Opinion
Civ. No. 03-4097 (RHK/AJB).
September 24, 2004
Christopher J. Dietzen and James M. Susag, Larkin Hoffman Daly Lindgren, Bloomington, Minnesota, for Plaintiff.
Brian L. Lindberg and Scott R. Carlson, Hinshaw Culbertson, Minneapolis, Minnesota, and Daniel K. Ryan, Hinshaw Culbertson, Chicago, Illinois, for Defendant.
MEMORANDUM OPINION AND ORDER
Introduction
Plaintiff Kimberly Bartodziej ("Bartodziej") has sued Defendant Life Insurance Company of North America ("LINA") alleging that it wrongfully reduced her long term disability ("LTD") benefits. LINA has moved for summary judgment on the grounds that it reduced Bartodziej's LTD benefits in accordance with the governing insurance policy. For the reasons expressed below, the Court will grant LINA's motion.
Bartodziej's Memorandum in Opposition states that it is "In Support of Summary Judgment to Plaintiff." (Mem. in Opp'n at 1.) Bartodziej has not, however, filed a summary judgment motion, and so only LINA's Motion is before the Court.
Background
On October 5, 2000, Bartodziej underwent surgery to remove a tumor from her brain. (Bartodziej Second Aff. ¶ 2.) While the removal of the tumor was successful, she has been plagued with complications from the procedure ever since. (Id. at ¶ 5.) Her symptoms include cognitive dysfunction, permanent loss of hearing, and "chronic excruciating pain on the left side of her face," which affects other areas of her head and neck. (Bartodziej Aff. ¶ 3.)At the time of her surgery Bartodziej worked for ADC Telecommunications ("ADC") as a Senior Account Specialist. (Id. at ¶ 2.) Before she underwent surgery, both Bartodziej and ADC believed that she would return to work after a short disability leave. (Bartodziej Second Aff. ¶ 4.) Because of the unanticipated complications stemming from the surgery, however, she has been unable to return to work. (Id. at ¶ 2.)
Since her surgery, Bartodziej has been receiving disability benefits through an insurance policy carried by ADC and issued by LINA ("the Policy"). In April 2001, Bartodziej applied for LTD benefits under the Policy and was approved for payments retroactive to April 2, 2001. (Bartodziej Second Aff. ¶ 6; Susag Aff. Ex. A at LINA 000295.) In June 2001, LINA discontinued Bartodziej's LTD benefits. (Id. at LINA 000239-000242.) After Bartodziej provided LINA with documentation of her continuing disability, her benefits were reinstated retroactively, and in October 2001 she received a lump sum payment for benefits covering June to October 2001 ("Lump Sum Payment"). (Id. at LINA 000129-000130.)
The LTD benefit start date of April 2, 2001 represents the end of the 180 day "Benefit Waiting Period" imposed on beneficiaries, and is defined as "the period of time an Employee must be continuously Disabled before Disability Benefits may be payable." (Susag Aff. Ex. A at LINA 000013,000295-000297.) From October 2000 through April 3, 2001, Bartodziej received short term disability benefits, which were referred to under the Policy as "Salary Continuation." (See Susag Aff. Ex. A at LINA 000120, 000311.)
The Policy provides that LTD benefits consist of a percentage of an insured's "Covered Earnings," paid on a monthly basis. (Susag Aff. Ex. A at LINA 000013-000014.) The term "Covered Earnings" is defined in the Policy as "an Employee's annual wage or salary as reported by the Employer for work performed for the Employer in effect just prior to the date Disability begins. . . . Any increase in an Employee's Covered Earnings will not be effective during a period of continuous Disability." (Id. at LINA 000013.) The Policy also provides that "[i]f benefits are overpaid, the Insurance Company has the right to recover the amount overpaid by either" requesting the repayment of the overpaid amount in a lump sum, or withholding amounts payable under the Policy. (Id. at LINA 000019.)
An employee is Disabled under the Policy if "she is unable to perform all the material duties of . . . her regular occupation. . . ." (Id. at LINA 000013.) On her application to LINA for LTD benefits, Bartodziej listed October 5, 2000 as the "date of accident or beginning of sickness" and as the date on which she became "totally disabled." (Id. at LINA 000310.) It is undisputed that she has not been able to perform any of the duties of her job at ADC since her brain surgery on October 5, 2000. (Bartodziej Second Aff. ¶ 7.)
She mistakenly wrote October 5, 2001 as the date on which she became "totally disabled;" the confusion between 2000 and 2001 occurs elsewhere in the record as well. (See, e.g., Mem. in Opp'n at 4, n. 1.)
The present dispute centers around which of two salary amounts should be used to calculate Bartodziej's LTD benefit payments. On September 29, 2000, her last day of work before surgery, Bartodziej earned $3,728.26 per month (her "Pre-Raise Salary"). In late September 2000 ADC informed her that she would be receiving a pay raise effective October 14, 2000, which would bring her monthly salary to $3,958.33 (her "Post-Raise Salary"). (Bartodziej Second Aff. ¶ 2, 3; Susag Aff. Ex. A at LINA 000101, 000116.) According to Bartodziej, she and ADC agreed that immediately following her October 5, 2000 surgery she would receive some vacation pay at her Pre-Raise Salary level and then would receive disability benefits calculated using her Post-Raise Salary. (See id. ¶ 3.)
Bartodziej's application for LTD benefits, filled out in part by an ADC human resources representative, lists her Post-Raise Salary as her "Basic Earnings." (Susag Aff. at LINA 000311.) Initially, LINA used the Post-Raise Salary to calculate Bartodziej's LTD benefits, both when she was paid month-to-month and when she received the Lump Sum Payment. (See Susag Aff. Ex. A at LINA 000297.) On March 29, 2002, however, LINA informed Bartodziej that her LTD benefit payments would be reduced because the use of the Post-Raise Salary to calculate her payments was incorrect under the Policy, and her Pre-Raise Salary would be used instead. (See id. at LINA 000147-000149.) Bartodziej was also informed that, as a consequence of this error, she had been overpaid, and would have to reimburse LINA or have her benefit payments withheld in the amount of the overpayment. (Id.) Bartodziej responded by refusing to acknowledge any overpayment, demanding that her benefits be reinstated at their previous amount, and eventually bringing the instant suit against LINA. (Id. at LINA 000103-000104, 000118-000119.)
Standard of Review
Summary judgment is proper if, drawing all reasonable inferences favorable to the nonmoving party, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986). The moving party bears the burden of showing that the material facts in the case are undisputed. See Celotex, 477 U.S. at 322; Mems v. City of St. Paul, Dep't of Fire Safety Servs., 224 F.3d 735, 738 (8th Cir. 2000). The court must view the evidence, and the inferences that may be reasonably drawn from it, in the light most favorable to the nonmoving party. See Graves v. Arkansas Dep't of Fin. Admin., 229 F.3d 721, 723 (8th Cir. 2000); Calvit v. Minneapolis Pub. Schs., 122 F.3d 1112, 1116 (8th Cir. 1997). The nonmoving party may not rest on mere allegations or denials, but must show through the presentation of admissible evidence that specific facts exist creating a genuine issue for trial. See Anderson, 477 U.S. at 256; Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995).
Analysis
According to Bartodziej, there are two reasons why she is entitled to continue receiving benefits calculated using her Post-Raise Salary: first, because she used vacation days after her surgery and before receiving disability benefits, her disability "onset date was after her vacation days were exhausted" and after her raise was implemented; and second, because her acceptance of the Lump Sum Payment constituted an accord and satisfaction, her benefits may not be recalculated. (Mem. in Opp'n at 5.) Before addressing Bartodziej's arguments, however, the Court must consider which standard of review to apply to LINA's decision to change the amount of her payments.
I. The De Novo Standard of Review Applies to LINA's Decision to Change the Amount of Bartodziej's Benefit Payments.
Neither party disputes that LINA's Policy is a welfare benefit plan under the Employee Retirement Income Security Act ("ERISA").See 29 U.S.C. § 1002(1). The standard of review governing benefits claims under an ERISA plan depends on whether the plan administrator has discretion under the Policy in making eligibility determinations. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). In Firestone, the Supreme Court held that courts should apply a de novo standard of review to eligibility determinations under ERISA plans "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. The Eighth Circuit has interpreted Firestone as requiring a more deferential standard of review "only if the Policy contains explicit discretion-granting language." Walke v. Group Long Term Disability Ins., 256 F.3d 835, 839 (8th Cir. 2001) (internal quotation omitted). In Walke, the court noted that "[i]t is relatively easy for an insurer to use unambiguous discretion-conferring language when its group policy will serve as an ERISA plan," and thus when that language is missing, "the presumption should be there was no intent to confer such discretion." Id. at 840.
Here, there is no such discretion-conferring language in the Policy. Neither party directs the Court to any language in the Policy indicating that LINA has discretion in awarding benefits. Nor has the Court found discretion-conferring language upon examination of the Policy. Thus, the Court will apply the de novo standard of review to LINA's decision to reduce Bartodziej's benefits. In considering Bartodziej's claims, the Court has considered the entire record and has not accorded deference to LINA's decision.
II. Under the Policy, Bartodziej is Limited to Benefits Calculated Using her Pre-Raise Salary.
Bartodziej first contends that she is entitled to receive benefits based on her Post-Raise Salary because her disability onset date occurred after she exhausted her vacation days, which was after her salary increase was effective. Her claim, however, must stem from the Policy in order to survive summary judgment. ERISA "does not mandate that employers provide any particular benefits" to employees. Shaw v. Delta Air Lines, 463 U.S. 85, 92 (1983). The Act is therefore aimed in part at "protect[ing] contractually defined benefits." Firestone, 489 U.S. at 113 (internal quotation omitted). Because ERISA "does not provide a right to benefits under . . . [a] plan," the court's focus is upon what "contractual commitment[s]" a given plan creates.Ravenscraft v. Hy-Vee Employee Benefit Plan and Trust, 85 F.3d 398, 401 (8th Cir. 1996). "When reviewing an ERISA plan de novo, [courts] interpret the terms of the plan by `giving the language its common and ordinary meaning as a reasonable person in the position of the [plan] participant . . . would have understood the words to mean.'" Adams v. Continental Cas. Co., 364 F.3d 952, 954 (8th Cir. 2004) (second alternation in original) (quoting Hughes v. 3M Retiree Med. Plan, 281 F.3d 786, 789-90 (8th Cir. 2002)). Under ERISA, LINA's Policy defines Bartodziej's right to LTD benefits. There is no dispute between the parties that she is entitled to LTD benefits — rather, the dispute hinges on which salary figure to use in calculating those benefits.
The Policy clearly provides that LTD benefits are calculated based on Bartodziej's monthly "Covered Earnings," which are determined based on her salary "in effect just prior to the date Disability begins." (Susag Aff. Ex. A at LINA 000013.) Under the Policy, and according to Bartodziej, October 5, 2000 is the date on which Bartodziej's disability began. And the parties agree that October 14, 2000 is the date on which her salary increase became effective. Thus, because it is clear from the common and ordinary meaning of the Policy language that salary increases subsequent to the date of disability will not affect the amount of disability payments, Bartodziej's Pre-Raise Salary constitutes her "Covered Earnings." (Id.) See also Adams, 364 F.3d at 954.
Despite the plain language of the Policy, Bartodziej contends that she had an agreement with ADC to use her vacation time immediately after her surgery and before her disability benefits commenced. (Mem. in Opp'n at 8.) Because of this agreement, Bartodziej maintains that her disability "onset date was after her vacation days were exhausted," and so her Post-Raise Salary should be used to calculate her benefits. (Mem. in Opp'n at 5.)
Bartodziej's evidence in support of her agreement with ADC is thin; it consists primarily of the following statement in her Second Affidavit:
Because ADC knew of my pending brain surgery, my compensation increase was made effective on October 14, 2000, although my last date of work was September 29, 2000. It was agreed between the parties that I would receive some vacation pay at my previous, lower rate of compensation and that my new higher rate of compensation would commence in line with what the parties believed would be a short-term absence. In short, ADC and I planned for the performance review, the compensation increase, the pending short-term leave of absence and the use of vacation pay as a payment method prior to the use of short-term disability benefits.
(Bartodziej Second Aff. ¶ 3.). Bartodziej also cites the LTD benefit form that was completed by an ADC human resources representative as support for the existence of an agreement. (Mem. in Opp'n at 8 (citing LINA 000311).) The form represents Bartodziej's Post-Raise Salary as her "Basic Earnings." There is, however, no evidence of an agreement anywhere on the form. At best, the form simply reflects that ADC gave Bartodziej a raise effective October 14, 2000, and that a human resources representative at ADC thought her LTD benefits would be calculated using the Post-Raise Salary level. As discussed below, however, the existence of an agreement between Bartodziej and ADC would not affect the outcome in this case.
Bartodziej also asserts that because she, her doctors, and ADC expected her to recover and return to work shortly after the surgery, "the date of her compensation increase is not even relevant because there was no established long-term disability in . . . October 2000." (Mem. in Opp'n at 9.) While the complications she suffers due to the surgery were not anticipated, there is no support for her argument that this in any way affects the date on which her Disability began under the Policy — which, in turn, determines her "Covered Earnings." There is no dispute that, though unanticipated, the complications she has suffered since October 5, 2000 have caused her to suffer a continuing disability under the Policy.
It is unclear, though, how this purported agreement could be given effect under the plain language of the Policy. Bartodziej does not point to any term in the Policy providing that the use of vacation days tolls the disability start date or otherwise alters the definition of "Covered Earnings." Nor can this Court, exercising de novo review, find any support in the Policy for the viability of this theory. Nothing in the Policy suggests that such an arrangement between Bartodziej and ADC would have any effect on the Policy's clear terms relating to LTD benefits.
Not only does the plain language of the Policy fail to support Bartodziej's claim, but her purported agreement with ADC could not have modified the Policy to toll the disability start date. The Policy precludes the enforcement of such an agreement. It states that "[t]he entire contract will be made up of the Policy, the application of the Policyholder, a copy of which is attached to the Policy, and the applications, if any, of the Employees." (Susag Aff. Ex. A at LINA 000024.) It further provides that "[n]o change in the Policy will be valid until approved by an executive officer of the Insurance Company. This approval must be endorsed on, or attached to, the Policy. No agent may change the Policy or waive any of its provisions." Id. There is nothing in the record to indicate that Bartodziej attempted to amend or change the Policy pursuant to its terms.
While Bartodziej did not present this argument in her brief to the Court, it was raised at oral argument.
Further, ERISA plans are required to be "established and maintained pursuant to a written instrument." 29 U.S.C. § 1102(a)(1). "The ERISA requirement that terms of a welfare benefits plan be committed to writing was intended to insure that employees could rely on the terms of the formal written plan provided to them without fear that unwritten, contrary terms would later surface." United Paperworkers Int'l Union v. Jefferson Smurfit Corp., 961 F.2d 1384, 1386 (8th Cir. 1992). Thus, "[c]ourts have interpreted § 1102(a)(1) to preclude oral modifications of or amendments to ERISA plans." Eide v. Grey Fox Tech. Servs. Corp., 329 F.3d 600, 606-07 (8th Cir. 2003) (citation omitted) (holding that "[o]ral statements are unenforceable under ERISA when they amend or supersede contradictory terms in an ERISA plan").
Bartodziej has not produced a written agreement, and she does not claim that her agreement with ADC was ever in writing. Because her purported agreement was not reduced to writing and incorporated into the Policy, it is not enforceable under ERISA. Eide, 329 F.3d at 606-07. As noted by the Seventh Circuit, "[h]avoc would ensue if [ERISA] plans meant different things for different participants, depending on what someone said to them years earlier." Frahm v. Equitable Life Assurance Soc'y of the United States, 137 F.3d 955, 960 (7th Cir. 1998).
Even if the agreement with ADC were in writing, Bartodziej's claim would fail. If an ERISA "plan, properly construed, does not afford the benefits at issue, they may not be added to the plan by implication from an `independent bilateral contract.'" Stearns v. NCR Corp., 297 F.3d 706, 710 (8th Cir. 2002).
III. Bartodziej's Accord and Satisfaction Argument is Without Merit.
Finally, Bartodziej argues that she is entitled to increased benefits under a theory of accord and satisfaction. She devotes the following one sentence to this argument: "LINA's agreement to reopen and reinstate Bartodziej's disability benefits was as a result of a resolution of a disputed claim between the parties and as such was an accord and satisfaction." (Mem. in Opp'n at 5.) Although she only cites her unverified Complaint in support, it appears that her claim is based upon letters exchanged between her attorneys and LINA employees. (Lodi Aff. Ex. D.) This correspondence pertained to the cancellation of Bartodziej's LTD benefits and led to the reinstatement of her benefits and the Lump Sum Payment.
"Under Minnesota law, accord and satisfaction acts to discharge a contract or cause of action." Weed v. Commissioner of Revenue, 550 N.W.2d 285, 288 (Minn. 1996). A cause of action is discharged "only if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim." Id. (internal quotation omitted) (emphasis in original). Generally, some expression making "it clear that [the payor] intended the check to be full payment . . . and that he recognized that [the payee] might dispute the amount" should be present. Lundeen v. Cozy Cab Mfg. Co., 179 N.W.2d 73, 75-76 (Minn. 1970).
Bartodziej has not presented any evidence of a "conspicuous statement" by LINA indicating that the Lump Sum Payment was in full satisfaction of a threatened claim. Weed, 550 N.W.2d at 288. Nor has she shown that LINA intended to settle any claims as to the amount of LTD benefits to which she was entitled. In fact, LINA was proceeding according to the Policy in response to Bartodziej's appeal of the discontinuance of her benefits. There is no evidence that LINA was responding to the threat of litigation in reopening Bartodziej's LTD benefits claim. There is similarly no indication that LINA intended to act outside of the Policy, which governs Bartodziej's LTD benefits. (See, e.g., Lodi Aff. Ex. D; Susag Aff. Ex. A at LINA 000053, 000057.) Based on the lack of support for Bartodziej's assertion that her acceptance of the Lump Sum Payment constituted an accord and satisfaction, her claim that LINA cannot correct its mistaken salary information is without merit.
Conclusion
Based on the foregoing, and all of the files, records, and proceedings herein, IT IS ORDERED that Defendant Life Insurance Company of North America's Motion for Summary Judgment (Doc. No. 11) is GRANTED, and Plaintiff Kimberly Bartodziej's Complaint (Doc. No. 1) is DISMISSED WITH PREJUDICE.
In view of the Court's resolution of Bartodziej's claims, her request for attorney's fees is denied as moot.
LET JUDGMENT BE ENTERED ACCORDINGLY.