Opinion
CIVIL ACTION NO. 99-30172-MAP.
November 27, 2001.
MEMORANDUM REGARDING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (Docket No. 35)
I. INTRODUCTION
This case presents claims for the wrongful denial of severance benefits under the Employee Retirement Income Security Act ("ERISA"), the Americans With Disabilities Act ("ADA"), and Mass. Gen. Laws ch. 151B ("Chapter 151B"). The plaintiff, Andrew Jorgensen ("Jorgensen") was an employee of defendant Massachusetts Mutual Life Insurance Company ("MassMutual"), and has been receiving Long-Term Disability benefits from MassMutual since February 24, 1999. The central issue is whether the circumstances of Jorgensen's termination entitle him to both Long-Term Disability benefits and severance benefits under the MassMutual Employee Severance Payment Plan (the "Plan").
Counts 1 through 3 have previously been dismissed. This memorandum addresses MassMutual's motion for summary judgment on the three remaining counts. For the reasons discussed below, the court will allow the defendants' motion for summary judgment on all remaining counts.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A "genuine" issue is one that reasonably could be resolved in favor of either party, and a "material" fact is one that affects the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). The court must view all the evidence in the light most favorable to the nonmoving party, "drawing all reasonable inferences in that party's favor." Thomas v. Eastman Kodak Co., 183 F.3d 38, 42 (1st Cir. 1999).
Once the moving party has asserted that no genuine issue of material fact exists, the burden is on the opposing party to point to specific facts demonstrating that there is, indeed, a trialworthy issue. National Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir. 1995). A "genuine" issue is one "that a reasonable jury could resolve . . . in favor of the nonmoving party." McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 315 (1st Cir. 1995). Not every genuine factual conflict, of course, necessitates a trial. "It is only when a disputed fact has the potential to change the outcome of the suit under the governing law if found favorably to the nonmovant that the materiality hurdle is cleared."Parrilla-Burgos v. Hernandez-Rivera, 108 F.3d 445, 448 (1st Cir. 1997) (citation omitted). At bottom, matters of law are for the court to decide at summary judgment. Blackie v. Maine, 75 F.3d 716, 721 (1st Cir. 1996).
III. FACTS AND PROCEEDINGS
The facts described below, when controverted, are cast in the light most favorable to Jorgensen, the non-moving party.
As noted above, Jorgensen was an employee of MassMutual. In January, 1998, Jorgensen was diagnosed with a brain tumor and had surgery. From January 20, 1998 until March 16, 1998, Jorgensen was absent from work and collecting his full salary through his Short-Term Disability policy. (Docket 37 at 3). Thereafter, he worked a reduced, four-day week, receiving a full salary by continuing to draw from his Short-Term Disability benefits one day a week, until November, 1998. Id.
On October 7, 1998, Jorgensen was told that his position would be eliminated on December 31, 1998. (Docket 37, Exhibit 6). Jorgensen had received this kind of notification once before on February 28, 1994, when he was informed that his position would be eliminated as of March 31, 1994. (Docket 37, Exhibit 2). That letter had notified Jorgensen that he could accept a job with a MassMutual subsidiary in Atlanta, Georgia, or apply for and receive his severance package as of March 31, 1994. Id. Jorgensen had found a third option, by seeking and obtaining an open position at MassMutual in Springfield, Massachusetts. Id. From this experience Jorgensen knew — and the undisputed facts clearly demonstrate — that at MassMutual a notice of position elimination was not equivalent to a termination.
The October 7, 1998 letter was similar to the February, 1994 notification. It informed Jorgensen that his position would be eliminated as of December 31, 1998, and that he had two options. (Docket 37, Exhibit 6). He could apply for other jobs within the company, or be terminated as of December 31, 1998. In the latter case he would be eligible for severance pay. Id.
An additional section of the October, 1998, letter informed Jorgensen that he could terminate his employment prior to December 31, 1998, and that MassMutual also reserved the right to terminate his employment prior to December 31, 1998. (Docket 37, Exhibit 6).
A document entitled "Benefit and Severance Overview" ("Overview") was attached to the October 7, 1998 letter. Id. It explained that under the "Position Elimination" provision of the Plan, Jorgensen would receive severance benefits. Id. Significantly, a sentence below this explanation stated that "[a]ssociates must remain employed until the actual termination date in order to be eligible to receive the severance payment." Id. Under "Short-Term Disability (STD)" the Overview explained that:
Coverage ends as of the termination date. However, if an associate is on STD on their termination date, STD benefits continue under the provisions of the STD program until the associate is released by their doctor or for a maximum of 26 weeks. If the STD benefit is exhausted, associates could then apply for coverage under the Long-Term Disability Plan. Employment is terminated when the STD is exhausted and the associate becomes eligible for severance pay and outplacement services (if applicable).
Docket 37, Exhibit 6 (emphasis added).
Jorgensen was unable to continue working until the December 31, 1998 date when his position was scheduled for elimination. Instead, he began receiving full-time, Short-Term Disability benefits on November 20, 1998, based upon the opinion of Jorgensen's physician that his health had declined to where he was "totally disabled" from doing his job or any other job. (Docket 37 at 4). Around this time, Jorgensen was told by a supervisor that he "should not come to work anymore." (Docket 43, Exhibit A). Jorgensen continued to receive his full salary through full-time, Short-Term Disability benefits until February 24, 1999. (Docket 43, Exhibit A at 2). Thus, as the Overview explained, Jorgensen's employment formally continued, though he was too ill actually to come to work, until the STD benefits were exhausted. Although Jorgensen argues that he was terminated on or before December 31, 1998, the discussion below shows that the only reasonable inference to be drawn from these facts is that Jorgensen's termination date was February 24, 1999.
Jorgensen initially elected to retire on November 30, 1998. (Docket 37, Exhibit 9). He filled out and submitted a "Retirement Election and Method of Payment" form asking that he begin to receive pension benefits on January 1, 1999. Id. However, Jorgensen subsequently changed his mind.
On December 17, 1998, Jorgensen met with several MassMutual representatives about his options. (Docket 37, Exhibit A at 64). At this meeting, Jorgensen received a memorandum that outlined these options. (Docket 37, Exhibit A at 76-77). The memorandum identified three choices:
Option 1, Remain on STD through February 24, 1999, and apply for Long-Term Disability benefits;
Option 2, Elect to retire now or at the end of the STD period; or
Option 3, Choose to terminate and not apply for Long-Term Disability or retirement.
The December 17, 1998 memorandum explained further that Jorgensen would be eligible for severance benefits under Option 2 and Option 3, but not under Option 1. (Docket 37, Exhibit 10). Under Option 1, the memorandum proclaimed (in bold and italics) that, if Jorgensen was approved for Long-Term Disability, he "would not be eligible to receive any payment under the MassMutual Employee Severance Plan." Id.
On the subject of termination, Option 1 clearly stated that Jorgensen "would be terminated at the end of [his] Short-Term Disability," and went on to describe the terms of the Long-Term Disability plan, which provided substantially greater benefits than the pension plan. Id. The last line of the December 17, 1998 memorandum said, "[p]lease notify me, in writing, if you wish to rescind your January 1, 1999, retirement election. I must receive this by December 29, 1998." Id.
On December 17, 1998, Jorgensen rescinded his election to retire, (Docket 37, exhibit 11), and on December 18, 1998, he applied for Long-Term Disability benefits. (Docket 37, Exhibit 12). In this application, Jorgensen stated that he was "totally disabled" from his job and any other work. Id.
While the Long-Term Disability benefits application was pending, December 31st came and went. Jorgensen did not believe that he was an "employee" after December 31, 1998, and felt he was treated differently after that date. (Docket 43, Exhibit A at 2-3). However, Jorgensen did continue to receive his full salary under the full-time, Short-Term Disability benefits package. (Docket 43, Exhibit A at 2).
On February 9, 1999, MassMutual sent Jorgensen a letter informing him that his claim for benefits under the Long-Term Disability Plan had been approved. (Docket 37, Exhibit 13). The letter stated that the long-term benefits would become effective February 25, 1999, Jorgensen would be paid $4,491.66 monthly, and payments would continue until Jorgensen was age 65 and eligible for retirement. Id. These payments did begin on February 25, 1999, docket 43, exhibit A at 2, and apparently have continued to this day. The letter also stated that "[t]his approval ends your status as an employee on February 24, 1999, the day your Short-Term Disability expired." (Docket 37, Exhibit 13).
Jorgensen filed for severance benefits on May 24, 1999. A letter dated August 13, 1999, denied his request, stating that because Jorgensen's termination was a "Disability Termination," Jorgensen was ineligible for benefits under the Severance Plan. (Docket 37, Exhibit 14). Jorgensen appealed on August 25, 1999. The appeal was denied October 25, 1999. (Docket 37, Exhibit 15).
Jorgensen filed suit against MassMutual and the Severance Plan (the "Defendants") in this court on August 3, 1999, asserting three state law causes of action in Counts 1 through 3 for breach of contract, violation of the covenant of good faith and fair dealing, and promissory estoppel. Count 4 alleged a violation of ERISA.
On August 3, 2000, this court allowed Defendants' motion to dismiss Counts 1 through 3, the state law claims, because they were preempted by ERISA. (Docket 22). In so doing, this court found that the Plan was an ERISA plan, and therefore was governed by federal law. Id. Jorgensen preserved his rights to challenge that ruling, but proceeded on the ERISA claim.
On November 29, 2000, Jorgensen moved to amend his complaint. (Docket 29). He proposed to add Count 5, alleging that MassMutual violated the Americans with Disabilities Act ("ADA") and Mass. Gen. Laws c. 151B ("Chapter 151B") by denying Jorgensen severance benefits because of his disability, and Count 6, alleging that the Severance Plan violated the ADA and Chapter 151B by denying Jorgensen severance benefits because of his disability. Id. The court allowed the motion to amend without opposition on January 29, 2001. Id. As noted, defendants have now moved for summary judgment on Counts 4, 5, and 6. (Docket 35).
IV. DISCUSSION A. ERISA Claim 1. Standard of Review
MassMutual's decision to deny severance benefits will be reviewed under the deferential "arbitrary and capricious" standard. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). This standard is functionally equivalent to review for "abuse of discretion," or "reasonableness." Pari Fasanov v. ITT Hartford Life Acc. Ins. Co., 230 F.3d 415, 419 (1st Cir. 2000). Put differently, the degree of reasonableness of the Plan Administrator's decision determines whether its action constituted an abuse of discretion.
In undertaking this review, the court will consider the fact that the defendants had a cognizable conflict of interest. The Plan Administrator is appointed to its position by MassMutual, and MassMutual sponsors the Plan. (Docket 37, Exhibit 18 at 5). Thus, "a finding of eligibility means that the insurer will have to pay benefits out of its own pocket." Pari Fasanov, 230 F.3d. at 418. However, this conflict of interest does not shift the standard of review in the First Circuit; it is merely a factor to be considered in the "arbitrary and capricious" analysis. Id. at 419.
2. The Merits
A review of the whole record reveals that, while there may be issues of disputed fact, none has "the potential to change the outcome of the suit." Parrilla-Burgos, 108 F.3d at 448. The undisputed facts would prevent any reasonable factfinder from concluding that the Plan Administrator's decision was an abuse of discretion, or "unreasonable." Therefore, summary judgment will be allowed as to the ERISA claim in Count 4.
As a threshold matter, the terms of the Plan are undisputed. Under the Plan, an employee is eligible for severance benefits
if the Employee has been Involuntarily Terminated from employment by the Employer as a result of Performance Release or Position Elimination . . . . Employees terminated for reasons other than Performance Release or Position Elimination shall not be entitled to and shall not receive Severance.
Docket 37, Exhibit 18 at 8 (emphasis added). Under the Severance Plan, a "Disability Termination" is an
Involuntary Termination initiated by the Employer when the Employee's Long-Term Disability claim has been accepted by the Employer. Disability Termination is not considered a Discharge, Performance Release, or Position Elimination.
Docket 37, Exhibit 18 at 7 (emphasis added). Jorgensen does not dispute that these are the terms of the Plan.
In view of these provisions, Jorgensen is forced to argue that it was an abuse of discretion for the Plan Administrator to view his termination as a Disability Termination, and not a Position Elimination Termination. To make this claim, Jorgensen must argue that it was arbitrary and capricious for the Plan Administrator to view Jorgensen's termination as a Disability Termination even when MassMutual was paying Jorgensen $4,491.66 every month, because it had accepted his application for Long-Term Disability benefits. Viewed in this context, Jorgensen's argument simply falls of its own weight. His receipt of Long-Term Disability benefits foreclosed the option of receiving severance benefits.
The Plan Administrator had clear and persuasive evidence to support its decision that Jorgensen's termination was a Disability Termination. First, the terms of the Plan itself indicate that when an employee's claim for Long-Term Disability is accepted, the employee suffers a Disability Termination. It is undisputed that Jorgensen's claim for Long-Term Disability was accepted, and that he has been receiving Long-Term Disability benefits since February, 1999. Thus, it was, at a minimum, "reasonable" for the Plan Administrator to conclude that Jorgensen's termination was a Disability Termination.
Second, Jorgensen was informed in writing, at the December 17, 1998, meeting that if he chose to rescind his retirement election and to apply for Long-Term Disability benefits under "Option 1," he would be ineligible for severance benefits. The same day, Jorgensen rescinded his retirement election. The next day, Jorgensen applied for Long-Term Disability benefits.
Third, the February 9, 1999 letter informing Jorgensen that his Long-Term Disability benefits claim was approved said "[t]his approval ends your status as an employee on February 24, 1999, the day your Short-Term Disability expired." (Docket 37, Exhibit 13). A "reasonable" Plan Administrator would interpret this letter to mean that Jorgensen's employment was terminated on February 24, 1999, as a result of MassMutual's acceptance of his Long-Term Disability claim.
Next, no reasonable factfinder could conclude that it was unreasonable, or an abuse of discretion, for the Plan Administrator to find that Jorgensen was not terminated on December 31, 1998. It is undisputed that Jorgensen was receiving full-time, Short-Term Disability benefits from November 20, 1998 to February 24, 1999. The Overview, under Short-Term Disability, or STD, stated clearly that "[e]mployment is terminated when the STD is exhausted." Further, the December 17, 1998 memorandum told Jorgensen that if he was approved for Long-Term Disability, "[he] would be terminated at the end of [his] Short Term Disability." (Docket 37, Exhibit 10). It is undisputed that Jorgensen's Short-Term Disability did not end on December 31, 1998. Therefore, it was reasonable for the Plan Administrator to find that Jorgensen was not terminated as of December 31, 1998. Given these facts and the record as a whole, it is clear that the Plan Administrator did not abuse its discretion by finding that Jorgensen's termination was a Disability Termination, rather than a Position Elimination Termination.
Admittedly, some ambiguous details in the record lend Jorgensen's claim some support. Jorgensen was told on October 7, 1998 that his position would be eliminated on December 31, 1998. Jorgensen's affidavit states that a supervisor told him he would not be an employee after December 31, 1998. Jorgensen was also told in November that he did not have to come to work anymore, and after December 31, 1998, Jorgensen felt he was treated differently.
In addition, the Overview said that "if an associate is on STD on their termination date, STD benefits continue under the provisions of the STD program until the associate is released by their doctor or for a maximum of 26 weeks." This sentence could be interpreted as implying that it was possible to receive STD benefits and not be an employee. These facts, taken together, lend some support to Jorgensen's contention that he was terminated on December 31, 1998, when his position was scheduled to be eliminated. And, it is undisputed that under the terms of the Plan, an employee who is terminated because of "Position Elimination" is eligible for severance benefits.
This interpretation of the quoted language is contradicted, as already noted, by language in the next sentence of the Overview stating clearly that "[e]mployment is terminated when the STD is exhausted." (Docket 37, Exhibit 6 at 5).
While these facts make Jorgensen's claim colorable, they do not, as the above analysis shows, render the Plan Administrator's decision arbitrary and capricious. If Jorgensen was told not to come to work, the Plan Administrator could reasonably conclude that this was inevitable once Jorgensen's doctor reported that Jorgensen was totally disabled from performing his job, or any other job. Given the clear language of the Plan and the chronology summarized above, Jorgensen's arguments amount to straws in the wind. No reasonable factfinder could conclude that the Plan Administrator was behaving unreasonably in declining to award Jorgensen severance benefits under the circumstances described above. Certainly no abuse of discretion occurred. The defendants are entitled to summary judgment as to Count 4.
B. ADA Claims 1. Discrimination
Against the ADA claim, defendants argue first that Jorgensen cannot show he was treated differently because of his disability, a fundamental element of any ADA claim. 42 U.S.C. § 12101 et seq. The inescapable facts of record make it clear that Jorgensen was denied severance benefits, not because he was disabled, but because he was approved for Long-Term Disability benefits. This was the explanation stated in the August 13, 1999 letter, (docket 37, exhibit 14), and there is not a scintilla of evidence in the record suggesting that this reason was pre-textual.
An employer does not violate the ADA by providing different benefits under service retirement plans and disability plans. See EEOC Notice No. 405:7291 at Docket 36, Exhibit 2. While the denial of severance pay based on an employee's termination for illness or injury may sometimes constitute a violation of the ADA, an employer does not violate the ADA by limiting severance plans to employees who are terminated because of reasons other than illness or injury. See EEOC Informal Opinion at Docket 36, Exhibit 1; see also Castellano v. City of New York, 142 F.3d 58, 71 ("nothing in the ADA requires an employer to provide to disabled employees the . . . benefits of a service plan in addition to freely-chosen disability benefits under a disability plan."). In sum, MassMutual is entitled to judgment as a matter of law on the ADA claim because Jorgensen cannot show that MassMutual's decision to deny him severance benefits was in any way discriminatory within the meaning of the ADA.
2. Not "Qualified Individual"
Defendants have offered a second reason for allowing summary judgment on the ADA claim. They point out that Jorgensen cannot qualify under the ADA because a "reasonable accommodation" would not help him. Under the ADA, only a "qualified individual" may bring suit. See, e.g., Weyer v. Twentieth Century Fox Film Corp., 198 F.3d 1104, 1108 (9th Cir. 2000). A person is only a "qualified individual" if he can perform the essential functions of his job with a reasonable accommodation. Id. Jorgensen has admitted that he could not do his job, even with a reasonable accommodation. (Docket 40, Exhibit 3). Therefore, he cannot bring suit under the ADA.
Jorgensen has two responses. First, he argues that there is a disputed issue of fact about when he was "totally disabled" and when the decision to deny him severance benefits was made. Jorgensen contends that there is evidence that he was capable of performing his job with a reasonable accommodation at least through November 20, 1998. Jorgensen also says that if the decision to deny him severance benefits was made before November 20, 1998, it violated the ADA.
That may be true as far as it goes, but no reasonable factfinder could conclude that the decision to deny Jorgensen severance benefits was made prior to November 20, 1998. On December 17, 1998, MassMutual effectively put the choice between severance benefits and Long-Term Disability benefits in Jorgensen's hands. Jorgensen himself chose to apply for long-term benefits on December 18, 1998. (Docket 37, Exhibit 12). Therefore, the decision to deny him severance benefits was not made before November 20, 1998. Of course, in one sense it might be argued that the decision was, in effect, made some time earlier because the terms of the Plan were placed in writing before November 20, 1998. However, Jorgensen has not argued, and could not argue, that the provisions of the Plan themselves violated the ADA.
Second, Jorgensen asks this court to find that even a totally disabled employee may sue his employer under the ADA, citing the Third Circuit's decision in Ford v. Schering-Plough Corp., 145 F.3d 601, 606 (3d Cir. 1996). This case is inapposite. In Ford, the Third Circuit noted that the ADA's definition of a "qualified individual" refers to one who is "currently able to work." Id. at 605. This definition may require a court to differentiate between one who is not able to work "currently" (i.e., at the time of the lawsuit) and one who was able to work at the time the employer refused to make a reasonable accommodation. The Third Circuit thus read a "temporal qualifier" into the ADA, and found that one who was unable to work at the time of the lawsuit could still sue under the ADA if he had been able to work at the time the accommodation was refused.Id. at 606. See also Castellano v. City of New York, 142 F.3d 58, 68 (2d Cir. 1998) (adopting same interpretation).
Even if this were controlling law in the First Circuit, the Ford holding obviously does not apply to Jorgensen's situation. Jorgensen was never denied a reasonable accommodation, and therefore cannot argue that he was able to work when the reasonable accommodation was refused. Moreover, he claimed to be totally disabled when the challenged decision was made. As noted, Jorgensen applied for severance benefits long after he applied for long-term benefits. Therefore, summary judgment will be allowed on the ADA claim because (1) Jorgensen cannot show that he was discriminated against because of his disability and (2) Jorgensen was not a "qualified individual" within the meaning of the ADA.
C. Chapter 151B
Finally, summary judgment will be allowed as to the Chapter 151B claims in Counts 5 and 6, because they are preempted by ERISA. The provisions of ERISA "supercede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a) (emphasis added). Because Jorgensen's 151B claim is for the improper denial of benefits under MassMutual's employee benefit plan, it obviously "relates to" an employee benefit plan and is preempted by ERISA.
It is true that some state law claims are exempt from ERISA preemption if they are a necessary part of a federal enforcement scheme under statutes like Title VII or the ADA. See Tompkins v. United Healthcare of New England, 203 F.3d 90, 96-97 (1st Cir. 2000). Therefore, for example, if Jorgensen's "state statutory claims targeted conduct unlawful under the ADA, those state claims would be exempt from ERISA preemption pursuant to ERISA § 514(d)." Id. at 97. In this case, however, as noted above, Jorgensen has no cognizable claim under the ADA. Because the Chapter 151B claims cannot, therefore, be necessary to the enforcement of the ADA scheme, they are subject to normal ERISA preemption. They are "related to" an employee benefit claim, and therefore preempted.
V. CONCLUSION
For the aforementioned reasons, the defendants' Motion for Summary Judgment is hereby ALLOWED as to Counts 4, 5, and 6.
A separate order will issue.
ORDER
For the reasons stated in the accompanying Memorandum, defendants' Motion for Summary Judgment as to Counts 4, 5, and 6 is hereby ALLOWED. The clerk is ordered to enter judgment for the defendants on all counts in the complaint and to set the case for a status conference on the defendants' counterclaim.
It is So Ordered.