570 F. App'x 831
10th Cir.2014Background
- Dr. Howard Holbrooks, an Army veteran later diagnosed with ALS, was covered by an ERISA-governed group long-term disability policy issued by Sun Life.
- The Policy paid 60% of monthly earnings (capped) but permitted offsets for "Other Income Benefits," defined to include benefits under "Workers' Compensation Law," "Compulsory Benefit Act or Law," or "any other act or law of like intent."
- VA regulations (38 C.F.R. § 3.318) provide a statutory entitlement to disability benefits for ALS; Holbrooks received VA monthly disability payments.
- Sun Life offset Holbrooks’s policy benefits by the VA payments and informed him of the reasons and his right to administrative review; Holbrooks administratively appealed, arguing VA benefits were not specifically listed.
- Sun Life denied the appeal citing the Policy language (including "Compulsory Benefit Act or Law"); Holbrooks sued under ERISA and the district court granted summary judgment to Sun Life.
- The Tenth Circuit affirmed, holding VA benefits were properly offset as benefits required by law (a "Compulsory Benefit Act or Law").
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sun Life waived reliance on "Compulsory Benefit Act or Law" rationale under ERISA notice rules | Holbrooks: Sun Life did not raise that basis earlier and thus cannot rely on it now | Sun Life: Denial letter explicitly invoked "Compulsory Benefit Act or Law" and provided review rights | Held: Sun Life adequately articulated the rationale; not precluded |
| Whether VA benefits are "Other Income Benefits" because not specifically listed | Holbrooks: Absence of explicit mention of VA benefits means offset is improper | Sun Life: Policy language is broad; VA payments fit within listed categories | Held: Argument unsupported by authority; rejected |
| Whether the phrase "Compulsory Benefit Act or Law" is ambiguous and must be construed against Sun Life | Holbrooks: Term ambiguous; construed in insured's favor to exclude VA benefits | Sun Life: "Compulsory" plainly means statutorily required benefits; VA benefits are nondiscretionary | Held: Term unambiguous; VA benefits are compulsory and may be offset |
| Whether VA benefits instead must be treated like workers’ compensation (alternative) | Holbrooks: VA benefits are not similar to Workers’ Compensation | Sun Life: Alternatively, VA benefits are similar to workers’ comp | Held: Court affirmed on compulsory-law ground and did not decide the workers’ comp similarity alternative |
Key Cases Cited
- Heggy v. Heggy, 944 F.2d 1537 (10th Cir.) (de novo review means independent determination)
- Spradley v. Owens-Ill. Hourly Emps. Welfare Benefit Plan, 686 F.3d 1135 (10th Cir. 2012) (courts consider only rationales articulated in administrative record)
- Foster v. PPG Indus., Inc., 693 F.3d 1226 (10th Cir.) (ERISA-plan interpretation governed by federal common law and ordinary meaning)
- Phillips v. Calhoun, 956 F.2d 949 (10th Cir.) (court need not consider arguments unsupported by legal authority)
- Cushman v. Shinseki, 576 F.3d 1290 (Fed. Cir.) (VA disability benefits are nondiscretionary statutorily mandated entitlements)