Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. 1:09-cv-00977-Jeffrey N. Cole, Magistrate Judge.
The opinion of the court was delivered by: Ripple, Circuit Judge.
Before RIPPLE, EVANS and SYKES, Circuit Judges.*fn1
Basil Frye brought this ERISA*fn2 action in the United States District Court for the Northern District of Illinois against his former employer, Thompson Steel Company. Mr. Frye sought review of a denial of pension benefits by the Thompson Steel Retirement Committee ("the Committee"), which administers a company-sponsored retirement plan. The Committee had determined that the plan required it to offset against his pension the amount Mr. Frye previously had received from Thompson Steel in settlement of two Illinois workers' compensation permanent partial disability claims. On cross-motions for summary judgment on the administrative record, the district court held that the Committee had misread the plain language of the plan and that the offset therefore was arbitrary and capricious. Accordingly, the district court granted summary judgment in favor of Mr. Frye and remanded the matter to the Committee for a new determination. Thompson Steel now appeals.
We conclude that the decision of the Committee was not arbitrary and capricious. The Committee's determination that the offset provision is applicable has rational sup-port in the plan's terms. Accordingly, we reverse the judgment of the district court and remand the case with directions that the court grant summary judgment for Thompson Steel.
In 2007, Mr. Frye, a longtime employee at Thompson Steel and a member of the United Steelworkers of America, Local 7773, retired when Thompson Steel's Franklin Park, Illinois steel plant, at which he had worked for forty-two years, was shut down. At the time of the shutdown, he had the choice of being laid off or of taking early retirement. He chose the latter.
Thompson Steel and Mr. Frye's union had negotiated the terms of the benefit plan. Under its terms, Mr. Frye's pension payment, without any offset, was $688.13 a month. The Committee notified him, however, that payment of his pension would be deferred for eight years and two months. According to the Committee, the terms of the benefit plan required that, before the pension payments could start, Mr. Frye had to pay back the total amount of payments from workers' compensation settlements that he had received after sustaining two onthe-job injuries in 2005 and 2006. The Committee later recalculated the amount due and increased the offset period to about ten years and two months. See R.30-3 at 2 (AR0002).*fn3
We now turn to a detailed examination of the payments that are the basis of the claimed deduction from Mr. Frye's retirement pension. During his employment at Thompson Steel, Mr. Frye suffered two workplace injuries, one to his right arm in 2005 and one to his left leg almost exactly one year later. After his arm injury, Mr. Frye missed twelve weeks of work and received $6,893.16-or $574.43 per week-in "temporary total disability benefits" for lost wages. Id. at 15 (AR0072). After his leg injury, he missed no work and did not receive any temporary disability benefits. He continued to work for another year until the plant closed.
Mr. Frye also received workers' compensation settlement awards for permanent partial disabilities of $48,597.06 for his arm injury and $35,291.50 for his leg injury from Thompson Steel. The total award amount was $83,888.56. After the subtraction of attorney's fees, the cost of obtaining medical reports and the cost of making copies of exhibits and reports, Mr. Frye actually received $75,622.09. See id. at 16, 18 (AR0073, AR0075).
The Illinois Workers' Compensation Commission ("IWCC") calculated the amount of Mr. Frye's settle-ment awards in the following manner. The Illinois Workers' Compensation Act, 820 ILCS 305, contains a schedule that sets a certain number of weeks' compensation for the loss of a body part or the loss of use of a body part, called a "permanent partial disability" ("PPD"). For*fn4 example, at the time Mr. Frye was injured, the loss of an arm or the full loss of the use of an arm was set at 235 weeks PPD, and the loss of a leg at 215 weeks PPD.
See 820 ILCS 305/8(e)(10), (12). Because Mr. Frye lost only part of the use of his limbs, the number of weeks was multiplied by the percentage of lost use. IWCC determined that Mr. Frye had lost 40% of the use of his right arm and 35% of the use of his left leg; after multiplication, this resulted in 94 weeks for the arm and 75.25 weeks for the leg. R.30-3 at 16, 18 (AR0073, AR0075). Therefore, IWCC determined the total settlement amount by multiplying the number of weeks PPD by a statutorily fixed percentage, 60%, of Mr. Frye's average weekly wage for the year preceding the injury. The settlement*fn5 agreements recite that, given Mr. Frye's life expectancy of 16.8 years from the date of settlement, the settlement amount would compensate Mr. Frye for the equivalent of $86.56 per week for the rest of his life. See id. The award did not include medical expenses, which also were paid by Thompson Steel.
We now examine the deduction of these settlement amounts for permanent partial disability from Mr. Frye's pension. To ensure a comprehensive understanding, we describe the key provisions of the retirement plan that are pertinent to this matter.
The pension offset is based on section 4.8 of the retirement plan. That section provides:
Any amount paid to or on behalf of any Employee or Pensioner on account of injury or occupational disease causing disability in the nature of a permanent disability for which the Company is liable . . . pursuant to Workers' Compensation . . . shall be deducted from or charged against any regular pension payable under this Plan[.]
R.30-5 at 72-73 (AR00221-22) (emphasis added). The Committee determined that this provision applies to Mr. Frye's permanent partial disability awards and that Thompson Steel is entitled to recoup the $83,888.56 by withholding Mr. Frye's pension payments in the full amount of $688.13 a month until the awards are paid back. Under this determination, the Committee will not begin paying Mr. Frye any portion of ...