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Perugini-Christen v. Homestead Mortgage Co.

April 19, 2002


Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 1:00 CV 57--William C. Lee, Chief Judge.

Before Bauer, Rovner, and Williams, Circuit Judges.

The opinion of the court was delivered by: Williams, Circuit Judge.

Argued January 16, 2002

Mary Perugini-Christen was covered by long-term disability insurance under a group policy provided by Reliance Standard Life Insurance Company. When she became disabled, Perugini filed for benefits under the Reliance plan. Reliance paid benefits to Perugini, but the amount it paid was less than Perugini thought she should receive, and she filed suit. The district court granted summary judgment in Reliance's favor. We conclude that the district court correctly reviewed the plan administrator's decision de novo and that the administrator correctly characterized the profit compensation language of the employment agreement as a bonus for purposes of the ERISA plan.


From 1985 until 1993, Perugini was the owner, president, and CEO of People's Mortgage Company in Fort Wayne, Indiana. In 1993, Perugini sold People's to Homestead Mortgage Company. As part of the sale, Perugini entered into a deal with Homestead to act as an independent branch manager for the Fort Wayne office. Perugini negotiated a compensation package under which she was to receive fifty percent of the branch profits in addition to her annual salary.*fn1 Perugini worked under this compensation plan until she became disabled in 1996. Perugini filed a claim for long-term disability benefits with Reliance, Homestead's disability insurance carrier. Under Reliance's benefits plan, Perugini's benefits were to be based on her covered monthly earnings. Covered monthly earnings were defined as the employee's monthly salary and any commissions or bonuses averaged over the preceding twelve months, with respect to commissions, or thirty-six months, with respect to bonuses. The plan does not define either salary or bonus.

Reliance considered the branch profits Perugini received to be a bonus and averaged them over a thirty-six month period to calculate her monthly benefit. Perugini disagreed and the district court found that the plan language was not ambiguous. Furthermore, the district court classified the branch profits compensation as bonuses because Perugini's employment agreement designated them as such and the ordinary definition of bonus encompassed the branch profits compensation.


A. Standard of Review

The Supreme Court has made it clear that "a denial of benefits challenged under sec. 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber v. Bruch, 489 U.S. 101, 115 (1989). In determining whether a plan grants its administrator discretion, we must look to the language of the plan. Postma v. Paul Revere Life Ins. Co., 223 F.3d 533 (7th Cir. 2000).

Reliance argues that the plan grants it discretionary authority because it required Perugini to submit:

"satisfactory proof of Total Disability to [Reliance]."

However, "the presumption of plenary review is not rebutted by the plan's stating merely that benefits will be paid only if the plan administrator determines they are due, or only if the applicant submits satisfactory proof of his entitlement to them." Herzberger v. Standard Ins. Co., 205 F.3d 327, 331 (7th Cir. 2000). Rather, the plan shouldclearly and unequivocally state that it grants discretionary authority to the administrator, which we find the plan did not do.

In this case, the language at issue is open to two reasonable interpretations: (1) that Perugini submit to Reliance satisfactory proof or (2) that she submit proof which is satisfactory to Reliance. The former interpretation would simply require Perugini to submit requested documents, the latter would be satisfied only if Perugini's documents satisfied Reliance's subjective notions of what was required. Because it is not clear from the plan language which interpretation is the ...

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