Appeal from the United States District Court for the Southern District of Illinois. No. 94 C 582 Paul E. Riley, Judge.
Before HARLINGTON WOOD, JR., CUDAHY and ROVNER, Circuit Judges.
Michael Morton was a covered beneficiary of a health and welfare fund regulated by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. sec. 1001, et seq. His benefits from the fund included reimbursement for most medical expenses, but not for medical expenses associated with "intentionally self-inflicted injuries." Morton suffered an injury when, according to his lawyer's account, he was "very, very drunk . . . and did something very, very stupid." The trustees of the fund decided that this injury was intentionally self-inflicted, and they denied him benefits. Morton sued them in the district court, contending that their interpretation of the terms of the fund's provisions was unreasonable and therefore violated ERISA. The district court rejected this contention and ruled for the trustees. We affirm.
At two o'clock in the morning on August 28, 1994, Michael Morton was in a bar in Centralia, Illinois after an evening of carousing with friends, and he was drunk. When he and another patron had an altercation, the bar's bouncer threw him out of the back door. Morton chose an unorthodox route to the front. He found a way to clamber up the side of the building and onto the bar's roof. From this perch, he could see his friends leaving by the front door. In an attempt to catch up with them, he lowered himself to the metal awning across the front of the bar and jumped to the sidewalk, an eight-foot drop. The fall broke his leg, and he was taken to the hospital where doctors treated his leg and measured his blood alcohol level at .23. The medical bills associated with this injury amounted to more than $20,000.
At the time, Morton was a beneficiary of a trust created by the Southern Illinois Laborers' District Council, an association of local labor unions, and the Associated General Contractors of Illinois. This trust is regulated by ERISA. As determined by the trust agreement, the trust is known as the Southern Illinois Laborers and Employers Health and Welfare Fund (the Fund), and it purports to provide health care benefits, life insurance and other similar benefits. The trust agreement gives the trustees the authority to determine, adopt and administer benefit plans consistent with its purpose. According to the terms of one such benefit plan, the Fund reimburses its beneficiaries for most medical expenses, but it denies reimbursement for "[a]ny loss, expense or charge which results from an intentionally self-inflicted injury or sickness, suicide or attempted suicide, while sane or insane." Morton submitted his medical bills to the Fund, but it refused to pay them, concluding that the injury giving rise to the bills was intentionally self-inflicted. The trust agreement created a procedure for appealing this decision, and Morton pursued it, but the trustees stood by their conclusion.
Morton filed a suit in state court under ERISA, claiming that the trustees violated ERISA by unreasonably interpreting the term "intentionally self-inflicted injury" in the benefit plan. The case was removed to the district court where he and the trustees filed a joint stipulation of the facts and made cross-motions for summary judgment. The district court ruled in favor of the trustees, deciding that it could not overrule the trustees' interpretation of the benefit plan because it was not arbitrary and capricious.
Morton challenges the district court's summary judgment in three ways. He first questions whether the district court employed the proper standard of review in its consideration of the trustees' interpretation of the benefit plan. He then contends that the trustees' decision cannot be affirmed under any standard of review because it was made outside the scope of their authority. Finally, he maintains that their interpretation was unreasonable even when considered under a deferential standard of review. Especially when the summary judgment depends upon legal conclusions like those that Morton challenges here, our review is de novo. See Butler v. Encyclopedia Brittanica, Inc., 41 F.3d 285, 287 (7th Cir. 1994).
The nature of ERISA determines the standard by which courts review the administration of a covered benefit plan. When it adopted ERISA, Congress sought to regulate the way in which the fiduciaries of employee benefit plans administered those plans by establishing standards of "conduct, responsibility, and obligation" for them. See 29 U.S.C. sec. 1001(b). These standards are defined in a federal common law which is modeled on the common law of trusts. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110-11 (1989). When the fiduciaries of a covered plan decide who is eligible for benefits, the common law of ERISA controls their decision-making. See id. at 108. If the beneficiary of a plan believes that its fiduciaries have improperly denied him benefits, he may bring an action to challenge their decision. 29 U.S.C. sec. 1132(a)(1)(B).
In Firestone, the Supreme Court determined how courts should review the decision-making of plan fiduciaries in an action challenging the denial of benefits. Following the fundamental principles of trust law, the Court held that the judicial review of benefit eligibility determinations will vary in accordance with the extent of the fiduciaries' power to construe the terms of the benefit plan. Firestone, 489 U.S. at 110-15. When the fiduciaries do not have any discretion to construe the terms of the plan, courts make a de novo review of their interpretations. Id. at 115. When the fiduciaries do have the ...