Tolson v. Avondale Indust Inc ( 1998 )

REVISED, July 22, 1998
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 97-31029
GREGORY A. TOLSON,
Plaintiff-Appellant,
versus
AVONDALE INDUSTRIES, INC.,
AVONDALE INDUSTRIES, INC.,
SHIPYARDS DIVISION, AVONDALE
HEALTH PLAN AND AVONDALE
INDUSTRIES, INC., SHIPYARDS
DIVISION, GROUP INSURANCE PLAN,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Louisiana
June 3, 1998
Before WIENER, BARKSDALE and DEMOSS, Circuit Judges.
WIENER, Circuit Judge.
In appealing from the district court’s summary judgment that
dismissed his claims for medical and long-term disability benefits
under two ERISA1 plans sponsored by his employer, Plaintiff-
Appellant Gregory A. Tolson insists that the court erred in thus
rejecting his claims for benefits and for breach of fiduciary duty
as well as in assessing court costs against him. The thrust of
Tolson’s argument is that the costs of treatment for his depression
should have been covered by the Avondale Industries, Inc. Shipyards
Division Avondale Health Plan (the “AHP”), and that benefits for
the disability that resulted from such depression should have been
paid under the Avondale Industries, Inc. Shipyards Division Group
Insurance Plan (the “GIP”). Tolson argues that, despite the
express, unambiguous limitations on coverage of “mental and nervous
conditions” by these plans, he should nevertheless be covered
because his depression was secondary to or caused by his Hepatitis
C or by the Interferon treatment for that condition and was
therefore “unusual.” More particularly, Tolson insists that the
plan administrator for the AHP and the GIP (collectively, “the
Plans”) erred in its legal interpretation of the Plans’ provisions
and abused its discretion in denying Tolson benefits under the
Plans. According to Tolson, this occurred when the administrator
treated his depression as a mental or nervous condition or disorder
instead of recognizing that the Hepatitis C/Interferon-caused
depression fit a narrow exception that Tolson perceives this court
to have recognized in Lynd v. Reliance Standard Life Insurance
1
Employee Retirement Income Security Act of 1974, 29 U.S.C.
§ 1001 et seq.
2
Co..2 Tolson reads some dicta in Lynd to forecast the possibility
that some day there might be an unusual case in which treatment of
a mental disorder is necessitated by, and disability is caused by,
something other than the cause of most other kinds of debilitating
depressive conditions. And, of course, Tolson asserts that his is
that unusual case. Disagreeing with Tolson’s reading of Lynd, we
affirm the summary dismissal of Tolson’s action and the taxing of
costs to him.
2
94 F.3d 979 (5th Cir. 1996).
3
I
FACTS AND PROCEEDINGS
Despite Tolson’s insistence to the contrary, the material
facts of this case are undisputed. Tolson was employed by Avondale
from 1981 through April 1987 and was a participant in and a
qualified beneficiary of the Plans. He was diagnosed in December
1994 by Dr. Robert Perillo, a liver specialist at New Orleans’
Ochsner Clinic and an approved medical provider under the AHP, as
having “moderate chronic Hepatitis C, with mild but definite
chronic active component.” Tolson was successfully treated by
Dr. Perillo in an experimental program using Interferon-Alpha 2a,
and the AHP paid for all eligible medical charges and prescription
drugs. The following May, Tolson applied to the GIP for weekly
disability benefits on the basis of a statement from Dr. Perillo
that Tolson suffered “Interferon-induced adverse effects (insomnia,
fatigue) causing temporary disability.” Following the GIP’s
approval of his application, Tolson started receiving weekly
disability benefits. In August 1995, Tolson applied to the GIP for
long-term disability benefits based on his chronic Hepatitis C.
Four days later Tolson was released by Dr. Perillo to return to
work. Even though the physician’s statement said that Tolson was
not totally disabled, he was approved for long-term benefits for 21
days, being the number of days between the end of his 90-day
elimination period and the date of his return to work. Tolson
received no other long-term disability benefits under the GIP.
4
The recommencement of Tolson’s work was unremarkable until
March 1996, when Dr. Gerald Heintz, a psychiatrist with Ochsner to
whom Tolson had been referred by Dr. Perillo, diagnosed Tolson as
suffering from “major depression” and treated him for that
condition. According to Tolson, his depression is a secondary
symptom resulting directly from his Hepatitis and the Interferon
treatment he received for it.
The following month, almost eight months after he had returned
to work from disability leave, Tolson quit his job. He blamed his
depression for his inability to continue working.
The entire documentation for each of the Plans is contained in
its Summary Plan Description (“SPD”); there are no separate trust
indentures. The AHP provides comprehensive health care benefits
for eligible employees and their beneficiaries, covering medical
costs incurred in conformity with that plan’s requirements. In the
AHP, coverage of treatment of mental conditions is limited as
follows:
a) Introduction:
Note in particular that covered treatment for Mental and
Nervous conditions or Substance Abuse will be provided
only by West Jefferson Behavioral Medicine Center
[”WJBMC”].
b) Benefit Limitations:
Note: Coverage for Mental and Nervous conditions is
provided ONLY by [WJBMC] and is subject to different
limitations, deductibles and co-payments.
c) Summary of Benefits:
5
In order that treatment for mental and nervous conditions
be covered by the [AHP], treatment must be pre-certified
and provided by [WJBMC]. There is no plan benefit for
services received from other sources.
Parallel provisions limiting coverage of disability by reason
of mental conditions under the GIP are as follows:
a) Weekly disability Benefits (Non-
Occupational) - Benefit Limitations
. . . .
Also, benefits will not be payable for disability because
of mental or nervous disorders unless hospitalized. If
hospitalized, then later discharged, benefits will not
continue beyond 30 days following discharge.
b) Long-Term Disability Benefits -
Benefit
Limitations
. . . .
Also, benefits will not be payable for disability because
of mental or nervous disorders, unless hospitalized. If
hospitalized, then later discharged, benefits will not
continue beyond 30 days following discharge.
Both plans establish an ERISA Review Committee (the “Committee”)
and endow the Committee with discretionary powers to interpret the
terms of the Plans and to evaluate claims for benefits. Among
other things, those provisions specify that the Committee has “sole
and exclusive discretion and power to grant and/or deny any and
all claims for benefits, and construe any and all issues of Plan
interpretation and/or facts or issues relating to eligibility for
benefits.” “All findings, decisions, and/or determinations of any
type made by the [Committee] shall not be disturbed unless the
[Committee] act(s) in an arbitrary and/or capricious manner or
6
abuses the discretion and powers conferred by the Plan’s sponsor.”
After he quit working, Tolson claimed coverage of his
treatment for a “major depressive disorder” and sought disability
benefits on that basis as well. As no part of Tolson’s treatment
for depression took place at WJMBC, the plan administrator for the
AHP denied his claim for psychological treatment. Similarly, his
application to the GIP for long-term disability benefits was denied
because he was never hospitalized for his depression. An
additional road block to Tolson’s coverage is the fact that Dr.
Heintz is not on the list of approved referral providers.3
Tolson’s claim for coverage of psychological treatment was denied
because it was not pre-certified and none of it was provided by
WJBMC. Likewise, his claim for disability benefits was denied
because he was never hospitalized for his nervous or mental
condition. The Plans classified Tolson’s claims as stemming from
a distinct and separate “mental or nervous disorder or condition,”
terms that, Tolson notes, are not defined in the Plans. He
appealed the denial of his claim, but the Committee unanimously
upheld denial.
Tolson sued in March 1997, alleging wrongful denial of
3
Tolson attempts to skirt the problem of having been treated
by a non-approved referral provider, first by urging that his
referral to Dr. Heintz by Dr. Perillo should be sufficient and,
second, by stating that the original administrative record does not
contain a list of approved referral providers, the latter
contention being countered by the Plans which point out that the
subject list was presented to the court in an exhibit to their
reply brief.
7
benefits or, in the alternative, breach of the fiduciary duty to
avoid misrepresenting the terms of available coverage. His
complaint asserted that he was improperly denied payment of medical
claims in connection with his treatment for depression under the
AHP, and was improperly denied payment of disability benefits under
the GIP. He grounded his alternative breach of fiduciary claim in
the alleged misrepresentation of the terms of the Plans, both of
which are employee welfare benefit plans governed by ERISA.
After some preliminary procedural skirmishing, which included
the Plans’ filing a motion to dismiss and Tolson’s amendment of his
complaint, the defendants filed a motion for summary judgment, and
Tolson filed an opposition. Shortly thereafter, the district court
granted the Plans’ motion and entered judgment dismissing Tolson’s
claims and assessing costs to him. Tolson filed a motion for
review of the taxation of costs which the court denied. Tolson
timely filed a notice of appeal.
II
ANALYSIS
A. Standard of Review
All grants of summary judgment are reviewed de novo.4
“Whether the district court employed the appropriate standard in
reviewing an eligibility determination made by an ERISA plan
4
FDIC v. Myers, 955 F.2d 348, 349 (5th Cir. 1992).
8
administrator is a question of law.”5 “Therefore, we review the
district court’s decision de novo.”6 When an ERISA plan vests its
administrator or fiduciary with discretionary authority to
determine eligibility for benefits or to construe the terms or the
plan, or both, our standard of review is abuse of discretion.7
There is no question but that the language of the AHP and GIP vests
their plan administrator with such authority.
The district court found that the Plans’ language vested the
plan administrator with sufficient discretion to make abuse of
discretion the appropriate standard for reviewing the Committee’s
denial of Tolson’s claims for benefits. The district court applied
the de novo standard to reviewing Tolson’s breach of fiduciary
claim.
B. Plan Interpretation
In Wildbur v. ARCO Chemical Co., we set forth the appropriate
two-step methodology for testing the plan administrator’s
interpretation of the plan for abuse of discretion:
First, a court must determine the legally correct
interpretation of the plan. If the administrator did not
give the plan the legally correct interpretation, the
5
Lynd, 94 F.3d 979, 980-81 (citing Chevron Chem. Co. v. Oil,
Chem. & Atomic Workers Local Union 4-447, 47 F.3d 139, 142 (5th
Cir. 1995)).
6
Id. at 981.
7
Wildbur v. ARCO Chem. Co., 974 F.2d 631, 636 (5th Cir.),
modified, 979 F.2d 1013 (1992). See also Firestone Tire & Rubber
Co. v. Bruch, 489 U.S. 101, 113-17, 109 S. Ct. 948, 956-57, 103 L.
Ed. 2d 80 (1989).
9
court must then determine whether the administrator’s
decision was an abuse of discretion. In answering [this]
question, . . . a court must consider:
(1) whether the administrator has given
the plan a uniform construction,
(2) whether the interpretation is
consistent with a fair reading of
the plan, and
(3) any unanticipated costs resulting
from different interpretations of
the plan.8
Only if the court determines that the administrator did not give
the legally correct interpretation, must the court then determine
whether the administrator’s decision was an abuse of discretion.9
We need not proceed to the second step of the Wildbur analysis to
search for abuse of discretion if we determine in applying the
first step that the plan administrator’s legal interpretation of
the plan provisions is correct.10
Like the district court before us, we conclude that the plan
administrator correctly interpreted the pertinent provisions of the
Plans. The first element of the first Wilbur step—— uniformity of
construction —— is neutral here, as the applicable provisions of
the Plans have not previously been interpreted in light of claims
8
Wildbur, 974 F.2d at 637-38 (citing Jordan v. Cameron Iron
Works, Inc., 900 F.2d 53, 56 (5th Cir.), cert. denied, 498 U.S.
939, 111 S. Ct. 344, 112 L. Ed. 2d 308 (1990) (internal citation
omitted).
9
Id.
10
Chevron, 47 F.3d at 146.
10
like Tolson’s.
The second element of the first step of Wildbur —— a fair
reading of the plan —— clearly favors the administrator of the
Plans. Under the AHP, medical costs for the treatment of “mental
and nervous conditions” are covered only if they are (1) pre-
certified, and (2) provided by WJBMC. Under the GIP, neither
weekly nor long-term disability benefits are payable unless the
participant or beneficiary is hospitalized, and even then benefits
continue for only 30 days following discharge from the hospital.
Thus, the Wildbur “fair reading” element is met by the Committee’s
determination that AHP limits coverage for mental and nervous
conditions to pre-certified treatment at WJBMC and that GIP limits
disability payments on account of such disorders or conditions to
those for which hospitalization is required. Tolson does not claim
to have complied with these prerequisites.
The third element of the first step of Wildbur likewise favors
the administrator: Any variance from the interpretation placed on
the provisions in the Plans by the Committee would be likely to
produce costs not anticipated by the Plans. All costs of covering
treatment provided by others than WJMBC and all costs of disability
payments to non-hospitalized participants would produce costs not
anticipated by the Plans.
Clearly, then, the legal interpretation of the terms of the
Plans by the Committee passes the first step of the Wildbur test ——
11
“legally correct interpretation of the plan”11 —— with flying
colors. Inasmuch as the administrator made the legally correct
interpretation, we are not compelled to proceed to the second step
of Wildbur to determine whether the administrator’s denial of
benefits was an abuse of discretion12 because under a correct
interpretation “no abuse of discretion could have occurred.”13
We infer that, despite his argument, Tolson is not really
disagreeing with the legal interpretation of the Committee that
coverage of treatment costs for nervous or mental disorders are
predicated on pre-certification and treatment at WJBMC, and that
payments for long-term disability caused by such disorders are
predicated on hospitalization. Rather, we understand Tolson’s
argument to be that payments for the treatment of his “unusual”
kind of depression and benefits for his “unusual” disability do not
properly come within the undefined terms “mental and nervous
conditions” or “mental or nervous disorders,” as used respectively
in the AHP and the GIP, because his depression is secondary to and
caused by his hepatitis and the treatment of it with Interferon.
Tolson would have us conclude that his depression is part and
parcel of his hepatitis and its Interferon treatment, and thus
should not be restricted by the coverage limitations for mental or
11
Wildbur, 974 F.2d at 637-38.
12
Id.
13
Spacek v. Maritime Ass’n, ILA Pension Plan, 134 F.3d 283,
292 (5th Cir. 1998).
12
nervous disorders or conditions. He contends that, for purposes of
the Plans, his treatment for depression and his depression-caused
disability should receive the same coverage as is afforded to his
hepatitis. It is for this proposition that he relies on Lynd as
creating a narrow exception for those instances —— such as his ——
when a traditional mental or nervous disorder is not a mental or
nervous disorder within the intendment of the Plans. This reliance
is badly misplaced.
In Lynd, we expressly held that depression is a “mental
disorder,” irrespective of its physical causes or symptoms. As
noted earlier, we cannot read the holding in Lynd —— even its dicta
—— to admit of a situation (and Tolson claims that his is such a
situation) that would be a narrow exception to the universal
conclusion that depression is a mental disorder or nervous
condition. Try as we may, we can discern no such proposition in
the Lynd opinion.
Indeed, we concluded in Lynd that the appropriate standard for
interpreting ERISA plan terminology is its ordinary meaning, not
specialized meanings. 14 We have already noted that here the SPDs
are the only substantive plan documents. And, SPDs are required by
law to be couched in ordinary, conversational language that is
understandable by lay participants. This realization explains not
14
Lynd, 94 F.3d at 983 (quoting Brewer v. Lincoln Nat’l Life
Ins. Co., 921 F.2d 150, 154 (8th Cir. 1990), cert. denied, 501
U.S. 1238, 111 S. Ct. 2872, 115 L. Ed. 2d 1038 (1991)).
13
only the absence of definitions of the terms at issue here but also
the propriety of the Committee’s implicit conclusion that, in the
contemplation of the Plans, Tolson’s depression is a mental or
nervous condition or disorder.
In discussing the physical symptoms of mental disabilities in
Lynd, we stated:
If we begin with the premise that the cause of a
disability is “mental” —— and the Eighth and Ninth
Circuits, as well as the American Psychiatric
Association, characterize “depression” as a “mental”
disorder —— then to find that a disability falls outside
of the term “mental disorder” (as used in an ERISA plan)
because the disability has “physical” symptoms would
render the term “mental disorder” obsolete in this
context. As the ERISA plan in the instant case pointedly
refers to “mental or nervous disorders,” it would be
inappropriate to effectively collapse the term “mental
disorder” to include only those illnesses, if any exist,
which have no “physical” manifestations.15
The converse is equally true: Simply because a medical problem and
an ensuing disability are produced by depression (a stereotypical
mental condition or disorder) that is itself the product of a
pathological disease (Hepatitis) or of the medication used to treat
such a disease (Interferon), the fact is not altered that the
depression is and remains a mental disorder or condition. It
follows inescapably that (1) coverage of the costs of treating that
depression, like treating of any depression, is subject to the pre-
certification and WJBMC limitations of the AHP, and (2) payment of
benefits for disability produced by that depression, like
15
Id. at 984.
14
disability produced by any nervous or mental disorder, is subject
to the hospitalization limitations of the GIP.
Again, as the Committee satisfied the first step of the
Wildbur test by making the legally correct interpretation of the
Plan, we never reach the second, abuse of discretion step. A
determination that a plan administrator’s interpretation is legally
correct pretermits the possibility of abuse of discretion.16
C. Breach of Fiduciary Duty
Tolson’s efforts to justify assertion of breach of a fiduciary
duty claim against the Plans by distinguishing such a claim from
his claims for coverage and benefits claims are woefully
unavailing. If they are distinctions at all, they are without
differences. This was succinctly and correctly explained by the
district court:
Because Tolson has adequate redress for disavowed claims
through his right to bring suit pursuant to section
1132(a)(1), he has no claim for breach of fiduciary duty
under section 1132(a)(3). Section 1132(a)(2) allows a
beneficiary to bring a standard breach of fiduciary duty
suit for the benefit of the subject plan. Massachusetts
Mut. Life Ins. Co. v. Russell, 105 S. Ct. 3085 (1985).
In Varity Corp. v. Howe, 116 S. Ct. 1065 (1996), the
Supreme Court interpreted section 1132(a)(3) to allow
plaintiffs to sue for breach of fiduciary duty for
personal recovery when no other appropriate equitable
relief is available. Because Tolson has adequate relief
available for the alleged improper denial of benefits
through his right to sue the Plans directly under section
1132(a)(1), relief through the application of Section
1132(a)(3) would be inappropriate.
Unlike the plaintiffs in Varity, Tolson was the
16
Spacek, 134 F.3d at 292.
15
beneficiary of two viable plans whom [sic] he had
standing to sue and did sue. Further, both Plans are
viable and before the Court. Because this relief was
available and, indeed, utilized, it would be
inappropriate for the Court to fashion any further
equitable relief under Section 1132(a)(3). The simple
fact that Tolson did not prevail on his claim under
section 1132(a)(1) does not make his alternative claim
under section 1132(a)(3) viable.17
No purpose would be served by discussing this issue further.
The district court’s analysis is accurate and clear, so we adopt it
as our own.18
D. Costs
The district court rejected Tolson’s motion to review and
reverse taxation of costs. The court observed that F.R.C.P. 54(d)
contemplates that costs will be allowed to the prevailing party as
a matter of course unless the court directs otherwise. The Plans
were the prevailing parties and the court did not “otherwise
direct,” so the Clerk of Court properly taxed costs to Tolson as a
matter of course.
In particular, Tolson objects to the Plans’ seeking
17
The district court relied in part —— correctly, we conclude
—— on Wald v. Southwestern Bell Corp. Customcare Medical Plan,
83 F.3d 1002 (8th Cir. 1996) (determining that plaintiff failed to
state a cause of action for breach of fiduciary duty in reviewing
claim as she sought no different relief than that available under
claim for benefits under another section of ERISA).
18
We have also carefully considered the other issues and
assignments of error that Tolson ascribes to the rulings of the
district court by reviewing counsel’s appellate brief and hearing
his arguments to the court, including his complaints regarding the
court’s grant of summary judgment and its rulings on discovery. It
suffices that we discern no reversible error in any of the rulings
of the district court.
16
reimbursement of the costs of reproducing the whole administrative
record, insisting that the entire record was not necessary for
summary judgment disposition. Tolson also advances equitable
arguments, contending that his suit was neither frivolous nor
instituted in bad faith because his novel contention is,
essentially, res nova. He also pleads financial inability to pay.
We agree with the Plans’ contention that the taxing of costs
was routine and appropriate here. Given the burgeoning
jurisprudence in this circuit and elsewhere concerning the extreme
deference that courts must give to plan administrators vested with
discretionary authority to interpret plans and to award or deny
benefits, Tolson’s self-proclaimed res nova argument is more
correctly seen as specious sophistry, approaching frivolousness.
Indeed, plan participants and beneficiaries who continue to mount
attacks such as Tolson’s in the face of such an established body of
law may well find themselves assessed with much more than court
costs. Be that as it may, it suffices here that, as we do not
reverse a district court’s taxation of costs in the absence of
clear abuse of discretion,19 we will not disturb that assessment
against Tolson.
19
Louisiana Power & Light Co. v. Kellstrom, 50 F.3d 319, 334
(5th Cir.), cert. denied, 516 U.S. 862, 116 S. Ct. 173, 113
L. Ed. 2d 113 (1995).
17
III
CONCLUSION
For the foregoing reasons we hold that the legal
interpretation of the pertinent language of the Plans by the plan
administrator was correct, ending the need to continue our review,
(albeit the plan administrator’s determination that Tolson’s
depression was subject to the Plans’ provisions limiting coverage
of nervous or mental conditions or disorders was neither incorrect
nor an abuse of discretion). We also hold that the district court
correctly dismissed Tolson’s breach of fiduciary duty claims and
did not abuse its discretion in taxing costs to Tolson. For
essentially the same reasons, we assess costs of this appeal to
Tolson and caution him —— and future ERISA plan participants and
beneficiaries similarly situated —— that fomenting and prosecuting
litigation of this ilk in the face of plan provisions vesting
administrators with discretion to interpret provisions of ERISA
plans and entitlement to benefits under such plans, could result in
sanctions more stringent than mere assessment of costs, including,
without limitation, attorneys’ fees and double costs under F.R.A.P.
38 for frivolously appealing adverse dispositions of the district
court. The judgment of the district court is
AFFIRMED at appellant’s cost.
18