Sommer v. Prudential Ins Co , 138 F. App'x 426 ( 2005 )


Menu:
  •                                                                                                                            Opinions of the United
    2005 Decisions                                                                                                             States Court of Appeals
    for the Third Circuit
    7-5-2005
    Sommer v. Prudential Ins Co
    Precedential or Non-Precedential: Non-Precedential
    Docket No. 04-3434
    Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2005
    Recommended Citation
    "Sommer v. Prudential Ins Co" (2005). 2005 Decisions. Paper 903.
    http://digitalcommons.law.villanova.edu/thirdcircuit_2005/903
    This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
    University School of Law Digital Repository. It has been accepted for inclusion in 2005 Decisions by an authorized administrator of Villanova
    University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
    NOT PRECEDENTIAL
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    Case No: 04-3434
    PATRICIA M. SOMMER,
    Appellant
    v.
    PRUDENTIAL INSURANCE COMPANY OF AMERICA;
    AEGON INSURANCE GROUP
    f/k/a TRANSAMERICA CORP
    ________________
    On Appeal from the United States District Court
    for the District of New Jersey
    D.C. No. 03-2141
    District Judge: The Honorable Garrett E. Brown, Jr.
    ________________
    Submitted Pursuant to Third Circuit LAR 34.1
    July 1, 2005
    Before: NYGAARD, SMITH, and FISHER, Circuit Judges
    (Filed: July 5, 2005)
    ________________
    OPINION
    ________________
    SMITH, Circuit Judge.
    In this ERISA appeal, Patricia M. Sommer challenges the District Court’s grant of
    summary judgment that upheld the termination of Sommer’s long-term disability benefits
    (“LTD”) under the Transamerica Corporation Disability Plan (“the Plan”). Following the
    acquisition of Transamerica by AEGON, N.V., the AEGON welfare benefits committee
    (“the Committee”) succeeded the analogous Transamerica committee as the final appeals
    body determining benefits eligibility under the Plan. Because the District Court reviewed
    Sommer’s claim under the appropriate arbitrary and capricious standard and did not err as
    a matter of law, we will affirm.
    The District Court had jurisdiction based on 
    28 U.S.C. § 1331
     and 
    29 U.S.C. §1132
    , and we have jurisdiction under 
    28 U.S.C. § 1291
    . Our review over the District
    Court’s grant of summary judgment is plenary. Skretvedt v. E. I. DuPont de Nemours &
    Co., 
    268 F.3d 167
    , 173-74 (3d Cir. 2001). Summary judgment is proper “if the pleadings,
    depositions, answers to interrogatories, and admissions on file, together with affidavits, if
    any, show that there is no genuine issue as to any material fact and the moving party is
    entitled to judgment as a matter of law.” F. R. Civ. P 56(c).
    The pertinent facts are discussed at length in the District Court’s opinion, and
    because we write solely for the parties, we proceed directly to our analysis.
    Sommer’s first contention is that the District Court failed to recognize that the
    Committee operated under a conflict of interest when it denied Sommer’s claim for
    continued LTD benefits. Thus, Sommer maintains that the District Court erred when it
    reviewed the Committee’s determination under the deferential arbitrary and capricious
    standard. In Sommer’s view, the decision-making process was infected by a conflict of
    interest in that the Committee had final decision-making authority over benefits eligibility
    2
    that were paid from a trust funded in large part by a related entity, Transamerica. To
    account for this supposed conflict, Sommer maintains the District Court should have
    calibrated the deference owed the Committee’s determination according to the sliding
    scale this Court announced in Pinto v. Reliance Standard Life Ins. Co., 
    214 F. 3d 377
    , 392
    (3d Cir. 2000).
    Though in its otherwise thorough opinion the District Court could have been more
    explicit in explaining why Pinto’s sliding scale is inapplicable to this case, the summary
    judgment transcript, to which the District Court referred in footnote 5 of its opinion,
    contains a sound discussion of why the Committee was not operating under a conflict of
    interest. In Pinto, this Court acknowledged conflicts of interest inhere when an insurer
    both administers and funds a benefits plan such that any payments operate as debits from
    the insurer’s bottom line. Pinto, 
    214 F. 3d at 378-79
    . Here, by contrast, at oral argument
    the District Court properly noted that the eligibility determination was insulated from the
    source of the funds because under the Plan all benefits payments made to plan
    participants are made from a trust established solely for that purpose and which the
    corporation itself could not tap for other uses. The District Court explicitly rejected
    Sommer’s argument here – that AEGON’s desire to protect the trust fund gave rise to a
    conflict cognizable under Pinto.
    I think [Sommer’s] logic would really rule out the arbitrary
    and capricious standard in all ERISA cases, or a substantial
    quantity, where we do have the independent fund here. ... We
    have a trust fund here. We don’t have the general corporate
    3
    assets of either the employer or of the administrator. The
    basis for a heightened standard does not apply here.
    We agree with the reasoning of the District Court. The Plan, as iterated in the
    Summary Plan Description, vests the administration and interpretation of the Plan,
    including eligibility determinations, with the Committee. This stated discretion triggers
    the arbitrary and capricious standard of review, Firestone v. Bruch, 
    489 U.S. 101
    , 115
    (1989), which light scrutiny will be intensified only if there is good reason to suspect self-
    dealing on the part of the decisionmaker. Pinto, 
    214 F.3d at 386-87
    .
    The Plan further states that “all contributions” to the Plan “shall be deposited in
    the Trust Fund,” and that, save for reasonable administrative costs, “at no time shall any
    assets of the Trust Fund be used for, or diverted to, purposes other than for the exclusive
    benefit of Covered Participants, and other persons receiving or entitled to receive benefits
    or payments” under the Plan. In all important respects, the plan under review here is
    identical to the one at issue in Abnathya v. Hoffman-LaRoche, Inc., 
    2 F.3d 40
     (3d Cir.
    1993), as is Sommer’s argument for a more penetrating review of the denial of her LTD
    claim, which we rejected in that case.
    Abnathya argued that there was an inherent conflict of interest requiring
    heightened judicial scrutiny where the employer, Hoffman, both funded the LTD plan
    with fixed contributions and made eligibility determinations. Importantly, Hoffman’s
    contributions were paid into a trust established to provide moneys “for the exclusive
    benefit of Members under th[e] Plan or for the payment of expenses of the Plan and the
    4
    Fund.” 
    Id.
     at 45 n.5. The Abnathya panel reasoned, “Although some degree of conflict
    inevitably exists where an employer acts as the administrator of its own employee benefits
    plan, the conflict here is not significant enough to require special attention or a more
    stringent standard of review under Firestone.” 
    Id.
    Sommer’s situation is identical to that of Abnathya, and accordingly, our review of
    the Committee’s decision is pursuant to the arbitrary and capricious standard. Under this
    deferential standard, we are “not free to substitute our own judgment” for that of the
    Committee, and we will overturn its decision only if it was “without reason, unsupported
    by the evidence or erroneous as a matter of law.” Martorana v. Board of Trs. of
    Steamfitters Local Union 420 Health, Welfare, and Pension Fund, 
    404 F.3d 797
    , 801 (3d
    Cir. 2005).
    We also disagree with Sommer’s second contention – that the Committee’s
    decision to terminate her LTD benefits cannot survive even deferential review. Under the
    arbitrary and capricious standard, the Committee acted well within the discretion
    accorded it by the Plan. The record reveals that what Sommer argues was a selective
    evaluation of her medical history is more accurately characterized as the Committee’s
    weighing of the evidence, which it was entitled to do under the Plan.
    Sommer also attempts to undermine the substantially similar opinions of Drs.
    Sawyer and Kaszubski – that with therapy Sommer could return to sedentary work – by
    noting that neither averred Sommer’s earnings would be at least 80% of her pre-disability
    5
    compensation, as the Plan requires to terminate LTD benefits after twenty-four months.
    Sommer’s strategy is misguided. Dr. Sawyer and Dr. Kaszubski were retained for their
    medical, not human resources, expertise. They were not obligated to apply their medical
    opinions to calculate Sommer’s earnings potential as a Transamerica employee limited to
    sedentary work. The Committee was entitled to rely on the doctors’ evaluations, and to
    extrapolate from them that Sommer could, with training and rehabilitation, become able
    to earn at least 80% of her pre-disability salary.
    Based on the foregoing discussion, we will affirm.