Renfro v. Funky Door Long Term Disability Plan

686 F.3d 1044

12 Cal. Daily Op. Serv. 6675

2012 Daily Journal D.A.R. 8059

Jeff RENFRO, Plaintiff–Appellant,

v.The FUNKY DOOR LONG TERM DISABILITY PLAN and the ServiceMaster Long Term Disability Plan, Defendants–Appellees.

No. 11–15301.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 13, 2012.

Filed June 18, 2012.

Sharon Delfino Green, William Green (argued), Jennifer de la Campa, Delfino Green & Green, San Rafael, CA, for plaintiff-appellant Jeff Renfro.

Kevin Gill (argued) and Anna M. Martin, Rimac Martin, PC, Incline Village, NV, for defendants-appellees the Funky Door Long Term Disability Plan and the ServiceMaster Long Term Disability Plan.

Appeal from the United States District Court for the Northern District of California, Saundra B. Armstrong, District Judge, Presiding. D.C. No. 4:09–CV–02661–SBA.

Before: M. MARGARET McKEOWN and MILAN D. SMITH, JR., Circuit Judges, and BARBARA JACOBS ROTHSTEIN, Senior District Judge.^*

OPINION

M. SMITH, Circuit Judge:

Jeff Renfro is insured under two long-term disability plans administered by Unum Life Insurance Company (Unum), namely, the Funky Door Long Term Disability Plan (the FDP), and the ServiceMaster Long Term Disability Plan (the SMP) (the FDP and the SMP collectively, the Plans). Renfro sued the Plans when Unum decided to deduct his Social Security Disability Insurance (SSDI) benefit as deductible income under each plan, resulting in what he terms a “double offset.” On cross summary judgment motions, the district court granted summary judgment in favor of the Plans, found that Unum's interpretation of the Plans was not an abuse of discretion, and held that Renfro was not entitled to recovery under a theory of equitable estoppel. Renfro appeals the judgment of the district court. Because we find that Unum's decision was not an abuse of discretion, that the plain language of the Plans permits the deduction of the SSDI benefit from each plan, and that Renfro is not entitled to equitable estoppel, we affirm the district court's grant of summary judgment in favor of the Plans.

FACTUAL AND PROCEDURAL BACKGROUND

I. The Funky Door Plan

Renfro was employed since 2002 as a yoga instructor and department manager at Funky Door Yoga, and was covered under the FDP. After he suffered an injury to his right shoulder, Renfro tendered a disability claim to Unum under the FDP. Unum approved his claim.

As required under the FDP, Renfro filed an application for SSDI benefits, on March 11, 2005. The Social Security Administration (SSA) initially denied the claim but Renfro appealed the decision. On January 19, 2007, the SSA reversed its decision, and awarded Renfro benefits, along with retroactive payments extending back to June 1, 2005, the date it determined that Renfro became disabled under SSA rules. SSA's decision indicated that Renfro would receive a retroactive payment of $25,177.00.

After learning on February 26, 2007 of the SSA's approval of SSDI benefits for Renfro, Unum began deducting the SSDI award from the monthly payment under the FDP. In addition, because the SSDI retroactive payments overlapped with a period of time Unum had covered Renfro under the plan, Unum calculated an overpayment on the plan of $24,377.78, and requested reimbursement of that amount. On March 14, 2007, Unum sent Renfro another letter indicating that Renfro had not responded to its request for reimbursement of the overpayment, and stating that it would begin applying the full amount of his monthly payment under the FDP to the repayment of Unum's overpayment, until the overpayment was recovered in full.

II. The ServiceMaster Plan

In addition to working at Funky Door Yoga, Renfro was also employed at ServiceMaster, as a plumbing manager. At ServiceMaster, Renfro was covered under the SMP, which, coincidentally, was also administered by Unum. As he had done under the FDP, Renfro submitted a claim under the SMP. On August 25, 2005, Unum approved Renfro's SMP claim under a Reservation of Rights. Unum's SMP approval letter to Renfro stated that it would reduce the monthly gross benefit by the estimated SSDI amount of $1801.00.

On July 21, 2006, Unum concluded that Renfro no longer met the definition of disability under the SMP, and terminated his benefits. Renfro appealed this decision, and Unum reversed itself and reinstated his benefits under the SMP. As of this time, Renfro was still covered under the FDP, and had begun receiving SSDI benefits.

III. Handling of the SSDI Offset

On July 19, 2007, Renfro's attorney and a Unum representative engaged in a phone conversation regarding Renfro's claims. According to the following notes of the conversation taken by the Unum representative, the parties discussed the retroactive benefits due to Renfro on the SMP based on Unum's reversal of its previous decision, the overpayment Renfro owed Unum on the FDP, and how to handle the SSDI offset:

He asked about back pay and I advised based on our current considerations the back pay would be $51K. He asked if this was with offset, advised as the full offset is currently on the other file if all remains the way we are currently anticipating this would be the full back benefit with no further reduction for SSDI. Advised there is an overpayment on the other claim of $19297.78 that would need to be settled before payment and this would reduce payment to [sic] 31702.22. He asked if the paperwork could note the $51K from this claim with the payment being sent to him and a check for the [sic] 31702.22. Advised that he could drop us a note and that should not be a problem. He states he just wanted to know because the insured would have owed this on the other claim regardless of the outcome on this one.

Subsequently, Unum and Renfro's attorney exchanged two letters regarding their conversation. Unum confirmed that the overpayment from the FDP would be deducted from the retroactive benefits due under the SMP, per the phone conversation. Unum also confirmed that it would not seek an additional SSDI offset from the retroactive benefits but was “continuing to evaluate both claims for consideration of offsets going forward.”

On April 29, 2009, Unum sent Renfro a letter informing him of its final decision on how it would handle the offsets. In the letter, Unum explained its position that the SSDI offset was deductible under both Plans based on the contract language of both policies. However, Unum explained that because it had incorrectly calculated benefits on the SMP due to the SSDI offset, it would not seek to recover its overpayment, but would take the offset prospectively. Renfro wrote a letter to Unum objecting to the decision, and asking for a reversal of that decision. Unum rejected the appeal.

Subsequently, Renfro filed this lawsuit, seeking recovery of benefits that he alleges were wrongfully withheld, arising from Unum's deduction of the SSDI offset under both Plans. After the parties filed cross summary judgment motions, the district court handed down an order granting summary judgment in favor of the Plans. Renfro timely appeals the district court's decision.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291.

We review a district court's grant of a motion for summary judgment de novo. Bergt v. Ret. Plan for Pilots Employed by MarkAir, Inc., 293 F.3d 1139, 1142 (9th Cir.2002).

DISCUSSION

I. Deference Owed to the Plan Administrator's Decision

Before we reach the merits of Renfro's claims, we first consider the appropriate level of deference owed to the plan administrator's decision on how to treat the SSDI offset under the Plans. Renfro contends that we should not afford any deference to Unum's decision because Unum operates under a structural conflict of interest.

The standard for judicial review of benefit determinations by plan administrators of plans covered under the Employment Retirement Income Security Act of 1974 (ERISA) was prescribed by the Supreme Court in Firestone Tire & Rubber Company v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). The court set out the following principles: (1) we should be guided by the principles of trust law; (2) we should review decisions regarding plan benefits de novo unless the plan provides to the contrary; (3) the plan provides to the contrary if it grants the administrator “discretionary authority” to determine eligibility for benefits—requiring a more “deferential standard of review;” and (4) if the plan gives discretion, but the administrator operates under a conflict of interest, then “the conflict of interest must be weighed as a factor in determining whether there is an abuse of discretion.” Met. Life Ins. Co. v. Glenn, 554 U.S. 105, 110–11, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008) (citing Firestone, 489 U.S. at 111–15, 109 S.Ct. 948) (internal quotation marks omitted) (hereinafter MetLife ).

Thus, the standard of review of Unum's decisions turns mainly on whether discretionary authority is granted. If such discretionary authority is granted, then review is for abuse of discretion, and we may only overturn the decision if the administrator relied on “clearly erroneous findings of fact” in making the benefit determination. Taft v. Equitable LifeAssurance Soc., 9 F.3d 1469, 1473 (9th Cir.1993).

It is undisputed that both plans grant Unum discretionary authority:

DISCRETIONARY ACTS

In exercising its discretionary powers under the Plan, the Plan Administrator, and any designee (which shall include Unum as a claims fiduciary/will have the broadest discretion permissible under ERISA and any other applicable laws and its decisions will constitute final review of your claim by the Plan. Benefits under this Plan will be paid only if the Plan Administrator or its designee (including Unum), decides in its discretion that the applicant is entitled to them.

However, exactly how much discretion is afforded under the abuse of discretion standard for ERISA claims varies if a plan administrator faces a “structural...