Thomason v. Metropolitan Life Insurance Co.
703 F. App'x 247
| 5th Cir. | 2017Background
- Joel Thomason, a Verizon employee, took a lump-sum distribution from his Verizon pension and performed a trustee-to-trustee direct rollover into a traditional IRA.
- Metropolitan Life (MetLife), the Plan claims administrator, offset Thomason’s long-term disability (LTD) payments, concluding he had “elected to receive” pension benefits under the Summary Plan Description (SPD).
- Thomason sued under ERISA §§ 1132(a)(1)(B) and (a)(3) (and (c)), arguing a direct rollover is not an election to receive pension benefits and therefore the SPD’s offset should not apply.
- The district court granted summary judgment to Thomason on § 1132(a)(1)(B) (and sua sponte on (a)(3)); MetLife appealed.
- The Fifth Circuit reviewed de novo whether the SPD was ambiguous and reviewed MetLife’s interpretation for abuse of discretion because MetLife had discretionary authority over the Plan (but not over ambiguous SPD language).
- The court concluded the SPD’s phrase “elect to receive” is ambiguous as to trustee-to-trustee rollovers, construed the ambiguity contra proferentem against MetLife, and affirmed the district court’s judgment for Thomason.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a trustee-to-trustee direct rollover is an “elect[ion] to receive” pension benefits under the SPD | Thomason: a direct rollover is not an election to receive because funds were moved trust-to-trust and not actually received as income | MetLife: withdrawing the lump sum and directing a rollover constitutes an election to receive benefits and permit offset | Held for Thomason: SPD language ambiguous; construed against drafter, so rollover is not an election to receive |
| Whether the SPD is ambiguous such that contra proferentem applies | Thomason: SPD fails to tell a reasonable participant whether rollovers count as electing to receive benefits | MetLife: incorporation of SPD into Plan and administrator discretion means SPD should be interpreted under MetLife’s view | Held for Thomason: SPD ambiguous; administrator discretion does not extend to ambiguous SPD language; resolve ambiguity for beneficiary |
| Whether MetLife’s interpretation (offset) was legally correct or an abuse of discretion | Thomason: MetLife’s interpretation is legally incorrect and, on balance, an abuse of discretion (internal inconsistency, regs, bad faith) | MetLife: its interpretation was reasonable and within its discretion | Held for Thomason: interpretation legally incorrect and abused discretion given regulatory support and inference of bad faith |
| Whether the court needed to resolve the Plan’s definition of “elect to receive” after construing SPD | Thomason: SPD construction is sufficient to prevent offset; no need to reach Plan text | MetLife: (implicitly) plan meaning supports offset | Held: Court did not reach Plan meaning; SPD construction in favor of beneficiary dispositive |
Key Cases Cited
- Koehler v. Aetna Health Inc., 683 F.3d 182 (5th Cir. 2012) (ambiguous SPDs are construed against drafter; administrator discretion does not extend to SPD ambiguities)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) (standard of review for ERISA plan benefit denials — de novo vs. abuse of discretion analysis)
- Wildbur v. Arco Chem. Co., 974 F.2d 631 (5th Cir. 1992) (two-step test for reviewing administrator benefit denials and factors to evaluate abuse of discretion)
- Rhorer v. Raytheon Eng'rs & Constructors, Inc., 181 F.3d 634 (5th Cir. 1999) (SPD ambiguous when reasonable participant cannot determine which conflicting inference controls)
- Gosselink v. Am. Tel. & Tel., Inc., 272 F.3d 722 (5th Cir. 2001) (factors for abuse-of-discretion inquiry adapted from Wildbur)