D & H Therapy Associates, LLC v. Boston Mutual Life Insurance
640 F.3d 27
| 1st Cir. | 2011Background
- D&H Therapy Associates obtained a long-term disability plan from Boston Mutual in 2000; Dolan is a half-owner and employee of D&H.
- Plan eligibility turns on 20% loss in pre-disability earnings, with earnings defined by the plan for benefit calculation.
- Dolan began benefits in 2002 under Boston Mutual; a 2006 DRMS audit reclassified Dolan’s earnings to include ownership profits, prompting suspension and a demand for overpayment repayment.
- Boston Mutual contends Dolan’s post-disability earnings (including ownership income) show she was never eligible for benefits since 2002.
- Dolan challenges the plan’s earnings definition as inconsistent and seeks ERISA-specified relief; Boston Mutual seeks reimbursement of overpayments.
- District court granted mixed summary judgments; this court holds Boston Mutual abused its discretion and Dolan is entitled to benefits; remand issued on the counterclaim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Plan interpretation of earnings for eligibility | Dolan: earnings tied to W-2; ownership income excluded | Boston Mutual: earnings include all employment income | Boston Mutual abused discretion; Dolan eligible |
| Equitable relief/recoupment entitlement | Dolan argues overpayments are not properly recoverable | Boston Mutual seeks recoupment as equitable relief under ERISA | Recoupment claim affirmed for Dolan; district court reversed accordingly |
| Consistency and reasonableness of plan construction | Dolan urges consistent application of earnings definition (W-2 only) | Boston Mutual’s construction is reasonable under plan terms | Boston Mutual’s construction deemed unreasonable; abuse of discretion |
Key Cases Cited
- Wright v. R.R. Donnelley & Sons Grp. Benefits Plan, 402 F.3d 67 (1st Cir. 2005) (abuse of discretion review for ERISA benefits determinations with arbitrary or capricious standards)
- Gannon v. Metro. Life Ins. Co., 360 F.3d 211 (1st Cir. 2004) (abuse of discretion standard; deference to administrator when within discretion)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (Supreme Court 1989) (establishes deferential review for discretionary plan interpretations)
- Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (Supreme Court 2008) (conflicts of interest may inform reasonableness in benefit determinations)
- Denmark v. Liberty Life Assurance Co. of Boston, 566 F.3d 1 (1st Cir. 2009) (considerations of conflicts of interest in discretionary decisions)
- Kolling v. American Power Conversion Corp., 347 F.3d 11 (1st Cir. 2003) (plan administrator may construe terms by looking to insurer’s intent and past practice)
- Coffin v. Bowater Inc., 501 F.3d 80 (1st Cir. 2007) (reasonableness of construction; deference if persuasive)