Lois E. Marx v. Meridian Group, et al.

Lois Marx began working as a secretary for Meridian Bancorp, Inc. ("Meridian") in 1991. In January 1995, Marx requested a leave of absence on account of back pain

which she claimed affected her ability to sit or stand for extensive periods of time. With

the support of her treating physician, Dr. Mark Kender, Marx filed a claim for long-term

disability ("LTD") benefits with Defendants under the Meridian Bancorp, Inc. Long-Term

Disability Plan (the "Plan"), alleging an inability to work on account of the pain and the

depression it caused her.

The LTD Plan is an ERISA-regulated employee welfare benefit plan established

by Meridian. Under the Plan, the Administrative Services Committee of Meridian has

been designated as the "Plan Administrator," and is responsible for the day-to-day

operation and management of the Plan. See, Meridian Bancorp Long Term Disability

Plan, Art. I, 1.24.. Significantly, Meridian had entered into an Administrative Services

Agreement (the "Agreement") with Metropolitan Life Insurance Co. ("MetLife") to carry

out many of its responsibilities under the Plan. Generally, as the "Claim Administrator,"

MetLife was required to provide "claim adjudication services at the direction of the Plan

Administrator." Id., at 1.06.

To establish a claim for LTD under the Plan, a claimant must show that she is

unable to perform the duties of her own job. See, the Plan 1.32 (defining a Participant’s

’total disability’ as being "unable to engage in the material and substantial duties of his orher Regular Occupation immediately prior to the Date of Disability."). If a claimant can

establish disability under this standard, she may receive benefits during a two year

"Waiting Period." After the Waiting Period, a claimant’s eligibility is assessed under a

more stringent standard, one which requires her to demonstrate that she is unable "to

perform any occupation" for which she "is qualified or may reasonably become qualified

by training, education or experience."  1.32 & 1.03 of the Plan (defining ’Total

Disability’ and ’Any Occupation,’ respectively).

Marx succeeded in her claim to receive LTD benefits under the initial standard and

received benefits for the two year Waiting Period. During that time, Marx consulted other

doctors, underwent surgery for her back and took steps to establish a claim for permanent

disability benefits. For instance, she submitted medical records to the Plan Administrator,

received an independent medical examination and filed for Social Security Disability

Income ("SSDI"), all in accordance with the Plan’s requirements.

At the end of the Waiting Period, Defendants reevaluated Marx’s eligibility under

the more stringent standard of review and denied Marx’s benefits. Marx appealed this

determination and argued that SSA’s 1996 finding of total disability should have resulted

automatically in the same decision by Defendants. Marx also criticized the behavior of

Dr. O’Brien, the independent medical examiner and hence questioned the credibility of

his findings. Despite these arguments, Defendants upheld their decision on appeal.

On July 16, 1998, Marx, now represented by counsel, sought a third review of her

claim. Marx again argued that the SSA’s findings should have been conclusive. The

Claim Administrators, Metropolitan Life Insurance Company ("MetLife"), informed

Marx that she could submit additional medical evidence and Marx followed this

suggestion. However, on September 23, 1998, MetLife informed Marx that it would not

re-open her case.

On September 8, 1999, Marx filed a claim with the U.S. District Court for the

Eastern District of Pennsylvania under ERISA. See, 29 USC 1132(a)(1)(B) (authorizing,

inter alia, suits by a participant or beneficiary in an approved plan "to recover benefits

due to him under the terms of his plan"). After the completion of discovery, Defendants

filed for summary judgment.

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ERISA explicitly authorizes suits by a participant or beneficiary "to recover

benefits due to [her] under the terms of his plan, to enforce [her] rights under the terms of

the plan, or to clarify [her] rights to future benefits under the terms of the plan" See, 29

USC 1132(a)(1)(B). However, ERISA does not set out the standard of review for an

action brought by a plan participant under 1132(a)(1)(B). See, Mitchell v. Eastman

Kodak Co., 113 F.3d 433 (3d Cir 1997). Nevertheless, the Supreme Court has addressed

the question of the appropriate standard for actions challenging "denials of benefits based

on plan interpretations." See, Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989).

In Firestone, the Court held that "a denial of benefits challenged under 1132(a)(1)(B) is

to be 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." Id., at 115 [emphasis added]. This Court subsequently held that where

de novo review is inappropriate, an arbitrary and capricious standard should be applied in

evaluating a claim against a plan administrator for denial of benefits. See, Stoetzner v.

U.S. Steel Corp., 897 F2d 115, 119 (3d Cir. 1990); See also, Firestone, 489 US at 114

("[w]here the plan affords the administrator discretionary authority, the administrator’s

interpretation of the plan will not be disturbed if reasonable.") [emphasis added].

Therefore, we must determine whether the Plan granted discretionary authority to

MetLife to determine Marx’ eligibility for LTD benefits.

To determine the proper standard of review, we must begin with the language of
the plan. See, Luby v. Teamsters Health, Welfare & Pension Trust Funds, 944 F.2d

1176, 1180 (3d Cir. 1991) (instructing that "[w]hether a plan administrator’s exercise of

power is mandatory or discretionary depends upon the terms of the plan," and that "the

terms of the plan are construed without deferring to either party’s interpretation."); See

also, Firestone, 489 US at 115 ("the validity of a claim is likely to turn on the

interpretation of terms in the plan at issue"). The District Court below examined the

language of Meridian’s LTD Plan and found that the Plan "does not contain an [explicit]

grant of authority to MetLife."Marx v. Meridian, 2001 WL 706280, at *3. Nevertheless,

under ERISA, the discretion required to trigger the deferential arbitrary and capricious

standard of review need not be expressly stated in the plan, but can be implied from its

terms. See, Luby, 944 F.2d at 1180, quoting, Nobel v. Vitro Corp., 1180, 1187 (4th Cir.

1989) (no "magic words," such as "discretion is granted ...," need be expressly stated in

order for the plan to accord the administrator discretion to interpret plan terms and to hear

and decide disputes between persons alleging themselves to be beneficiaries, so long as

the plan on its face clearly grants such discretion). Accordingly, the District Court found

that certain provisions of the Plan, "taken together with the structure of MetLife’s

responsibilities,...suggest an almost unavoidable grant of [implicit] discretionary authority

by Meridian to MetLife," and therefore reviewed MetLife’s conclusions under an

arbitrary and capricious standard. Id. At oral argument, counsel for Meridian relied on

one specific provision in asserting that the terms of the Plan make it clear on its face that

Meridian had granted discretion to MetLife to determine eligibility for the Plan’s

participants. See, the Plan, 6.04(j) ("Upon request for review [of a denial of benefits] the

Plan Administrator will arrange and supervise a full review of the claim by the Claims

Administrator [MetLife], whose decision after such a review shall be final.") [emphasis

added].

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Click the case caption above for the full text of the Court's opinion.

Affirmed

Unavailable

Unavailable

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