Collins v. American Cast Iron Pipe Co. , 105 F.3d 1368 ( 1997 )

United States Court of Appeals,
Eleventh Circuit.
No. 96-6072.
Gregory COLLINS, Plaintiff-Appellee,
v.
AMERICAN CAST IRON PIPE COMPANY, a corporation, and American Cast
Iron Pipe Company Pension Plan, a devined benefit pension plan,
Defendants-Appellants.
Feb. 18, 1997.
Appeal from the United States District Court for the Northern
District of Alabama. (No. 95-PT-1323-S), Robert B. Propst, Judge.
Before TJOFLAT and DUBINA, Circuit Judges, and STAGG*, Senior
District Judge.
DUBINA, Circuit Judge:
In the district court, Plaintiff/Appellee Gregory Collins
("Collins") challenged Defendant/Appellant American Cast Iron Pipe
Company's ("ACIPCO") calculation of his benefits under ACIPCO's
ERISA1-governed pension plan ("the Plan"). Based upon the parties'
stipulation of undisputed facts, the district court entered
judgment in favor of Collins. ACIPCO and the Plan then perfected
this appeal. For the reasons that follow, we reverse.
I. BACKGROUND
Collins was an ACIPCO employee and a participant in the Plan,
which is self-funded and administered by ACIPCO. After Collins was
seriously injured on the job in 1987, ACIPCO began paying him
worker's compensation benefits. Three years later Collins retired
*
Honorable Tom Stagg, Senior U.S. District Judge for the
Western District of Louisiana, sitting by designation.
1
Employee Retirement Income Security Act of 1974, 29 U.S.C.
§§ 1001 et seq.
on disability and began drawing pension benefits. ACIPCO then
terminated his worker's compensation checks. Collins hired an
attorney to sue ACIPCO over his worker's compensation benefits and
agreed to pay the attorney 15% of any recovery plus reasonable
expenses. Collins and ACIPCO settled the worker's compensation
suit for $79,000, and ACIPCO tendered a check in that amount
payable to Collins and his attorney. Collins received $64,091.33
of the settlement, and his attorney received $14,908.67. Two years
later, ACIPCO notified Collins that, in accordance with the Plan,
it would begin reducing his pension payments "by the amounts
received for worker's compensation disability benefits." R2-17,
Exh. A. The relevant Plan provision is as follows:
Adjustment to Benefits. Notwithstanding the provisions of
this Plan, in the event that a Participant who is receiving a
pension hereunder is or becomes eligible for a disability
benefit under the Alabama Workmen's Compensation Law, as
amended, the amount of such pension shall be reduced by the
Workmen's Compensation benefit payable to such Participant in
accordance with such rules and regulations as may be adopted
by the Employer.2
R2-13, Exh. B, § 5.9 (emphasis added). Collins testified that he
never received nor requested a copy of the Plan. However, he
concedes that he received two copies of the Summary Plan
Description ("SPD"), which addresses this issue in two places.
First, under the heading "Disability Retirement Pension," the SPD
states: "The amount of the Disability Retirement Pension will be
reduced by any benefit that the disabled employee receives under
the Alabama Workmen's Compensation Law." R2-13, Exh. C at 3
(emphasis added). A different section of the SPD elaborates:
2
ACIPCO never adopted any clarifying rules and regulations.
"Workmen's Compensation Deductions. If a participant is or becomes
eligible for a disability benefit under the Alabama Workmen's
Compensation Law, the amount of the basic benefit will be reduced
by the Workmen's Compensation benefit payable to the participant."
Id. at 4 (emphasis added).
Collins does not contest the reduction of his pension benefits
to offset his worker's compensation settlement; rather, he argues
that the offset should not include the 15% of the settlement that
he paid to his worker's compensation attorney. Thus, this dispute
is about who pays the attorney's fees: Collins or the Plan.
II. STANDARD OF REVIEW
Because this appeal presents a purely legal question, our
review of the district court's decision is plenary. Ardestani v.
United States Dep't of Justice, 904 F.2d 1505, 1508 (11th
Cir.1990), aff'd, 502 U.S. 129, 112 S. Ct. 515, 116 L. Ed. 2d 496
(1991).
III. DISCUSSION
The first step in reviewing the benefits decision of an ERISA
plan administrator is determining whether the administrator's
interpretation of the Plan was legally correct. See Lee v. Blue
Cross/Blue Shield of Ala., 10 F.3d 1547, 1550 (11th Cir.1994);
Brown v. Blue Cross & Blue Shield of Ala., 898 F.2d 1556, 1566 n.
12 (11th Cir.1990), cert. denied, 498 U.S. 1040, 111 S. Ct. 712, 112
L. Ed. 2d 701 (1991). If the administrator's interpretation was
correct, then the inquiry ends. If the administrator's
interpretation was incorrect, we may still uphold it if the plan
grants the administrator the authority to construe plan provisions
and the administrator's decision was not arbitrary and capricious.
Godfrey v. BellSouth Telecommunications, Inc., 89 F.3d 755, 757
(11th Cir.1996); Florence Nightingale Nursing Service, Inc. v.
Blue Cross/Blue Shield of Ala., 41 F.3d 1476, 1481 (11th Cir.),
cert. denied, --- U.S. ----, 115 S. Ct. 2002, 131 L. Ed. 2d 1003
(1995). The arbitrary and capricious standard is "a range, not a
point." Brown, 898 F.2d at 1559, quoting Van Boxel v. Journal Co.
Employees' Pension Trust, 836 F.2d 1048, 1052-53 (7th Cir.1987).
Disinterested, impartial administrators are entitled to the
greatest deference. Administrators with a conflict of interest
receive less deference. Brown, 898 F.2d at 1564.
Based upon our review of the record, we conclude that
ACIPCO's interpretation of the Plan was correct. The operative
Plan provision states that pension benefits "shall be reduced by
the Workmen's Compensation benefit payable to such Participant."
R2-13, Exh. B, § 5.9 (emphasis added). The parties' dispute
centers on whether "payable to" refers to the entire amount of the
settlement benefit or just the $64,091.33 that Collins ultimately
received. ACIPCO issued one settlement check for $79,000 payable
jointly to Collins and his attorney. Collins signed the check over
to his attorney for deposit in an escrow account. Thus, Collins
exercised control over the funds before counsel deducted his fee.
Under these circumstances, the entire $79,000 benefit was payable
to Collins and, according to the plain language of the Plan, could
be deducted from his pension benefits.
Collins contends that the Plan is ambiguous; therefore,
under the rule of contra proferentum, he argues we should construe
it in his favor. See Lee, 10 F.3d at 1551 (rule of contra
proferentum requires courts to construe ambiguities in ERISA plans
against the drafter). According to Collins, the ambiguity lies in
the different language used in the Plan and the SPD. Whereas the
Plan uses the "payable to" language, the SPD states in one part
that pension benefits will be reduced by any benefit the
participant "receives" under the worker's compensation law.
Collins argues that the language of the SPD should control, and
that ACIPCO should offset his Plan benefits only by the amount of
the settlement which he ultimately pocketed. Assuming the wording
of the Plan differs materially from the wording of the SPD, the
trouble with Collins' argument is that Collins admitted he did not
read the SPD until after he filed this lawsuit. "[T]o prevent an
employer from enforcing the terms of a plan that are inconsistent
with those of the plan summary, a beneficiary must prove reliance
on the summary." Branch v. G. Bernd Co., 955 F.2d 1574, 1579 (11th
Cir.1992). Collins is bound by the plain language of the Plan
because he did not rely upon the "receives" language in the SPD in
electing to file his worker's compensation suit.3
Collins also argues that ACIPCO's interpretation of the Plan
placed him in an untenable position because ACIPCO effectively
3
Collins cites Germany v. Operating Engineers Trust Fund of
Washington, D.C., 789 F. Supp. 1165 (D.D.C.1992), but that case is
inapposite. In Germany, an injured participant in an ERISA plan
was asked to sign a subrogation agreement requiring him to
relinquish to the plan any recovery he got from a third party,
including money spent on attorney's fees and expenses. The
district court found the subrogation agreement invalid because it
was much broader in scope than the language in the plan summary.
Id. at 1172. The situation here is different because, among
other things, Collins did not rely on the SPD. Therefore, ACIPCO
is entitled to enforce the plain language of the Plan.
forced him to hire an attorney at his own expense to reinstate his
worker's compensation benefits. As a threshold matter, ACIPCO was
not required to contravene the plain language of the Plan to obtain
a fairer result for Collins. Moreover, we discern no unfairness in
ACIPCO's interpretation. Although Collins was entitled to pursue
his worker's compensation claim and to obtain legal representation
in that endeavor, he was not required to do so. Additionally,
under Alabama law, "the employee is to be entirely responsible for
the payment of attorney's fees" in worker's compensation cases.
Russell Coal Co. v. Williams, 550 So. 2d 1007, 1014
(Ala.Civ.App.1989), citing Ala.Code § 25-5-90 (1995). Thus, the
employee "must bear the whole [attorney's] fee out of compensation
awarded." Rush v. Heflin, 411 So. 2d 1295, 1297 (Ala.Civ.App.1982).
Collins' position—having to pay his worker's compensation attorney
out of his own pocket—is no more untenable than the position of any
worker's compensation plaintiff in Alabama.
Having determined that ACIPCO's interpretation of the Plan to
require recoupment of Collins' entire worker's compensation benefit
was correct, we need not address whether ACIPCO labored under a
conflict of interest.
IV. CONCLUSION
The plain language of the Plan permitted ACIPCO to reduce
Collins' pension benefits by the total amount of Collins' worker's
compensation settlement, including the portion Collins paid to his
worker's compensation attorney. The district court erred in
awarding judgment in favor of Collins. Accordingly, we reverse the
judgment of the district court and remand this case for further
proceedings consistent with this opinion.
REVERSED and REMANDED.