Swann v. Ryder System, Inc.

          MEMORANDUM OPINION & ORDER

          Joseph M. Hood Senior U.S. District Judge

         When Plaintiff Freddie Swann got hurt off the job, he could no longer work. Under an employer-sponsored insurance plan, Swann was entitled to disability benefits. No. doubt about that. Indeed, he received both short-term and long-term benefits. But upon receiving his long-term benefits, Swann noticed that the payments were substantially less than what he expected. The claim administrator, Defendant Liberty Life Assurance Company of Boston (“Liberty”) explained that the amount reflected 60 percent of Swann's “base pay, ” as calculated by Liberty and Defendant Ryder Systems, Inc. (“Ryder”), Swann's employer, in compliance with the plan.

         Swann disputes Defendants' calculation of his base pay. Swann, a truck driver, argues his base pay includes money for stops, down time, and mileage, which Defendants left out. The difference is thousands of dollars per month. But because the plan grants broad discretion to Defendants to determine Swann's long-term benefits, this Court is limited to narrow review of Liberty's decision under the Employee Retirement Income Security Act (“ERISA”). See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). And upon examination, the Court finds Defendants' determination was not arbitrary or capricious. Thus, for the reasons stated herein, Plaintiff's Motion for Judgment [DE 22');">22');">22');">22');">22');">22');">22');">22] is DENIED and Defendants' Motions [DE 25, 26] are GRANTED.

         I. Background

         Swann drove truck for Ryder. [DE 1-3]. He began work in September 2015. [Id. at p. 6]. Four months later, Swann got hurt off the job. [Id. at p. 7]. His injuries prevented him from engaging in any gainful full-time work. [Id.]. So Swann applied for disability benefits under his employer-sponsored group disability insurance plan.

         Initially, things went smoothly. Swann received short-term disability benefits for six months-the cap allowed by the plan. [Id.]. Once six months were up, Swann had to apply for long-term disability benefits. He did so, and Liberty began paying long-term benefits in July 2016. [Id.]. But the new benefit checks were substantially less than the short-term benefits. Swann wondered why, so checked with Liberty and Ryder.

         The confusion stemmed from the calculation of Swann's “base pay.” The plan documents relevant here comprise two documents:

         (1) The Ryder System, Inc. Summary Plan Description and Benefit Programs (the “Plan”) and (2) the Liberty Group Disability Income Policy (the “Policy”).^[1] [Ryder R. 5, 22');">22');">22');">22');">22');">22');">22');">22, 63]. The official plan documents include the Plan and “contracts between Ryder System, Inc. and the benefit administrators” (in this case, Liberty). [Id. at 22');">22');">22');">22');">22');">22');">22');">22]. When an employee has a question about his plan, the plan documents-meaning both the Plan and Policy-govern the issue. [Id.]. But to the extent the Plan and Policy conflict, language of the Policy controls. [Ryder R. 5]. Understanding Swann's claim requires the Court to look at the Plan and Policy in more detail.

         We start with the Plan, which names Ryder as the Plan Administrator and grants the administrator broad discretion to determine “administer, apply and interpret all plans” and to “decide all factual and legal matters arising in connection with the operation of administration of the plans.” [Ryder R. 21]. In particular, the Plan grants the administrator “absolute discretional authority to . . . make all decisions (including factual decisions) with respect to . . . the amount of, benefits payable under the plans to employees or participants or their beneficiaries.” [Id.]. The discretion also extends to decisions about “legal or factual questions, relating to the calculation and payment of benefits, and all other determinations made under the plans” and resolving and clarifying “any factual or other ambiguities, inconsistences and omissions.” [Id.]. Such discretion is given to Ryder “or, where applicable, any duly authorized delegee of the plan administrator.” [Id.].

         The Plan names Liberty as the benefits administrator for the long-term disability benefits plan. [Id. at 22');">22');">22');">22');">22');">22');">22');">22, 63]. And when describing long-term disability benefits, the Plan continually informs employees that the “insurance carrier”-i.e., Liberty-will be making the decisions. [Id. at 66, 68, 69, 70, 71, 72]. Indeed, in a section titled “Who to Send Your Claims and Appeals To, ” Ryder instructs employees to contact Liberty. [Id. at 55].

         Finally, the Plan outlines pay for the purposes of disability benefits. The Plan first notes that “each benefit plan provides a slightly different definition” of earnings and that “earnings for any given benefit plan shall be defined under the portion of the SPD describing that plan.” [Id. at 76]. The Plan then lists “examples” including base pay, weekly base pay, and monthly base pay, “for the purposes of the STD plan.” [Id.] (emphasis in original). The Plan does not define base pay for the purposes of the long-term benefits plan. But it does define “pre-disability earnings” for the purposes of the long-term plan as “your monthly rate of average earnings in effect on the day before you became disabled. Average earnings means the greater of your base pay or the average of the previous 2 years of total earnings as of August 31, rounded to the next higher thousand.” [Id.].

         Now we turn to the Policy. This first uses the term “base pay” in its definition of “basic monthly earnings” as the “greater of the average of the previous two years of frozen pensionable earnings as of August 31 or frozen base pay established at each annual enrollment, rounded to the next higher thousand.” [Liberty R. 7]. The Policy then provides that an employee's monthly benefit under the plan is based on the person's basic monthly earnings. [Id. at 21]. And like the Plan, the Policy provides broad discretion to the administrator: “Liberty shall possess the authority, in its sole discretion, to construe the term so this policy and to determine benefit eligibility hereunder. Liberty's decision regarding construction of the terms of this policy and benefit eligibility shall be conclusive and binding.” [Id. at 42].

         Although Swann disputed the calculation of base pay, he continued to receive benefits for five months. [DE 22');">22');">22');">22');">22');">22');">22');">22, p. 2]. Liberty then terminated the benefits. [Id.]. Three months later, however, Liberty reinstated the benefits and paid benefits retroactively. [Id.]. But Liberty did not change its base pay calculation.

         The nature of Swann's employment agreement was the source of the “base pay” dispute. As a truck driver, Swann earned 26 center per mile and $18 per hour for “down time, ” as well as a fixed amount for “stops.” [DE 1-3, p. 3]. In the final three-and-a-half months of 2015 (before getting injured), Swann earned $19, 644.06. [Id.]. Only 18 percent of ...