Plaintiffs, former General Electric Company (“GE”) employees who became disabled
We conclude that the district court applied an incorrect standard in reviewing Met Life’s interpretation of the insurance contract. However, because the results do not change when the correct standard is applied, we AFFIRM the grant of summary judgment.
BACKGROUND
GE established the Long-Term Disability Income Plan for Hourly Workers (the “GE Plan” or “Plan”) in 1970 as the result of a collective bargaining agreement. To meet its obligations to the unions, GE purchased from Met Life a group long-term disability insurance policy incorporating the terms of the Plan. Participation is open to union and nonunion employees, and is entirely voluntary. All contributions to the GE Plan have been made by participants.
Plaintiffs are six former GE employees who became disabled while at GE and who received long-term disability (“LTD”) benefits under the Plan.
With respect to the Lake Plaintiffs, Met Life’s initial practice under the Plan was to reduce the LTD benefits payable to Plan beneficiaries by the amount of SSDI benefits either actually received or anticipated. GE and Met Life revised this procedure in 1971 to permit Plan beneficiaries to receive LTD benefits without a reduction for anticipated SSDI benefits provided that the insured signed a reimbursement agreement (the “Reimbursement Agreement”). The Reimbursement Agreement obligated the insured to reimburse Met Life in the amount of any retroactive SSDI award received, and permitted Met Life to reduce or “carve-out” future LTD benefits to recover such amount if necessary.
Lake filed a claim under a version of the Plan in effect in 1985; Blanton and Mink filed claims under the Plan in effect in 1982. All three signed a Reimbursement Agreement and received unreduced LTD benefits. As required by the Plan, the Lake Plaintiffs applied for SSDI benefits. The Social Security Administration initially denied these applications, but subsequently reversed itself. Lake, Blanton, and Mink each received a retroactive lump-sum SSDI award. Met Life collected or is collecting the amount of this award by withholding a portion of each of the Lake Plaintiffs’ monthly LTD benefits.
The Pauley Plaintiffs also had their benefits reduced as the result of a long-standing practice by Met Life. Beginning in 1971, when the matter first arose, until the Plan was amended in 1988,
Pauley, Buffington, and Perry became disabled, respectively, under the 1985,1982, and 1976 versions of the GE Plan. Each had his LTD benefits reduced as a result of being eligible to receive social security early retirement benefits. The Pauley Plaintiffs elected to receive these early retirement benefits, and, as a result, now receive lower monthly social security payments than if they had waited until age sixty-five. This reduction is permanent even though the Pauley Plaintiffs have ceased to receive LTD benefits.
GE distributes to participating employees a document containing the terms of the Plan (the “Plan Document”) and a summary of the Plan Document (the “SPD”) as a single package. Section II of the Plan, entitled ‘Tour Benefits,” describes the benefits payable upon disability. The relevant portion of Section II, as it appeared in 1982, 1985, and 1988, is set forth below. (The italicized portions were added in 1985; the bracketed portions in bold were added in 1988.)
Benefits will be paid monthly and will be one twenty-fourth of your normal straight-time annual earnings reduced by (1) any disability pension benefits paid under the GE Pension Plan ... (2) any primary Social Security [disability] benefits [or primary Social Security retirement benefits payable at age 65], (3) benefits under a Workers’ Compensation or Occupational Disease Law, and (4) any benefits available in conformity with Federal, State, Commonwealth or Dominion laws, of the United States or Canada. If an overpayment of benefits occurs for any reason under this Plan, the amount of the overpayment will be then due and owed to the carrier.
If the benefits referred to in (2), (3), or (4) above would have been payable to you upon timely application, you will be considered as receiving such benefits....
You are responsible for promptly notifying the carrier if any award or settlement of benefits derived from any source described in (2), (3), or (U) above is, or will become, payable retroactively. The carrier may, in addition to other remedies it may have to recover any overpayment, reduce future benefits otherwise payable under the Plan.
(Respectively, J.A. at 549, 560, 570.) The 1976 Plan is identical in all pertinent aspects to the 1982 Plan.
The corresponding SPDs also describe the benefits payable to Plan beneficiaries. The 1985 SPD states in relevant part:
You receive 50% of your monthly pay from the LTD Insurance Plan in combination with other disability income benefits subject to a minimum benefit of $50 per month.
Your monthly LTD benefit depends upon the monthly income you’re entitled to from the following sources:
— Primary Social Security (just the benefit payable to you)
— Workers’ Compensation or similar laws (payable for job-related illness or injury)
— any disability benefits you apply for and are granted under the GE Pension Plan, and
— any disability benefits available under any government laws.
(J.A. at 157.) The above-quoted language is representative of all of the SPDs; any variations between the SPDs of different years are immaterial for purposes of this litigation.
The Lake and Pauley Plaintiffs filed a class action under 29 U.S.C.A. § 1132(a)(1)(B),
On appeal, the Lake and Pauley Plaintiffs first contend that the district court erred in employing an arbitrary and capricious standard of review. The Lake Plaintiffs also argue that Met Life’s practice of withholding future LTD benefits to recover the amount of retroactive SSDI awards is impermissible under the 1982 Plan because Section II does not explicitly authorize recoupment. They further contend that the recoupment provision in the 1985 Plan is ineffective because the term “overpayment” is ambiguous and should be construed against defendants under the doctrine of contra proferentem. Similarly, the Pauley Plaintiffs argue that the carve-out for “primary Social Security benefits” in the pre-1988 Plans refers, in context and in light of the relevant SPDs, to SSDI benefits only and not to retirement benefits.
ANALYSIS
We review the district court’s grant of summary judgment de novo. Wells v. United States Steel & Carnegie Pension Fund, Inc.,
As an initial matter, this court must determine whether to apply a de novo or an arbitrary and capricious standard of review to Met Life’s interpretation of Section II. It is now well settled that deferential review is appropriate only where the benefits plan clearly grants discretionary authority. Firestone Tire & Rubber Co. v. Bruch,
The district court found that Section V of the Plan Document entitled “How to File a Claim” grants Met Life broad discretion and that this discretion encompasses decisions concerning the level of benefits. Section Y has read at all relevant times:
[Met Life] will make all decisions on claims and has reserved the right to examine medically an individual for whom claim is made....
Accordingly, the management and control of the operation and administration of claim procedures under the Plan, including the review and payment or denial of claims and the provision of full and fair review of claim denial ... shall be vested in [Met Life].
An individual on whose account claim is made shall ... [when requested] furnish proof of the continuance of total disability....
(J.A. at 150; emphasis added.) The underscored language unequivocally grants Met Life discretionary authority to determine who is eligible for benefits. Cf. Miller v. Metropolitan Life Ins. Co.,
When applying the de novo standard of review, a court must interpret the terms of the plan “without deferring to either party’s interpretation.” See Bruch,
A. Carve-Out for Retroactive SSDI Payments
Section II of the 1982 and 1985 Plans provides in relevant part:
Benefits will be paid monthly and will be one twenty-fourth of your normal straight-time annual earnings reduced by ... any primary Social Security benefits....
According to this language, Plan disbursements may be reduced for “any” social security benefit. There is no basis for distinguishing between retroactive and prospective SSDI payments. See Calloway v. Pacific Gas & Elec. Co.,
Other courts considering plan language similar to that in the 1982 Plan have upheld the recoupment of retroactive SSDI awards. See, e.g., Calloway,
The fact that the word “retroactive” is not used in the Plan or SPD language does not eliminate the fact that the clear language of those documents anticipates reductions in Plan benefits upon the receipt of Social Security benefits. A disabled insured would be required to accept such a reduction upon the immediate payment of Social Security benefits; it would be illogical to construe the contract language to mean that, because Social Security payments were delayed and then paid in a lump sum, the insured would be entitled to full Plan benefits and the Social Security payment.
Stuart,
The Lake Plaintiffs argue that this court’s decision in Bush v. Metropolitan Life Ins. Co.,
The Monthly Benefit is the applicable amount ... reduced by an amount equal to the monthly equivalent of the total of the following benefits for which the Employee is eligible:
Disability ... Benefits (Primary Insurance Amount only) to which the employee is entitled under the Federal Social Security Act....
If it is determined that any benefits paid to an Employee under the Group Policy should not have been paid or should have been paid in a lesser amount, the Insurance Company shall be entitled to a refund of the amount of the overpayment.
Id. at 232. The linchpin of the court’s decision was the existence of ambiguity in the recoupment provision. The court noted that the phrase “should not have been paid or should have been paid in a lesser amount” was subject to two equally plausible interpretations: (a) an overpayment is determined by all facts whenever occurring, or (b) an overpayment is determined solely by facts in existence at the time of the payment. The Bush court then applied the Michigan state law doctrine of contra proferentum against the defendant to prohibit recoupment in cases involving a retroactive award of SSDI benefits. Id. at 233.
Although Bush lends some support to the Lake Plaintiffs’ case, it is not controlling and does not alter our interpretation of the Plan. The contract terms at issue in Bush are not present in either the 1982 or 1985 Plans. Despite a superficial similarity to Bush, the 1985 Plan quite clearly avoids ambiguity by referring to benefits which are “payable retroactively” and not to payments which “should not have been paid or should have been paid in a lesser amount.” The Lake Plaintiffs correctly note that 1982 Plan does not contain an express recoupment provision. Contrary to their argument, however, the right to recoup overpayments is part in parcel of Met Life’s authority to reduce LTD benefits.
The Lake Plaintiffs also argue that the 1982 and 1985 SPDs failed to provide adequate notice of the carve-out for retroactive lump-sum SSDI awards in violation of 29 U.S.C.A § 1022(a)(1). Section 1022(a)(1) provides that plan summaries “shall be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants ... of their rights....” We hold that the 1982 and 1985 SPDs put Plan participants on notice by stating that “[y]our monthly LTD benefit depends upon ... income you’re entitled to from ... Primary Social Security.” Moreover, the Lake Plaintiffs would not be entitled to recover substantive damages even if we found that the SPDs violated § 1022(a)(1) because violations of the procedural sections of ERISA do not give rise to claims for substantive damages. See Lewandowski v. Occidental Chem. Corp.,
B. Early-Retirement Benefits
The Pauley Plaintiffs contend that the carve-out for “any primary Social Security benefits” in the pre-1988 Plans is ambiguous when read in context, and that the pre-1988 SPDs clarify this ambiguity in favor of limiting the offset to SSDI benefits. Met Life contends that Section II unambiguously permits Met Life to reduce LTD benefits by all social security benefits. The district court concluded that the language of the pre-1988 Plans was ambiguous, but deferred to Met Life’s interpretation as neither arbitrary nor capricious. As indicated above, our review is de novo. Wulf,
We hold that Section II of the pre1988 Plans, which provides for the carve-out of “any primary Social Security benefits,” unambiguously encompasses social security retirement benefits. Although the word “primary” may be somewhat confusing, there is no definition of “primary” as used in its ordinary, nontechnical sense which would lead one to conclude that the carve-out is limited to SSDI benefits. Further, the context does not alter the plain meaning of the phrase in question. Section II mentions
Language in a plan summary may, under certain circumstances, control inconsistent terms in the plan. Edwards v. State Farm Mut. Auto. Ins. Co.,
Here, the pre-1988 SPDs do not alter our interpretation of the corresponding Plans. The pre-1988 SPDs contain a greater emphasis on disability income, stating that “You receive 50% of your monthly pay from the LTD Insurance Plan in combination with other disability income_” (Emphasis added.) Nonetheless, the pre-1988 SPDs also state that LTD benefits are subject to “Primary Social Security” which encompasses social security retirement benefits. Further, any ambiguity caused by the greater emphasis on disability benefits in the pre-1988 SPDs is resolved by reference to the clear and unambiguous language in the pre-1988 Plans. The Pauley Plaintiffs cite to no authority, and we have found none, where a plan summary which is merely ambiguous trumps unambiguous plan language. Moreover, unlike in Edwards, each of the Pauley Plaintiffs received the SPD and Plan Document as a single package, and therefore had access to the relevant Plan language.
We are not unsympathetic to the plight of the Pauley Plaintiffs. As a practical matter, the carve-out for social security retirement benefits payable at age sixty-two forced the Pauley Plaintiffs to apply for these benefits. The Pauley Plaintiffs now receive lower monthly social security benefits than they would otherwise be entitled to if they had waited until age sixty-five to receive such benefits. This reduction is permanent and continues despite the fact that they no longer receive LTD benefits. Nonetheless, courts must give effect to the unambiguous terms of an ERISA plan. Boyer,
CONCLUSION
Federal law gives effect to straightforward language in ERISA-governed plans. Turner v. Safeco Life Ins. Co.,
Notes
. Plaintiffs purport to be a class consisting of two subclasses. The district court entered summary judgment against the individual plaintiffs without deciding the issue of class certification.
. GE amended the Plan in 1988 as part of a settlement agreement with the Equal Employment Opportunity Commission over an age discrimination claim. After the amendment, the carve-out for social security retirement benefits applied only to benefits payable after age sixty-five and not, as had been the previous practice, to benefits payable after age sixty-two.
. Section 1132(a)(1)(B) permits the beneficiary of an ERISA-governed plan to bring a civil action in federal court "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”