Susan Jones v. Life Ins. Co. of N. Am.

• Court: Court of Appeals for the Ninth Circuit
• Decided: November 17, 2017
• Docket: 16-16172
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 17 2017 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

SUSAN RENE JONES, No. 16-16172

Plaintiff-Appellant, D.C. No. 5:08-cv-03971-RMW

v. MEMORANDUM* LIFE INSURANCE COMPANY OF NORTH AMERICA; et al.,

Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California Ronald M. Whyte, District Judge, Presiding

Submitted November 14, 2017** San Francisco, California

Before: GOULD and MURGUIA, Circuit Judges, and GRITZNER,*** District Judge.

Plaintiff-Appellant Susan Rene Jones appeals the district court’s summary

* 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 James E. Gritzner, United States District Judge for the Southern District of Iowa, sitting by designation. judgment decision in favor of Defendant-Appellees Merck Sharp & Dohme, Merck

& Co., Inc., Long Term Disability Plan MSD Medical, Dental, and Long Term

Disability Plan, and Life Insurance Company of North America. Jones previously

worked for Merck & Co., Inc. (now known as Merck Sharp & Dohme Corp.)

(“Merck”) until 2001. Under Merck’s self-funded welfare benefit plan, Jones was

entitled to long-term disability (“LTD”) benefits, which she began receiving in

2001. The issue for the Court is whether the district court properly upheld Merck’s

claim administrator’s decision that Jones’ LTD benefits were offset by the

dependent social security benefits (“DSSDI”) she began receiving in 2009.

The Court reviews the “district court’s decision on coverage provided by” an

Employee Retirement Income Security ACT (“ERISA”) plan de novo. Harlick v.

Blue Shield, 686 F.3d 699, 706 (2012). As part of its de novo review, the Court

must determine whether the district court correctly reviewed the plan

administrator’s denial of benefits. Typically, when a district court reviews an

ERISA plan administrator’s denial of benefits, the default standard of review is de

novo. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). However,

if the plan confers discretionary authority to the claim administrator, the standard

of review shifts to abuse of discretion. Abatie v. Alta Health & Life Ins. Co., 458

F.3d 955, 963 (9th Cir. 2006).

Here, the district court correctly determined that Merck’s welfare benefit

2 plan confers discretionary authority to the claim administrator Life Insurance

Company of North America (“LINA”) because the plan documents in place when

Jones first began receiving LTD benefits, and the plan documents in place during

her appeal, both confer the claim administrator with discretionary authority.

Therefore, the district court correctly applied the abuse of discretion standard in

reviewing LINA’s decision. See Id.

“Under the abuse of discretion standard, an administrator’s denial of benefits

must be upheld ‘if it is based upon a reasonable interpretation of the plan’s terms

and if it was made in good faith.’” Moyle v. Liberty Mut. Ret. Benefit Plan, 823

F.3d 948, 957–58 (9th Cir. 2016) (citation omitted). Here, the relevant plan

provision states: “Any benefit payable under the Plan shall be reduced by: (i)

Social Security Benefits, effective at the time the Participant becomes entitled to

benefits.” Despite Jones’ assertions to the contrary, LINA’s determination that the

offset provision applied to Jones’ DSSDI benefits when she began receiving the

DSSDI benefits in 2009 is based on a reasonable interpretation of the plain

language of the plan in effect at that time. See Boyd v. Bert Bell/Pete Rozelle NFL

Players Ret. Plan, 410 F.3d 1173, 1178 (9th Cir. 2005)

(“An ERISA administrator abuses its discretion only if it (1) renders a decision

without explanation, (2) construes provisions of the plan in a way that conflicts

with the plain language of the plan, or (3) relies on clearly erroneous findings of

3 fact.”). Because LINA construed the plan provision consistent with its plain

language and did not otherwise abuse its discretion, the district court properly

upheld LINA’s decision that Jones’ LTD benefits were offset by her DSSDI

benefits.1

Jones also contends that the offset provision is void under California

Insurance Code § 10127.15. Section 10127.15 provides:

Any provision contained in a policy of disability insurance or a self-insured employee welfare benefit plan for a reduction of loss of time benefits during a benefit period because of an increase in benefits payable under the federal Social Security Act, as amended, shall be null and void with respect to any such increase which occurs on or after the effective date of this section.

However, ERISA preempts § 10127.15. See 29 U.S.C. § 1144(a) (“any and all

State laws insofar as they may now or hereafter relate to any employee benefit

plan” are superseded by ERISA, subject to exceptions not relevant here).

Therefore, Merck’s offset provision is not barred by § 10127.15.

Jones also contends that she is entitled to penalties under 29 U.S.C. § 1132

because Defendant-Appellees failed to timely provide her with a complete

administrative record. Section 1132(c) states that “any administrator . . . who fails

1 Jones contends that the statute of limitations bars LINA’s application of the plan’s offset provision to her LTD benefits. However, there is no authority to support Jones’ argument. Defendant-Appellees have not brought any claims against Jones. Jones filed this lawsuit seeking reinstatement of her LTD benefits without the DSSDI offset.

4 or refuses to comply with a request for any information” which the administrator is

statutorily required to produce, may be required to pay penalties. However,

Defendant-Appellees were not statutorily required to provide Jones with a

complete administrative record. The statute only requires the administrator to

provide, upon request, a copy of the latest updated summary plan description, and

the latest annual report, any terminal report, the bargaining agreement, trust

agreement, contract, or other instruments under which the plan is established or

operated. 29 U.S.C. § 1024(b)(4). The administrative record is not a document that

Defendant-Appellees statutorily were required to produce. Therefore, Jones is not

entitled to penalties under 29 U.S.C. § 1132.

Lastly, Jones contends that she should be able to add MetLife as an

additional defendant. The question of whether to allow a party to amend a pleading

after a responsive pleading has been filed is left to the trial court’s discretion.

Gabrielson v. Montgomery Ward & Co., 785 F.2d 762, 765 (9th Cir. 1986). Here,

the district court denied Jones’ motion to amend her pleadings to add MetLife

because LINA replaced MetLife as the claims administrator, and MetLife no

longer has authority to resolve Jones’ claims or pay Jones benefits. No evidence in

the record supports Jones’ claim that the district court abused its discretion by

denying her motion to add MetLife as a defendant. Therefore, Jones is not entitled

to add MetLife as a defendant at this point in the proceedings.

5 AFFIRMED.