John Del Gallego v. Wells Fargo & Co. Ltd Plan , 679 F. App'x 547 ( 2017 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 16 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN DEL GALLEGO, No. 15-15294
Plaintiff-Appellant, D.C. No. 3:13-cv-04518-VC
v.
MEMORANDUM*
WELLS FARGO & COMPANY LONG
TERM DISABILITY PLAN;
METROPOLITAN LIFE INSURANCE
COMPANY,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Vince G. Chhabria, District Judge, Presiding
Submitted February 14, 2017**
San Francisco, California
Before: SILER,*** TASHIMA, and HURWITZ, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Eugene E. Siler, Circuit Judge for the U.S. Court of
Appeals for the Sixth Circuit, sitting by designation.
In this ERISA action, John Del Gallego alleges that the Wells Fargo &
Company Long Term Disability Plan (the “Plan”) and the Plan insurer, Metropolitan
Life Insurance Company (“MetLife”), improperly offset Del Gallego’s permanent
partial disability workers’ compensation (“PPD”) benefits against his Plan long-term
disability benefits. The district court granted summary judgment to the Plan and
MetLife. We affirm.
1. The Plan, which incorporates a group Certificate of Insurance issued by
MetLife, provides that long-term disability benefits are “reduced by Other Income
Benefits.” The Plan definition of “Other Income Benefits” includes “Workers’
Compensation or a Similar Law,” and states that “[p]eriodic benefits and substitutes
and exchanges for periodic benefits will be counted.”
2. Courts interpret ERISA policy terms in the “ordinary and popular sense as
would a person of average intelligence and experience.” Babikian v. Paul Revere
Life Ins. Co., 63 F.3d 837, 840 (9th Cir. 1995) (quoting Evans v. Safeco Life Ins.
Co., 916 F.2d 1437, 1441 (9th Cir. 1990)). The plain language of the Plan provides
that a covered employee’s long-term disability benefits will be reduced by periodic
workers’ compensation benefits received by the employee, and the district court
therefore did not err in interpreting the Plan.
3. Del Gallego argues that “other income benefits” are only those paid to
compensate for lost wages, and therefore include only temporary disability
2
payments. But, the case upon which Del Gallego relies, Russell v. Bankers Life Co.,
120 Cal. Rptr. 627 (Ct. App. 1975), involved an insurance contract defining “income
from other sources” as “any payment . . . under a Workmen’s Compensation Act . . .
providing benefits for loss of time from employment.” Id. at 629-630, 633-34.
Because the Plan does not limit “Other Income Benefits” to those providing benefits
for loss of time from employment, Russell is inapposite.
4. Del Gallego argues that because the Plan requires proof of “the amount
attributable to lost income” when an employee receives “Other Income Benefits in
a lump sum instead of in monthly payments,” reductions must be limited to the
portion of the lump sum payment attributable to lost income. But, the provision he
cites only applies to lump sum payments, not to periodic benefits, and the Plan did
not set off the lump sum workers’ compensation settlement that Del Gallego
received against his Plan benefits.
5. Del Gallego also argues that the phrase “workers’ compensation” is
ambiguous because a reasonable person would not anticipate that payments
“intended to provide for the future of the injured worker” would be offset from
disability insurance benefits. But, the language of the Plan unambiguously covers
all workers’ compensation benefits. See Ott v. Workers’ Comp. Appeals Bd., 173
Cal. Rptr. 648, 650-51 (Ct. App. 1981) (finding no ambiguity when Plan stated
“payments required by Workmen’s Compensation Laws” offset Plan benefits); see
3
also Peterson v. Am. Life & Health Ins. Co., 48 F.3d 404, 411-12 (9th Cir. 1995)
(rejecting application of reasonable expectations doctrine when insurance policy was
“unambiguous and conspicuous”).
6. Del Gallego argues that, even if his weekly PPD benefits were for loss of
future earning capacity, these payments are not “income.” This argument is at odds
with precedent, see Jones & Laughlin Steel Corp v. Pfeifer, 462 U.S. 523, 533 (1983)
(describing impaired earning capacity as “diminution in…stream of income”), and
the Plan language, which defines workers’ compensation benefits as “Other
Income.”
7. Del Gallego argues that the term “periodic benefits” is facially ambiguous.
To the contrary, a “person of average intelligence and experience,” Babikian, 63
F.3d at 840 (quoting Evans, 916 F.2d at 1441), would understand “periodic benefits”
to include benefits paid in weekly increments. See Periodic, MERRIAM-
WEBSTER.COM (defining “periodic” as “occurring or recurring at regular intervals”).
And, because the Plan has specific language separately exempting lump sum
payments from the setoff, it is not possible to interpret “periodic payments” as
including a lump sum payment.
AFFIRMED.
4