Spradley v. The Owens-Illinois Hourly Employees Welfare Benefit Plan
686 F.3d 1135
10th Cir.2012Background
- Spradley, a longtime Owens-Illinois employee, retired early in May 2008 at 55 due to disability.
- Nine months after retirement, Spradley claimed PTD life insurance benefits under the Plan.
- The Social Security Administration had found Spradley permanently and totally disabled as of March 1, 2008.
- The Committee denied benefits both initially and on appeal, relying on healthcare coverage terms.
- The district court found Spradley was entitled under the Plan’s PTD terms or, alternatively, that the denial was arbitrary and capricious and remanded.
- On appeal, the plan argues the PTD benefit is governed by separate life insurance coverage provisions, which would end coverage at retirement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the remand order is final for appealability. | Spradley receives benefits under PTD provisions; remand effectively finalizes relief. | Remand preserves plan discretion and may resolve eligibility on remand. | Remand was a final decision; appellate jurisdiction proper. |
| Whether the denial of PTD benefits was arbitrary and capricious. | PTD provisions require age, SS Disability award, and timely filing; denial relied on incorrect healthcare provisions. | Denial based on Plan terms; broad interpretation allowed. | Denial based on healthcare provisions was arbitrary and capricious; not supported by PTD terms. |
| What is the proper remedy when a plan denial is arbitrary and capricious? | District court should award benefits or remand for factual findings. | Remand for further administrative proceedings. | Remand with directions to enter judgment in plaintiff's favor; consider attorney’s fees. |
Key Cases Cited
- Rekstad v. First Bank Sys., Inc., 238 F.3d 1259 (10th Cir.2001) (finality of ERISA remands depends on remaining issues)
- Graham v. Hartford Life & Accident Ins. Co., 501 F.3d 1153 (10th Cir.2007) (remand not final when eligibility remains on remand)
- Flinders v. Workforce Stabilization Plan of Phillips Petroleum Co., 491 F.3d 1180 (10th Cir.2007) (remand appropriate if inadequate factual findings or grounds)
- Kellogg v. Metropolitan Life Insurance Co., 549 F.3d 818 (10th Cir.2008) (remedy of award of benefits when administrator’s conduct arbitrary and capricious)
- In re Jones, 9 F.3d 878 (10th Cir.1993) (bankruptcy-remand finality when ministerial task only)
- In re Magic Circle Energy Corp., 889 F.2d 950 (10th Cir.1989) (finality analysis to avoid piecemeal appeals)