases on the ground that the language at issue in each case required the proof or evidence of disability to be satisfactory to the insurer or plan administrator. Since the Aetna Plan does not contain such language, the question becomes whether in the absence of such language—in grammatical terms an indirect object—the Plan constitutes a clear grant of discretion.
Because the Plan is governed by ERISA, we apply federal common law rules of contract interpretation in making our determination. Pitcher v. Principal Mut. Life Ins. Co., 93 F.3d 407, 411 (7th Cir.1996). In developing federal common law rules of contract interpretation, we take direction from both state law and general contract law principles. Regents of the Univ. of Michigan v. Agency Rent-A-Car, 122 F.3d 336, 339 (6th Cir.1997). The general principles of contract law dictate that we interpret the Plan's provisions according to their plain meaning, in an ordinary and popular sense. Id. Other circuits agree with this plain meaning approach to interpretation of ERISA contract provisions. Pitcher, 93 F.3d at 411 (interpreting ERISA-regulated policy "`[i]n an ordinary and popular sense as would a person of average intelligence and experience ....'") (quoting Meredith v. Allsteel, Inc., 11 F.3d 1354, 1358 (7th Cir.1993)); Bartlett v. Martin Marietta Operations Support, Inc. Life Ins. Plan, 38 F.3d 514, 517 (10th Cir. 1994) (applying plain meaning analysis); Hughes v. Boston Mut. Life Ins. Co., 26 F.3d 264, 268 (1st Cir.1994) (giving language in an ERISA-regulated insurance policy its "natural meaning"). In applying this plain meaning analysis, we "must give effect to the unambiguous terms of an ERISA plan." Lake v. Metropolitan Life Ins. Co., 73 F.3d 1372, 1379 (6th Cir.1996).
Although many of our prior cases finding a clear grant of discretion involved ERISA plans which explicitly provided that the evidence be satisfactory "to the insurer," "to the company" or "to us," it does not automatically follow that in the absence of such language discretion has not been granted to the plan administrator. Both parties acknowledge that the Plan allows for Aetna to request and receive satisfactory evidence of total disability before an individual is entitled to receive continued benefits. We agree with Aetna
In short, reading the contractual language in an ordinary and popular sense as we must, the only reasonable interpretation of the Plan is that Aetna requests the evidence, reviews it, and then makes a benefits determination.
Although the case before us today presents a slight variation, our conclusion that the Plan vests discretion in Aetna follows naturally from our prior Sixth Circuit decisions addressing similar plan language cases.
Id. at 381.
Thus, in Yeager we concluded that a plan's failure to designate to whom the submitted proof must be satisfactory did not mean that discretion to determine eligibility benefits had not been clearly granted to the plan administrator. Id. Although the panel in Yeager noted that "the Plan language could have been clearer," it held that "[t]he mere fact that language could have been clearer does not necessarily mean that it is not clear enough." Id.
The panel in Yeager reached the only reasonable interpretation of the language at issue in that case when the panel concluded that "it would not be rational to think that the proof would be required to be satisfactory to anyone other than [the insurance company]." This case presents an issue identical to the one presented in Yeager. In reaching the same conclusion as the panel in Yeager, we reaffirm that decision today.
Given that the Plan clearly grants Aetna discretion to make benefits determinations, we have no occasion to reach the second en banc issue; whether the de novo standard of review announced in Firestone applies to the factual determinations made by Aetna.
The prior panel in this case reviewed Aetna's decision to terminate benefits under the de novo standard of review. Today we hold that the arbitrary and capricious standard should have been applied. Accordingly, we remand the case to the original panel to review Aetna's decision to terminate benefits under the arbitrary and capricious standard.
BOGGS, Circuit Judge, dissenting.
This case involves a straight-forward interpretation of the meaning of words. The Supreme Court has set out the standard in Firestone: does the document grant discretion to the plan administrator in making decisions under the plan? See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). Since the grant must be a clear and affirmative one, as the court correctly holds, see Majority Opinion at 555-556, it seems to me that the words at issue here, furnish "written proof," do not grant such discretion. I therefore respectfully dissent.
The court's opinion in this case carefully and correctly sets out the basic tenets of the law concerning the standard of review for decisions by the administrator of an ERISA plan to deny benefits to a claimant. Firestonerequires that there be a grant of discretion to the administrator before such decision will be given the deference of the "arbitrary and capricious" standard of review. See Majority Opinion at 552 n. 1 (citing Firestone, 489 U.S. at 115, 109 S.Ct. 948). Otherwise, "de novo" review applies. Ibid. Under our decisions, that grant must be "clear." See ibid. at 555-556 (citing Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir. 1994); Tiemeyer v. Community Mut. Ins. Co., 8 F.3d 1094, 1099 (6th Cir.1993)).
The majority also correctly notes that when the language of the plan clearly gives discretionary decision-making power to the administrator, courts have upheld such language. See Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 983 (6th Cir.1991) ("evidence satisfactory to the Insurance Company"); Donato v. Metropolitan Life Ins. Co., 19 F.3d 375, 379 (7th Cir.1994) ("satisfactory to us"). Where the majority goes astray is in holding that the language in our plan is "similar" to such language, and thus is governed by the same principles. The court's opinion correctly concedes that the two types of language are dissimilar in a very important
The court's opinion also (perhaps over-generously
The court errs in deciding that we may simply assume that the plan must mean that the proof is "satisfactory" to the administrator, for that is the only entity which could be the intended decision-maker. To me the difference between these two phrases, especially the difference to a sophisticated drafter, is enormous. When faced with the language "satisfactory proof" (or "written proof" or "due proof" or simply "proof"), the immediate response of any half-trained lawyer is "satisfactory to whom" (or, "proof" in whose judgment?). In this case, the Aetna drafter did not supply an answer, and it seems much more plausible that the default reading should be an objective standard, satisfactory to a neutral arbiter, or satisfactory in terms of the over-all meaning of the contract, rather than satisfactory to one of the two interested parties.
While individual ERISA plan participants generally have very little power over the exact terms of their plan, such plans are frequently negotiated in collective bargaining arrangements. In either instance, the worker or the worker's representatives might well find a significant difference between having their benefits determined wholly at the discretion of the plan administrator, usually a company chosen by the management of the plan, and having a neutral standard of proof. Reasonable participants reading the language of this plan would be quite unlikely to be on notice that they should be meticulous, and wary of the plan administrator, who will have enormous discretion.
The majority's argument based on the structure of the approval process proves too much. Every benefit plan requires the submission of some type of claim. The benefit administrator has to know that one claims benefits. Then the administrator has to match the claim against some type of standard and make a decision. There is no dispute about that. Even in Firestone, itself, the plan required that a claimant apply for benefits when he or she is "physically or mentally unable to perform [his or her] job." Firestone, 489 U.S. at 105-06, 109 S.Ct. 948.
The question at issue here is whether in so doing, the administrator is held to an objective standard upon review, or is to be upheld unless a decision is not only objectively wrong, but also arbitrary and capricious. The majority's holding virtually eliminates the possibility of de novo review, unless the plan specifically says that de novo review will apply—the exact opposite of the result required by Firestone. See Firestone, 489 U.S. at 109, 109 S.Ct. 948. After all, how could there be a system in which benefits are claimed other than by applying to the plan administrator. See Ayers v. Continental Cas. Co., 955 F.Supp. 50, 53 (W.D.Va.1996).
The majority holding, resting as it does primarily on the nature of the application process, also underscores the weakness of its grammatical argument. "Evidence satisfactory to the Insurance Company," as in Miller, 925 F.2d at 983, or "evidence satisfactory to the committee," as in Bali v. Blue Cross & Blue Shield Ass'n, 873 F.2d 1043, 1047 (7th Cir.1989), are clear. Indeed, the concession in Yeager, noting that the language in that policy could be clearer, see Yeager, 88 F.3d at 381, and the majority's footnote 8 today, admonishing plan drafters, undercut the specific reasoning of Yeager, that there is "no
Finally, it is well to note that the key plan language here does not even require "satisfactory proof," as in Yeager. Rather, it requires the claimant to furnish "written proof," and only later states that the claimant must show "satisfactory evidence ... that [he] has furnished all required proofs...." Majority Opinion at 555 (emphasis added). Obviously, if a claimant has submitted a claim with support that is objectively sufficient to prove the claim, that would have to be "satisfactory evidence" of his having furnished such proof! The nature of the proof required is itself qualified only by the term "written," and the grant of discretion, if there is to be one, must be carried simply in the language "written proof." Thus, only the majority's structural argument can possibly be a logical basis for its holding today.
The large majority of courts that have ruled on language that does not contain a referent as to who shall decide the quality of proof submitted have held that such language does not grant discretion, and have applied de novo review.
A very recent Ninth Circuit case, Kearney, is the clearest. See Kearney v. Standard Ins. Co., 144 F.3d 597, 600 (9th Cir.1998). There, a requirement of "satisfactory written proof" of loss was found not to create a discretionary standard of review. Ibid. at 605. The opinion specifically held that a previous Ninth Circuit case, Snow v. Standard Ins. Co., 87 F.3d 327 (9th Cir.1996), did not dictate a discretionary standard of review, because the language in Snow ("proof satisfactory to the company") differentiated it from that in Kearney ("satisfactory written proof"). Kearney, 144 F.3d at 609-10. In so holding, the circuit chose between the decisions of two of its district courts—Williamson v. Unum Life Ins. Co., 943 F.Supp. 1226 (C.D.Cal.1996), which came to the same conclusion, and Atkin v. Standard Ins. Co., No. C95-01176 FMS, 1996 WL 88814, at *1 (N.D.Cal. Feb.16, 1996), which relied on Snow to find that such language granted discretion.
In Bounds v. Bell Atlantic Enter., 32 F.3d 337, 339 (8th Cir.1994), the 8th Circuit similarly held that "adequate proof of loss" did not confer discretion. This was confirmed in the more recent case of Brown v. Seitz Foods, Inc., 140 F.3d 1198, 1199-1200 (8th Cir.1998), which involved the phrase "due ... proof of loss."
Additionally, clear decisions invoking de novo review were issued by district courts in the District of Massachusetts in Cleary v. Knapp Shoes Inc., 924 F.Supp. 309, 312 (D.Mass.1996) ("submit proof of loss"); the Southern District of New York in Sarosy v. Metropolitan Life Ins. Co., No. 94-CIV 5431(SHS), 1996 WL 426387, at *1 (S.D.N.Y. July 30, 1996) ("written proof of loss"); and the Western District of Virginia in Ayers, 955 F.Supp. at 53 ("due written proof of loss").
In the 4th Circuit case of Quesinberry v. Life Ins. Co., 987 F.2d 1017, 1020-22 (4th Cir.1993), the court noted that both parties conceded that de novo review applied to language stating that the claimant must in accord with terms of the policy "file proof of loss."
The primary authority to the contrary appears to be the 7th Circuit's holding in Patterson v. Caterpillar Inc., 70 F.3d 503, 505 (7th Cir.1995), although the language there could be considered a bit stronger than in our case, in that the plan stated that the claimant must file "such due proof as shall be ... required." Feeling themselves bound by Patterson, district courts in the 7th Circuit have held similarly. See Bollenbacher v. Helena Chem. Co., 926 F.Supp. 781, 786 (N.D.Ind.1996) ("when the company receives proof"); Infantino v. Waste Management, Inc., 980 F.Supp. 262, 266 (N.D.Ill.1997) (provide "proof" of disability). However, even within the 7th Circuit, in the case of Lehmann v. UNUM Life Ins. Co., 916 F.Supp. 897 (E.D.Wis.1996), the district court for the Eastern District of Wisconsin held that "satisfactory proof" did not confer discretionary review.
In fact, the Caldwell case, from the District of Kansas, is the only clear holding from
Thus, based both on the ordinary rules of English and the large preponderance of authority from other federal courts, we should hold that the language in Aetna's policy does not grant to Aetna the type of discretion required by Firestone. I therefore respectfully dissent.