United States District Court, N.D. Illinois
March 15, 2004.
TERRY L. MANNY, Plaintiff
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE AND PENSION FUNDS AND BOARD OF TRUSTEES OF THE CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE AND PENSION FUNDS, Defendants
The opinion of the court was delivered by: CHARLES NORGLE, District Judge
ORDER AND OPINION
Before the court are Defendants' Motion for Summary Judgment [20-1]
and Plaintiff's Cross-Motion for Summary Judgment [25-1], For the
following the reasons, Defendants' motion is granted; Plaintiff's motion
This case involves claimed violations of the Employee Retirement Income
Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., arising out of
Defendant's, Central States, Southeast and Southwest Areas Health and
Welfare and Pension Funds ("Central States"), denial of a
predetermination for coverage of gastric bypass surgery. Plaintiff, Terry
L. Manny ("Manny"), is a member of the International Brotherhood of
Teamsters, Local Union 705. Manny is a covered individual of the Central
States Health and Welfare Fund based upon his enrollment by Stahly
Cartage Company. He is employed by Stahly Cartage Co. which
pursuant to a Teamster union contract requires that Stahly Cartage Co.,
pay health and welfare contributions to Central States for its covered
Teamster employees. Manny is 58 years old, 6 feet 1 inches tall and
weighs approximately 470 pounds. Manny claims his various health
conditions are related to his weight. They include: type II diabetes,
hypertension, osteoarthritis, chronic obstructive pulmonary disease, back
pain, swelling in the legs and ankles, sleep apnea, and a 40% to 50%
blockage to two arteries of his heart. Central States provides Manny with
medical coverage pursuant to an ERISA-qualified Employee Health and
Welfare Plan ("the Plan").
Manny is attempting to have gastric bypass surgery, for which he
asserts the Plan should provide coverage. Manny asserts that gastric
bypass surgery would allow him to drastically reduce his weight and thus
alleviate his other related health problems. Central States asserts that
gastric bypass surgery is designed only to reduce a person's weight,
which is a cosmetic procedure specifically not covered under the health
plan, and that any other health benefits derived are not a direct result
of the surgery but rather incidental.
Manny applied for a predetermination as to whether the health plan
would cover his gastric bypass surgery. Central States denied Manny's
claim for gastric bypass surgery on February 12, 2002. On February 24,
2002, Manny appealed the denial of his predetermination. Central States
denied Manny's appeal on May 15, 2002. On November 20, 2002, Manny again
appealed his denial of predetermination. Central States officially denied
Manny's third request for predetermination on November 27, 2002. After
exhausting all administrative remedies, Manny filled this claim in the
Federal Court. Both parties have moved for summary judgment and the issue
is now ripe for ruling.
A. Standard of Review
Summary judgment is permissible when "there is no genuine issue as to
any material fact and . . . the moving party is entitled to judgment
as a matter of law." Fed.R.Civ.P. 56(c). The nonmoving party cannot
rest on the pleadings alone, but must identify specific facts, see
Cornfield v. Consolidated High School District No. 230,
991 F.2d 1316, 1320 (7th Cir. 1993), that raise more than a mere scintilla of
evidence to show a genuine triable issue of material fact. See
Murphy v. ITT Technical Services. Inc., 176 F.3d 934, 936 (7th Cir.
1999); see also Shank v. William R. Hague, Inc., 192 F.3d 675,
682 (7th Cir. 1999) (stating that a party opposing summary judgment must
present "what evidence it has that would convince a trier of fact to
accept its version of events"). A defendant is entitled to put the
plaintiff to his proofs and demand a showing of the evidence. See,
e.g., Navarro v. Fuji Heavy Industries, Ltd., 117 F.3d 1027,
1030 (7th Cir. 1997). If the plaintiff fails to come up with the
required proof, the defendant is entitled to summary judgment. See
id. It bears repeating that the plaintiff must present evidence,
rather than speculation and conclusions without factual support.
See Rand v. CF Industries. Inc., 42 F.3d 1139, 1146-47 (7th
In deciding a motion for summary judgment, the court can only consider
evidence that would be admissible at trial under the Federal Rules of
Evidence. See Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560,
562 (7th Cir. 1996). The court views the record and all reasonable
inferences drawn therefrom in the light most favorable to the party
opposing summary judgment. See Fed.R.Civ.P. 56(c);
Perdomo v. Browner, 67 F.3d 140, 144 (7th Cir. 1995). "In the
light most favorable" simply means that summary judgment is not
appropriate if the court must make "a choice of inferences." See
United States v. Diebold, Inc., 369 U.S. 654, 655 (1962); First
Nat'l, Bank of
Arizona v. Cities Service Co., 391 U.S. 253, 280 (1968);
Wolf v. Buss (America) Inc., 77 F.3d 914, 922 (7th Cir. 1996).
The choice between reasonable inferences from facts is a jury function.
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
The court has one task and one task only: to decide, based on the
evidence of record, whether there is any material dispute of fact that
requires a trial. Waldridge v. American Hoechst Corp.,
24 F.3d 918, 920 (7th Cir. 1994) (citing Anderson, 477 U.S. at 249-50;
10 Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal
Practice and Procedure: Civil § 2712, at 574-78 (2d ed. 1983)).
Manny's only assertion is one for benefits under his ERISA plan. "A
claim for benefits under an ERISA-governed plan `is a matter of contract
interpretation. When there are no triable issues of fact, we have held
that contract interpretation is a subject particularly suited to
disposition by summary judgement.'" Bechtold v. Physicians Health
Plan of Northern Ind. Inc., 19 F.3d 322, 325 (7th Cir. 1994)
(quoting Hickey v. A.E. Staley Mfg., 995 F.2d 1385, 1389
(7th Cir. 1993)).
ERISA was enacted "to promote the interests of employees and their
beneficiaries in employee benefit plans," Shaw v. Delta Airlines.
Inc., 463 U.S. 85, 90 (1983), and "to protect contractually defined
benefits." Massachusetts Mutual Life Ins. Co. v. Russell,
473 U.S. 134, 148 (1985); see generally 29 U.S.C. § 1001 et
seq. (setting forth congressional findings and declarations of policy
regarding ERISA). ERISA requires "a `full and fair' assessment of claims
and a clear communication to the claimant of the `specified reasons' for
benefit denial." The Black &Decker Disability Plan v. Nord,
538 U.S. 822, 123 S.Ct. 1965, 1967 (2003). ERISA provides "a panoply of
remedial devises" for participants and beneficiaries of benefits plans.
Firestone Tire and Rubber
Co. v. Brunch, 489 U.S. 101, 106 (1989) (citing
Massachusetts Mutual Life Ins. Co., 473 U.S. at 146).
The Supreme Court held in Firestone that a "de novo standard
of review applies regardless of whether the plan at issue is funded or
unfunded and regardless of whether the administrator or fiduciary is
operating under a possible or actual conflict of interest."
Firestone, 489 U.S. at 115 (citing Restatement (Second) of
Trust § 187, Comment'd (1959)). Further, the Seventh Circuit has
stated "[t]he [Firestone] case makes plenary review the default
rule, that is, the rule to govern when the plan documents contain no
indication of the scope of judicial review; and it is a natural and
modest extension of [Firestone], or perhaps merely a spelling
out of an implication of it, to construe uncertain language concerning
the scope of judicial review as favoring plenary review as well."
Herzberger v. Standard Insurance Co., 205 F.3d 327, 330 (7th
Cir. 2000); see also O'Reilly v. Hartford Life & Accident Ins.
Co., 272 F.3d 955 (7th Cir. 2001). However "an ERISA plan can
likewise specify that the administrator has discretion in interpreting or
applying it . . . but the conferral of discretion is not to be assumed."
Herzberger, 205 F.3d at 331. Discretion is only entitled when
the language of the plan provides it. See id.; see
also O'Reiliy, 2001 WL 1518765, at *2.
The Seventh Circuit has suggested such "safe harbor" language that
would assure that the administrator has sole discretion, however, such
language is not mandatory nor can it be considered magic words.
See Herzberger, 205 F.3d at 331 (The safe harbor
language suggested by the Seventh Circuit is the following: "Benefits
under this plan will be paid only if the plan administrator decides in
his discretion that the applicant is entitled to them."). Rather, "in
some cases the nature of the benefits or the conditions upon it will make
reasonably clear that the plan administrator is to exercise
discretion." Herzberger, 205 F.3d at 331. "In others the
plan will contain language that, while not so clear as our `safe harbor'
proposal, indicates with the requisite of minimum clarity that a
discretionary determination is envisaged." Id. If the
administrator does have discretion, then the court reviews the
administrator's decision from the perspective of an arbitrary and
capricious standard. See Id., at 331-32. Neither
party disputes the fact that the Plan allows its administrator discretion
to interpret the plan. Upon a review of the language of the Plan, the
Court determines that the arbitrary and capricious standard applies for
reviewing the denial of Manny's predetermination. Thus the Court will
review the administrator's findings under that standard.
"Under the arbitrary and capricious standard, determinations will be
overturned by the court only when they are `unreasonable, and not [when]
merely incorrect.'" Herzberger, 205 F.3d at 329 (7th Cir.
2000); see also James v. General Motors Corp.,
230 F.3d 315, 317 (7th Cir. 2000) (stating a benefit determination will only
be found arbitrary and capricious when "downright unreasonable"). To find
that a decision was arbitrary and capricious, the court must first find
that the decision-maker erred seriously in considering the evidence.
Patterson v. Caterpillar, Inc., 70 F.3d 503, 505 (7th Cir.
1995). The court must ask whether the "decision was (1) without reason,
(2) unsupported by substantial evidence, or (3) erroneous as a matter of
law." Udoni v. Department Store Div. of Dayton Hudson Corp.,
1996 U.S. Dist. LEXIS 8282, No. 94 C 3577, 1996 WL 332717, at *2 (N.D.
Ill. June 13, 1996) (citation omitted). The court does not ask whether
the court, a jury, or a different plan administrator would or could have
granted the benefits; any questions of judgment are left to the plan
administrator. Patterson, 70 F.3d at 505 n3. When considering a
claim under the arbitrary and capricious standard, the court may refer
only to that evidence which was before the decision
maker at the time of the denial at issue.*fn2 See Krawczyk v.
Harnischfeger Corp., 41 F.3d 276, 279 (7th Cir. 1994). The court may
not reweigh the evidence before the decision maker, it must only
determine if the decision was reasonable. Chandler v. Underwriters
Laboratories, 850 F. Supp. 728, 734 (N.D. Ill. 1994). Accordingly,
the plan's decision "shall not be overturned . . . if it is possible
to offer a reasoned explanation, based on the evidence, for the
particular outcome." Exborn v. Central States. Southeast &
Southwest Areas Health & Welfare Fund, 900 F.2d 1138, 1142 (7th
Cir. 1990) (citations omitted).
Manny asserts that the denial of his predetermination request for
gastric bypass surgery was arbitrary and capricious. In furtherance of
his assertion, Manny presents all of the correspondence between the two
parties during the time in which his claim was pending and various
letters from his doctors stating his medical necessity for the surgery
and the benefits that he would incur from having it. Manny bases his
assertion that Central States denial of coverage was arbitrary and
capricious on essentially six arguments. Those arguments are: (1) his
surgery would dramatically improve his medical conditions; (2) his
surgery is not cosmetic, as Central States asserts, but a medical
necessity; (3) his morbid obesity is an illness that requires treatment;
(4) the Plan is contradictory because it provides treatment for other
illnesses, such as alcoholism and drug addiction, but not gastric bypass
surgery for the morbidly obese; (5) Central States failed to adequately
review his petition, summarily denying his claims; and (6) the medical
findings of Dr. Buckingham, Central States doctor, should be given no
weight because he failed to physically examine Manny.
Central States contends that its decision to deny benefits was not
arbitrary and capricious. The Plan, which Central States is governed by,
clearly denies benefits for gastric bypass surgery. The Plan states in
Article IV, Section 4.08:
A Covered Individual shall not be entitled to
payment on a claim for benefits for any charge
incurred for treatment or service in connection
with a cosmetic procedure, even if performed for
psychological reasons, unless the treatment or
service is medically required as a result of an
Accidental Bodily Injury incurred while a Covered
This exclusion includes, but is not limited to"
(a) Any surgery primarily for obesity,
including gastric bypass, gastric stapling,
intestinal bypass. . . .
Def. LR 56.1 ex. B at 25 (emphasis added).
Additionally, Central States sought the advice of Dr. Buckingham on the
issue of Manny's necessity for the surgery. Dr. Buckingham reviewed the
medical evidence submitted by Manny and determined that the proposed
gastric bypass surgery would not cure any of Manny's other related health
problems. The surgery, which is designed to reduce a person's weight,
might have an affect on Manny's other health problems, but those results
would only be secondary, or a by-product from Manny's weight loss. Dr.
Buckingham determined that the result of the gastric by-pass surgery
would be weight-loss, which is considered cosmetic and not covered by the
Seeking independent expert advice is evidence of a thorough
investigation, and reliance upon independent experts generally insulates
the fiduciary from judicial reversal. See Hightshue, 135 F.3d
at 1148; Donato v. Metropolitan Life Ins. Co., 19 F.3d 375, 380
(7th Cir. 1994) (holding that an insurance company made a permissible
choice in relying upon independent medical consultant over claimant's
physicians); Anderson v. Operative Plasterers' & Cement Masons'
Int'l Ass'n Local No. 12 Pension & Welfare Plans, 991 F.2d 356,
358 (7th Cir. 1993) (upholding a pension fund's denial of benefits
where the fund relied upon an examination conducted by an independent
In this instance, Manny has failed to establish that Central States'
denial of his request for predetermination of coverage regarding gastric
bypass surgery was arbitrary and capricious. The
evidence shows that Central States reviewed Manny's claim and
denied it, clearly notifying him that their reason for denial was that
the Plan clearly denies coverage for gastric bypass surgery. After the
initial denial, Manny appealed and Central States again denied his claim
based on the written terms of the Plan. For the third and final appeal,
Central States reviewed all of the documents submitted by Manny, the
States Attorney General and Manny's doctors. Additionally, Central States
had an independent physician, Dr. Buckingham, review all of Manny's
medical records. Dr. Buckingham determined that the requested procedure,
gastric bypass surgery, was not a medical necessity, because it is
designed only to reduce a person's weight and any other medical affects
would only be secondary or coincidental. Central States adopted Dr.
Buckingham's finding that the surgery was not a medical necessity and,
after looking at the explicit terms of the Plan, denied the third appeal.
Central States denied all three of Manny's requests for gastric bypass
surgery, based their interpretation on both the written terms of the Plan
and Dr. Buckingham's evaluation, and provided Manny with written notice
as to the basis for each of their denials. The evidence of record
indicates that Central States fully and fairly assessed Manny's claims
and clearly communicated to Manny the specific reasons for their decision
to deny benefits. See Nord, 123 S.Ct. at 1967. Manny has not
disputed the way in which Central States determined to deny his benefits,
only Central States' ultimate determination to deny the benefits. When
reviewing the denial of benefits under ERISA, the Court should not impose
its own belief as to whether or not the benefits should have been denied,
but merely determine whether the process by which the administrator
denied benefits was arbitrary and capricious. Clearly, Central States
denial of benefits was not arbitrary and capricious in this
instance. Central States denied Manny's claims based on the
explicit language of the Plan and a doctor's review of the record.
Central States had substantial evidence to deny Manny's claim.
For the foregoing reasons, Central States Motion for Summary Judgment
is granted. Manny's cross motion for summary judgment is denied. IT IS SO