United States District Court, E.D. Arkansas, Little Rock Division
OPINION AND ORDER
Kristine G. Baker United States District Judge.
Derrick Jones brings this action against defendant Kohler Co.
Pension Plan (“Kohler Plan”) to recover
disability benefits that he claims are owed to him under a
pension plan governed by the Employee Retirement Income
Security Act, 29 U.S.C. §§ 1001, et seq.
(“ERISA”). Mr. Jones and the Kohler Plan have
filed their briefs on this issue, and this matter is ripe for
decision (Dkt. Nos. 12; 13). For the following reasons, the
Court finds that the plan administrator did not abuse its
discretion in denying Mr. Jones's application for
disability benefits, and the Court dismisses with prejudice
Mr. Jones's claim.
Jones worked for Kohler for 17 years at its facility in
Searcy, Arkansas (Dkt. No. 12, at 2). During his employment,
he was diagnosed with a heart murmur, narcolepsy, chronic
paresthesia in his arms and hands, degenerative disk disease,
and bilateral osteoarthritis in his knees (Dkt. No. 12, at
2). He ceased working because of his health problems on
August 6, 2009, when he was 43 years old (Dkt. No. 13, at
8-9). On August 7, 2009, Mr. Jones applied for disability
insurance benefits from the Social Security Administration,
and his application was granted on November 5, 2010 (Dkt. No.
12, at 2).
relevant times for the purposes of this action, Kohler
maintained an employee benefit plan that is governed by ERISA
(Dkt. No. 12, at 1; No. 13, at 4). In 2013, after turning 45,
Mr. Jones submitted an application for disability pension
benefits under the Kohler Plan (Dkt. No. 13, at 9-10). A copy
of the Social Security Administration's Notice of
Decision, which found that Mr. Jones had been disabled since
August 6, 2009, was attached to Mr. Jones' application.
The plan administrator denied Mr. Jones claim, finding that
he did not qualify for disability benefits under the Kohler
Plan because his “employment records indicate that his
active service ended January 4, 2010 at age 43 years, 5
months” and that the Kohler Plan only provides
“Disability Retirement Benefits to participants that
terminated employment with the company due to a Disability
incurred after reaching age 45” (Dkt. No. 13, at 10).
Mr. Jones appealed the plan administrator's decision,
arguing that the Kohler Plan did not restrict eligibility to
only those who become disabled after reaching 45 years of age
(Dkt. No. 13, at 11). The plan administrator denied the
appeal, and Mr. Jones filed this action (Dkt. No. 13, at
Standard Of Review
ERISA purposes, Mr. Jones's claim is analyzed as a claim
for a disability benefit, rather than as a pension benefit.
ERISA treats a disability retirement benefit as part of an
employee welfare benefit plan, rather than a pension plan,
because the disability retirement benefit provides benefits
“in the event of. . . disability.” 29 U.S.C.
§1002(1). See also Edwards v. Briggs and Stratton
Retirement Plan, 639 F.3d 355 (7th Cir. 2011);
Rombach v. Nestle USA, Inc., 211 F.3d 190, 193 (2nd
does not establish what standard of review courts should use
for actions challenging benefit eligibility determinations.
Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
101, 109 (1989). However, the Supreme Court has established
that courts should use “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. In cases where the plan provides discretionary
authority, courts review benefit determinations under the
more deferential abuse of discretion standard. Anderson
v. U.S. Bancorp, 484 F.3d 1027, 1032 (8th Cir. 2007).
Mr. Jones and the Kohler Plan agree that the plan
administrator's decision in this case should be reviewed
under the abuse of discretion standard (Dkt. No. 12, at 6;
No. 13, at 16-17). Under the abuse of discretion standard,
the Court must affirm the plan administrator's
interpretation of the Kohler Plan unless it is arbitrary and
capricious. Midgett v. Wash. Group Int'l Long Term
Disability Plan, 561 F.3d 887, 896 - 97 (8th Cir. 2009).
determine whether a plan administrator's decision was
arbitrary and capricious, the court examines whether the
decision was “reasonable.” King, 414
F.3d at 998-99. Any reasonable decision will stand, even if
the court would interpret the language differently as an
original matter. Id.; see also Rutledge v. Liberty Life
Assurance Co., 481 F.3d 655, 659 (8th Cir. 2007)
(“[W]e must affirm if a reasonable person
could have reached a similar decision, given the
evidence before him, not that a reasonable person
would have reached that decision.”);
Midgett, 561 F.3d at 897. However, this standard
does not apply if the plan administrator has committed
“a serious procedural irregularity” causing
“a serious breach of the plan administrator's
fiduciary duty to the claimant, ” in which case the
court applies a less deferential standard of review.
Pralutsky v. Metro. Life Ins. Co., 435 F.3d 833, 837
(8th Cir. 2006) (internal citations omitted).
complaint, Mr. Jones alleges that, because the decision not
to pay benefits was made by the same entity responsible for
paying those benefits, there is an inherent conflict of
interest in connection with the decision-making activities
(Dkt. No. 1, ¶ 16). A conflict of interest exists when a
plan administrator holds the dual role of evaluating and
paying benefits claims, such as when the employer both
determines eligibility for benefits and pays the benefits.
Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 113-15
(2008). If such a conflict exists, then a reviewing court
should consider that conflict as a factor in determining
whether the plan administrator has abused its discretion in
denying benefits. The significance of this factor depends on
the circumstances of the particular case. Id. at
115-19. When an insurer has a history of biased claims
administration, the conflict “may be given substantial
weight.” Id. at 117. When an insurer has taken
steps to reduce the risk that the conflict will affect
eligibility determinations, the conflict “should be
given much less weight.” Id.; see also
Whitley v. Standard Ins. Co., 815 F.3d 1134, 1140 (8th
Cir. 2016) (“An insurer's structural conflict of
interest should prove less important (perhaps to the
vanishing point) where the administrator has taken active
steps to reduce potential bias and to promote
accuracy.”) (internal quotation marks omitted).
Mr. Jones does not argue this point in his brief, Kohler
addresses it. As an initial matter, the record contains no
evidence of biased claims administration. Kohler explains
that the plan administrator, Kohler, makes the benefits
decisions but that a different entity, a fund Kohler makes
non-reversionary payments to according to generally accepted
accounting principles, makes benefits payments (Dkt. Nos. 13,
at 25; 14, ¶ 6). Further, Kohler submits the Declaration
of Daniel J. Velicer, plan administrator (Dkt. No. 14). Mr.
Velicer's statements confirm that Kohler has taken action
to wall off the plan administrator from those interested in
firm finances. He confirms that he is not rewarded monetarily
or otherwise, and that he is not evaluated, based on claims
he grants or denies or on the basis of any savings that may
result from the denial of such claims (Dkt. No. 14,
¶¶ 7, 8). Kohler argues that, to the extent this
type of plan structure creates any conflict of interest on
the part of the plan administrator, that conflict should be
deemed of such little importance to recede “to the
vanishing point.” See Glenn, 554 U.S. at
117-118. Further, to the extent a structural conflict of
interest can even be said to exist on these facts, the
standard of review remains the deferential arbitrary and
capricious standard of review. Glenn, 554 U.S. at
115; Wakkinen v. UNUM Life Ins. Co., 531 F.3d 575,
581 (8th Cir. 2008).
plaintiff suing for benefits under ERISA bears the burden of
establishing that he is entitled to benefits. See Farley
v. Benefit Trust Life Ins. Co., 979 F.2d 653, 658 (8th
Cir. 1992). The parties do not appear to dispute four key
facts: (1) Mr. Jones is disabled; (2) before becoming
disabled, he had completed more than 10 years of service for
Kohler; (3) he became disabled before turning 45; and (4) he
applied for disability benefits under the Kohler Plan after
turning 45. The plan administrator found that Mr. Jones did
not qualify for disability benefits under the Kohler Plan
because it interpreted the Kohler Plan as restricting
eligibility for benefits to those who became disabled after
turning 45. Mr. Jones argues that this interpretation
constitutes an abuse of discretion for two reasons.
The Summary ...