657 F.3d 488
7th Cir.2011Background
- Frye, a Thompson Steel employee, retired in 2007 after the Franklin Park plant closed.
- Pension started at $688.13 per month but with an offset under Schedule C, Art. 4.8.
- IWCC awarded permanent partial disability payments totaling $83,888.56 (net $75,622.09) for two injuries in 2005 and 2006.
- Plan 4.8 requires deduction of workers' compensation disability payments from regular pension, unless exempted by interim language.
- Dispute centered on whether Frye’s IWCC PPD payments fall within the offset as payments 'in the nature of a permanent disability' given a separate disability definition in §3.4.
- District court found the offset inconsistent with plain §3.4; Seventh Circuit later reviewed de novo under arbitrary-and-capricious standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the offset in §4.8 applies to Frye's IWCC PPD payments | Frye argued the offset isn't triggered by a PPD award under §4.8 as interpreted by the IWCC. | Thompson Steel argued the IWCC characterization of the payments as permanent disability permits the offset. | Offset applies; rational interpretation supported by plan language. |
| Whether §3.4's disability definition governs the §4.8 offset | Disability as defined in §3.4 controls even for §4.8 offset. | §4.8 offset uses its own characterization language independent of §3.4. | Ambiguity exists; §4.8 offset is interpretative, not bound solely by §3.4. |
| Standard of review for the Committee's interpretation | Court should strictly limited to plain language; any ambiguity favors Frye. | Deferential review allows interpretation when ambiguities exist and is within the Committee’s discretion. | Arbitrary-and-capricious review with deference; court must uphold if rational. |
| Whether the Committee's resolution of ambiguity was reasonable | Committee redefined 'disability' to fit the offset; merits reversal. | Committee provided a rational explanation and did not rewrite the plan. | Committee's decision was reasonable and within its discretion; district court reversed. |
Key Cases Cited
- Hess v. Reg-Ellen Mach. Tool Corp. Emp. Stock Ownership Plan, 502 F.3d 725 (7th Cir. 2007) (deference under arbitrary-and-capricious review)
- Majeski v. Metro. Life Ins. Co., 590 F.3d 478 (7th Cir. 2009) (need for articulated reasoning to support determination)
- Marrs v. Motorola, Inc., 577 F.3d 783 (7th Cir. 2009) (interpretation of plan language; not rewrite of plan)
- Swaback v. Am. Info. Techs. Corp., 103 F.3d 535 (7th Cir. 1996) (fiduciary must not disregard unambiguous language)
- Sisto v. Ameritech Sickness & Accident Disability Benefit Plan, 429 F.3d 698 (7th Cir. 2005) (compare administrator’s interpretation to plan language)
- Comrie v. IPSCO, Inc., 636 F.3d 839 (7th Cir. 2011) (authorization of interpretative discretion in ambiguous plans)
- Gallo v. Amoco Corp., 102 F.3d 918 (7th Cir. 1996) (deferential review when plan language is ambiguous)
- Ross v. Indiana State Teacher's Ass'n Ins. Trust, 159 F.3d 1001 (7th Cir. 1998) (interpretation anchored to plan structure)
- Cozzie v. Metro. Life Ins. Co., 140 F.3d 1104 (7th Cir. 1998) (distinction between interpretation and modification; plan-consistent outcomes)