Lead Opinion
OPINION OF THE COURT
On еssentially undisputed facts, the parties to this case dispute whether the Trustees’ of the Amalgamated Pension Fund (“the Fund”) interpretation of the Plan document to deny disability benefits to Edith
I.
The Plan provision in question requires for eligibility, that a disability claimant:
(b) Has been Totally and Permanently Disabled, as defined in Section 2.11 hereof, such disability has continued for a period of at least 18 consecutive weeks, and is eligible to receive disability insurance benefits under Title II of the Federal Social Security Act within nine months of last date of Covered Emplоyment.
Section 4.3(b). The Trustees interpret this provision to require for Plan eligibility that a claimant actually becomes eligible to receive benefits within nine months of termination of employment.
Gaines, on the other hand, interprets this provision to require only that the Social Security Administration find that the onset of the claimant’s disability, rather than the eligibility to receive Social Security benefits, occurred within nine months of termination. Since a claimant is not eligible to receive Social Security Disability benefits until six months after the date of onset of disability, this difference between the two interpretations is significant.
At trial, the parties stipulated that Gaines was a covered employee, had served the required number of years, and last worked on August 4, 1978. An Administrative Law Judge’s report
II.
Judicial review of interpretation of a pension plan document by the Trustees charged with administering the Plan is limited to whether the Trustees’ interpretation is arbitrary and capricious. Wolf v. National Shopmen Pension Fund,
A plan interpretation should be upheld even if the court disagrees with it, so long as the interpretation is rationally related to a valid plan purpose and not contrary to the plain language of the plan. See Miles v. New York State Teamsters Conference Pension and Retirement Fund Employee Pension Benefit Plan,
The terms of the Plan provide for eligibility for a disability pension if the claimant “is eligible to receive disability insurance benefits under Title II of the Federal Social Security Act within nine months of last date of Covered Employment.” Under the Social Security Act (SSA), 42 U.S.C. § 423, the time of entitlement for disability benefits is defined as “each month beginning with the first month after his waiting period____” Section 423(c)(2) defines this waiting period as “[t]he earliest period of five consecutive calendar months throughout which the individual with respect to whom such appliсation is filed has been under a disabili-ty____” Thus, under the SSA, benefits do not begin, nor is a claimant entitled to benefits, until the sixth month after the onset of disability. Gaines’ eligibility certificate therefore bore a “date of entitlement” of “10/79”, or six months after April 23, 1979, the date of onset of disability-
The waiting period under the SSA is seen necessary to ensure that a claimant’s disability is in fact a permanent disability. See H.Rep. No. 1189, 84th Cong., 1st Sess. 6 (1955), U.S.Code Cong. & Admin.News 1956, p. 3877. The Trustees urge that the Social Security waiting period also serves to insure that the disability for which claim is made was the cause of the claimant’s termination of employment; that is, that a disability whose onset is closer in time to termination of employment is a disability more likely to be employment related.
Given this background, we cannot agree with Gaines that the onset date must be the date which controls for qualification under the nine-month provision of the Plan. By its plain meaning, “eligiblе to receive” disability insurance benefits is clearly susceptible to an interpretation by the Trustees that the entitlement date for Social Security benefits must fall within the nine-month period prescribed by the Plan.
III.
The judgment of the district court will be reversed, and the district court will be directed to enter judgment for the Amalgamated Insurance Fund.
Notes
. Section 2.1 provides in pertinent part:
(p) Total and Permanent Disability — Total disability by injury or disease which permanently prevents the employee from engaging in any occupation or employment for remuneration or profit as further evidenced by eligibility to receive disability insurance benefits under Title II of the Federal Social Security Act.
. A claimant need not actually receive the benefits within nine months to be eligible for Plan disability pension benefits. A determination by the Social Security Administration made even after nine months is sufficient, if the determination is that the claimant became eligible within the nine-month period after termination of employmеnt.
. The report of the Administrative Law Judge was dated August 3, 1979.
. While the district court rejected testimony of this purpose as "self-serving," we are not bound by the Rule 52 "clearly erroneous” standard in our review of potential justification for the Trustee’s reading of the Plan. The Trustee’s subjective intent may be a question of fact; nevertheless, whether the Trustee’s interpretation is rationally related to valid Plan objectives is a legal question.
. Our research has not disclosed any other case interpreting such an eligibility clause. Music v. Western Conference of Teamsters Pension Fund,
The dissent, relying on the somewhat сircular standard that "A rational and reasonable interpretation of a plan may still be arbitrary and capricious if contrary to the plain meaning of the plan," (Dennard v. Richards Group, Inc.,
Dissenting Opinion
dissenting.
Edith Gaines was an employee in the clothing industry insured under a collectively bargained for multiemployer pension and disability plan, administered by defendant Amalgamated Insurance Fund. Plaintiff left her employment on August 4,1978, аlleging permanent and total disability. A doctor’s report in the record finds Mrs. Gaines suffers from a variety of chronic conditions, including degenerative arthritis, diabetes, and hypertensive cardiovascular disease, and states that she was totally and permanently disabled as of October, 1978.
In September, 1978 plaintiff filed an application for disability benefits under the Social Security Act. These benefits were awarded by an Administrative Law Judge by decision dated August 3, 1979, which stated that “beginning on April 23, 1979, the claimant was under a ‘disability’ as that term is defined in the Social Security Act.” Payment of Social Security benefits does not begin until five months after this onset date. 42 U.S.C. § 423(c)(2)(A) (1982). Therefore, Gaines began to receive Social Security disability benefits in October 1979.
In February 1980, Gaines filed an application for disability benefits under her fund’s retirement plan. There is no question that she met the length of service requirements of the plan and was рermanently and totally disabled under the meaning of the plan provisions. The trustees of the plan rejected her application, however, because they concluded that she was not “eligible to receive disability insurance benefits under Title II of the Federal- Social Security Act within nine months of the last date of Covered Employment,” (emphasis added), as required by the plan.
The trustees interpret the plan’s requirement that a participant must be “eligible to receive disability insurance benefits ... within nine months” to mean that s/he must not only have an onset date established by the Social Security Administration within 9 months, but also must be entitled to receive benefits commencing on (or dating retroactively back to) a datе within 9 months. Thus, according to the trustees, although Gaines was found by the Social Security Administration to have become disabled within nine months of the last date of covered employment, she was nonetheless not entitled to her. disability pension because the 5 months waiting period established by statute for disability claimants precluded her from receiving benefits within the nine months.
The district. court found that the trustees’ interpretation was arbitrary and capricious, the agreed upon standard of review, and entered judgment for plaintiff. In Dennard v. Richards Group, Inc.,
I agree with the district court that the trustees’ interpretation of the language “eligible to receive” as if it read “entitled to receive” or “actually receiving,” was contrary to its plain meaning. In the first place, the plan itself does not define “eligible to receive ... disability insurance benefits,” and we must therefore refer to the meaning of “eligibility” under the Social Security Act. That Act uses the different term “entitlement ” to refer to thе date on which (or back to which) payment is due.
In the second place, the trustees have proffered no сlear or credible explanation to support their very restrictive interpretation of this requirement. The attorney who acts as counsel to the fund and who advises the trustees testified for them that the trustees chose not to make an independent determination as to whether a participant was totally and permanently disabled, but instead delegated that determination to the Social Security Administration in order to save the cost of maintaining fund physicians. The trustees “consider the onset date the date that Social Security says you are now in fact totally and permanently disаbled.” App. at 83a.
He stated the nine-month rule was adopted by the trustees to insure that the termination of employment was disability related. The only rationale provided by defendants was that the trustees intended to establish a three-month grace period following termination of employment (the ninе months set forth in the plan minus the five full months waiting period) because the determination of onset is inexact. According to the attorney’s testimony, SSA’s establishment of a payment date within nine months serves to establish that a participant became disabled within three months of the last day of covered employment, and this three-month period provides a margin of error for a determination that the termination was disability related.
I believe the trial judge justly rejected this testimony, construing the nine-month period to mean only three months, as implausible and self-serving. The trustees admittedly were relying on the determination of disаbility by the Social Security Administration. The onset of disability date, under the statute, is itself a determination of permanent disability, since the statute requires a finding that the individual cannot engage in any substantial gainful activity by reason of the impairment “which has lasted or can be expected to last for a cоntinuous period of not less than 12 months.” 42 U.S.C. § 423(d)(1)(A) (1982). Therefore, absent some language in the plan to the contrary, there is no basis for the attorney’s claim that the trustees intended to use the Act’s five-month waiting period as a means to establish either the fact of disability or its relation to employment.
Indeed, nothing prevents the trustees from enforcing the portion of their own plan which requires that employment be “terminated by reason of disability.” By not independently inquiring into the timing of disability and by instead relying on the Act’s five-month waiting period, the fund has reached the anomalous interpretation that a person such as Mrs. Gaines who claims to have left employment by reason of disability is excluded from disability benefits, whereas a person who suffers from an unrelated disabling accident within three months of termination receives a disability pension.
Furthermore, if the framers of the plan had intended to establish a requirement such as that which the trustees now favor, the plan could easily have been worded in terms of a “date of entitlement” to benefits within nine months, or explicitly stated that the date of actual payment (or retroactive payment date) must be within nine months, or (simplest of all) stated that the onset of disability dаte determined by the Social Security Administration múst be within three months of termination of employment. That the plan does not use any of the above language is strong evidence that it was not intended to bar eligibility for those unfortunate beneficiaries for whom the SSA sets an onset date of between four and nine months after leaving employment. I would affirm the judgment of the district court.