John Bickhart v. Carpenters Health and Welfare

• Court: Court of Appeals for the Third Circuit
• Decided: May 7, 2018
• Docket: 17-2834
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ____________

No. 17-2834 ____________

JOHN D. BICKHART, Appellant

v.

CARPENTERS HEALTH AND WELFARE FUND OF PHILADELPHIA AND VICINITY; THE BOARD OF ADMINISTRATION OF THE MEMBERS CARPENTERS HEALTH AND WELFARE FUND OF PHILADELPHIA AND VICINITY AND ITS INDIVIDUAL MEMBERS; EDWARD CORYELL; THOMAS BRESLIN; EDWARD CORYELL, JR.; MICHAEL HAND; MICHAEL MORROW; ROBERT NAUGHTON; JAMES R. DAVIS; FRANK BOYER; JOSEPH CLEARKIN; JACK HEALY; FRANK LUTTER; PHILIP RADOMSKI; PIOTR TONIA, Fund Coordinator and Coordinator of Benefit Funds for the Carpenters Health and Welfare Fund of Philadelphia and Vicinity ____________

On Appeal from the United States District Court for the Eastern District of Pennsylvania (E. D. Pa. No. 5-15-cv-05651) District Judge: Honorable Jeffrey L. Schmehl ____________

Submitted Pursuant to Third Circuit L.A.R. 34.1(a) April 10, 2018

Before: CHAGARES, VANASKIE and FISHER, Circuit Judges.

(Opinion Filed: May 7, 2018) ____________

OPINION* ____________

FISHER, Circuit Judge.

John D. Bickhart, a retired carpenter, had his medical benefits terminated by the

Carpenters Health and Welfare Fund of Philadelphia and Vicinity. Following exhaustion

of his administrative remedies, Bickhart sued, seeking reinstatement of his medical

benefits and monetary damages under the Employee Retirement Income Security Act of

1974 (ERISA), 29 U.S.C. § 1001, et seq. Following discovery, the District Court granted

summary judgment for the defendants. For the reasons that follow, we will affirm the

judgment of the District Court.

I

Bickhart retired as a carpenter in 2007 and began receiving a monthly pension as

well as medical benefits for him and his wife. The medical plan imposed severe

restrictions on post-retirement work. At the time, Section 3.04 of the plan provided that

all benefits would terminate if:

(a) The Retiree returns to work in any phase of the construction industry and works more than 40 hours in Covered Employment for which contributions to the Fund are required in a calendar month. (b) A Retiree works in the construction industry in work, which is not Covered Employment for one (1) or more hours in a calendar month.1

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. 2 Section 3.04 required retirees to report any post-retirement work to the Fund. The section

also authorized retirees to seek an advance determination of whether prospective

employment would trigger termination of benefits. If the work in question would lead to

termination, retirees could seek a limited waiver of the work restriction “in case of labor

need.”2

When Bickhart retired, he signed a form acknowledging his obligation to report

any post-retirement work to the Fund.3 Bickhart also received an annual notice in the

mail from 2009 to 2015 reiterating the work prohibition, explaining what kinds of work

would trigger termination, and detailing the process for seeking a waiver. In February

2008—roughly one year after his retirement—Bickhart petitioned the Fund for a

determination that his employment as a consultant for Turner Construction did not violate

the work prohibition. In the alternative, Bickhart requested a waiver to exceed the 40

hour per month limit. Bickhart’s request was denied by Edward Coryell, Sr., the

Executive Secretary-Treasurer/Business Manager of the Carpenters Regional Council and

Co-chair of the Fund’s Board of Administration. Bickhart then notified his employer that

he could not go back to work. Several months later, Turner Construction requested—and

1 App. 669. “Covered Employment” refers to work for an employer with a Union contract. Such employers are still required to make contributions for any hours worked by a retiree. 2 Id. 3 App. 535. This particular reporting obligation was specifically tied to the terms of Bickhart’s pension payments, not his medical plan. 3 received—a short, one-week waiver for Bickhart in August 2008, but two subsequent

requests by the company in September were denied. Bickhart did not request any further

waivers, nor did any employer acting on his behalf.

Each year from 2007 to 2014, Bickhart signed a declaration stating that he was in

compliance with all post-retirement work restrictions and continued to be entitled to

benefits. On each form, Bickhart indicated that he was unemployed.

In early 2009—following the 2008 recession and consequent contractions in the

construction industry—Section 3.04 was amended to eliminate the provision permitting

covered employment of less than 40 hours per month. As amended, Section 3.04

prohibited all post-retirement construction work of any kind or quantity. The waiver

provision remained unaltered. Advance notice of the change was sent to all active and

retired carpenters. The notice expressly cautioned that working even one hour a month

would jeopardize a retiree’s benefits and warned that terminated benefits would not be

restored.

In June 2015, a Carpenters Union agent observed Bickhart working at a

construction site for International Management Consultants, Inc.—a non-union

employer—and notified Coryell. Coryell, in turn, told Piotr Tonia, the Benefits

Coordinator for the Fund, whose job included making decisions regarding the termination

of retiree medical benefits. Shortly thereafter, Tonia terminated Bickhart’s medical

benefits and sent him a letter notifying him of this decision. The letter cited Section 3.04

4 as the basis for the determination and enclosed a copy of the pre-2009 version of the

provision. The letter also demanded payment of more than $21,000 for claims paid by the

Fund since Bickhart’s retirement. Tonia’s letter, which was labeled an initial

determination, informed Bickhart of his right to appeal to the Board of Administration.

Bickhart appealed, not contesting that he had violated the work prohibition, but instead

pledging to “never engage in work in the construction industry again.”4

As part of the appeal process, Bickhart provided his tax returns from 2010 to 2014,

which showed income from construction work ranging from $8,000 to $46,000 annually.

Tonia helped prepare a memo for the Appeal Committee recommending denial of

Bickhart’s appeal. The Appeal Committee, comprising voting members Coryell and

James Davis, endorsed Tonia’s recommendation. The matter was then forwarded to the

full Board of Administration, which adopted the recommendation of the Appeal

Committee. The Board informed Bickhart of its decision in writing, again referencing the

pre-2009 version of Section 3.04.

Bickhart filed suit in the Eastern District of Pennsylvania against the Fund, the

Board, each of the individual Board members, and Tonia. Bickhart’s complaint seeks

reinstatement of his retiree medical benefits and monetary damages of at least $21,000

pursuant to several ERISA provisions: 29 U.S.C. § 1102 (lack of specificity in employee

benefit plan), 29 U.S.C. § 1104 (breach of fiduciary duty), and 29 U.S.C. § 1132(a)(1)(B)

4 App. 519. 5 (enforcement of right to benefits). The defendants filed an answer,5 and following

discovery both parties moved for summary judgment. The District Court denied

Bickhart’s motion and granted the defendants’ motion. Bickhart timely appealed.

II

The District Court had jurisdiction under 29 U.S.C. § 1132(e). We have

jurisdiction under 28 U.S.C. § 1291. We review a grant of summary judgment under a

plenary standard.6 Summary judgment is appropriate when there are no genuine disputes

as to material facts and the moving party is entitled to judgment as a matter of law.7

III

Bickhart raises three principal arguments on appeal. First, he argues that he is

entitled to his retiree medical benefits under ERISA. Second, he argues that the District

Court erred in holding that Section 3.04’s waiver provision satisfies ERISA’s specificity

requirement. And third, he argues that the District Court erred in denying him equitable

relief stemming from Appellees’ alleged fiduciary breaches.

A. Claim for Benefits

Bickhart claims an entitlement to benefits under 29 U.S.C. § 1132(a)(1)(B), which

authorizes civil actions “to recover benefits due . . . under the terms of [a] plan.” In

evaluating Bickhart’s claim, the District Court first had to determine the appropriate

5 The defendants also filed, but eventually dismissed, a counter-claim for recovery of medical claims paid since Bickhart’s retirement. 6 Giles v. Kearney, 571 F.3d 318, 322 (3d Cir. 2009). 7 Id. 6 standard of review to apply to the Board of Administration’s termination decision. As we

review under a plenary standard, our task is the same.

When a participant challenges a denial of benefits under ERISA, the denial is

“reviewed under a de novo standard unless the benefit plan gives the administrator or

fiduciary discretionary authority to determine eligibility for benefits or to construe the

terms of the plan.”8 In the latter case, the decision is reviewed under an arbitrary and

capricious standard.9 Whether an administrator is empowered to wield such discretion

“depends upon the terms of the plan,”10 and while there are certainly phrases and

formulations that present a close call, this is not one of them. Section 5.10 states, in part,

that “[a]ny determination, interpretation, or construction by the Board of Administration

is final, conclusive and binding on all parties . . . to the maximum deference permitted by

law.”11 In interpreting these unmistakably clear terms, the District Court properly

concluded that the Board of Administration’s decision is entitled to the more deferential

arbitrary and capricious standard of review.

“An administrator’s decision is arbitrary and capricious if it is without reason,

8 Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). 9 Viera v. Life Ins. Co. of N. Am., 642 F.3d 407, 413 (3d Cir. 2011) (citing Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008)). 10 Luby v. Teamsters Health, Welfare, & Pension Tr. Funds, 944 F.2d 1176, 1180 (3d Cir. 1991). 11 App. 684–85. 7 unsupported by substantial evidence or erroneous as a matter of law.”12 The Board’s

decision here was supported not by merely substantial, but indeed overwhelming

evidence, a conclusion Bickhart leaves largely unassailed. Specifically, the Board had

evidence that Bickhart was caught working for a non-union employer, it had his tax

returns showing several years of disqualifying employment, and it had Bickhart’s own

admissions that he had been improperly working in the construction industry since his

retirement.

Bickhart raises two primary and nearly a dozen supplementary arguments against

the Board’s decision, but to no avail. First, Bickhart argues that Tonia, rather than the

Board, made the decision to terminate his benefits. This conflates Tonia’s initial

determination with the final decision rendered by the Board. When considering a benefits

determination under ERISA, we focus on the final, post-appeal decision.13 Second,

Bickhart argues that the Board’s decision is not entitled to any deference because both

Tonia and the Board relied on the pre-2009 version of Section 3.04, so neither

determination was based on the current plan language. Setting aside the question of

which version of Section 3.04 should apply in this case, it is sufficient to note that the

Board applied the language that is unquestionably more favorable to Bickhart in reaching

12 Miller v. Am. Airlines, Inc., 632 F.3d 837, 845 (3d Cir. 2011) (internal quotation marks omitted) (quoting Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 45 (3d Cir. 1993)). 13 Funk v. CIGNA Grp. Ins., 648 F.3d 182, 192 n.11 (3d Cir. 2011) (citing 29 C.F.R. § 2560.503-1(h)) abrogated on other grounds by Montanile v. Bd. of Trs. of Nat’l Elevator Indus. Health Benefit Plan, 136 S. Ct. 651 (2016). 8 its determination. Any error, therefore, was less than harmless.

Following these two arguments, Bickhart launches a fusillade of “due process”

objections to the Board’s decision. These arguments (eleven in total) range from the petty

to the absurd, e.g., that the Board failed to provide the basis for its decision, that the

Board failed to conduct a thorough investigation, and that the Board failed to articulate

the precise details of the disqualifying work performed by Bickhart. When a benefits

determination is supported by “an abundance of evidence,” even “procedural

irregularities” in the decision-making process cannot normally render an administrator’s

decision arbitrary and capricious.14 Here, Bickhart has not demonstrated any such

irregularities, but even assuming such a showing, the abundance of evidence in this

case—starting with his own admissions—would still foreclose a finding that the Board’s

decision was arbitrary and capricious.

B. ERISA’s Specificity Requirement

ERISA requires covered plans to “specify the basis on which payments are made

to and from the plan.”15 Bickhart claims that Section 3.04 is fatally ambiguous—thus

violating the specificity requirement—because it permits waivers of the work prohibition

for, in Bickhart’s view, “broadly characterized and undefined reasons.”16 Section 3.04(f)

provides, in part, that “[t]he Board of Administration, or one or more members on their

14 Miller, 632 F.3d at 846 (quoting Estate of Schwing v. The Lilly Health Plan, 562 F.3d 522, 526 (3d Cir. 2009)). 15 29 U.S.C. § 1102(b)(4). 16 Appellant Br. 47. 9 behalf, may waive the work rules on termination on the basis of labor need or other

considerations relevant to the purposes of the termination rules.”17 That this provision

contemplates discretion in the approval of waivers raises no concerns under ERISA. We

have consistently held that ERISA permits case-by-case benefits determinations so long

as the plan documents make this feature clear.18 But more importantly, neither Section

3.04(f)’s specificity nor its practical implementation are remotely relevant to Bickhart’s

case because he never so much as requested a waiver in the seven years that preceded the

termination of his benefits, during which time he was actively employed in the

construction industry. The terms of the plan make clear—and pellucidly so—that, absent

a waiver, the work Bickhart engaged in (confessedly and perennially) would result in

forfeiture of his benefits. At the very least, therefore, the terms of the plan satisfy

ERISA’s specificity requirement as applied to Bickhart.

C. Breach of Fiduciary Duty

Finally, Bickhart alleges that the Board of Administration, its members, and Tonia

violated ERISA’s standard of care for fiduciaries.19 At its core, this claim is

indistinguishable from the entitlement to benefits claim. It alleges nearly identical

misconduct—e.g., inadequate notice about the termination rule, insufficient investigation,

and inadequate justification—and seeks nearly identical relief—e.g., an injunction

17 App. 669. 18 Hamilton v. Air Jamaica, Ltd., 945 F.2d 74, 77–78 (3d Cir. 1991). 19 29 U.S.C. § 1104(a). 10 preventing the Board from enforcing its decision against Bickhart, restoration of

Bickhart’s benefits, and monetary damages. This Court is wary of fiduciary breach claims

under ERISA that, as here, are “actually [claims] based on denial of benefits under the

terms of [a] plan.”20 In such instances, the alleged fiduciary breaches are inseparable from

the claim for benefits, and do not afford a free-standing basis for relief.21 Bickhart’s claim

fits this description perfectly, so the District Court properly entered judgment in favor of

the Board and others for the same reasons as those justifying summary judgment on

Bickhart’s claim for benefits.22

IV

We will affirm the District Court’s judgment.

20 D’Amico v. CBS Corp., 297 F.3d 287, 291 (3d Cir. 2002). 21 Id.; see Varity Corp. v. Howe, 516 U.S. 489, 515 (1996) (describing equitable relief as not “appropriate” where Congress has otherwise provided adequate relief under ERISA). 22 The equitable relief sought in the First Amended Complaint focuses solely on Bickhart and his benefits. No doubt hoping to put some daylight between his fiduciary claim and his benefits claim, Bickhart now offers several ideas for more broadly applicable equitable relief, e.g., training for the Board, clarifications to the Retiree Booklet, etc. These efforts are in vain, however, as Bickhart’s complaint leaves no doubt as to the common core of the two claims. 11