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KELLY v. IBM

October 13, 1983

JOAN H. KELLY
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION, and IBM TOTAL AND PERMANENT DISABILITY INCOME PLAN



The opinion of the court was delivered by: BECHTLE

 BECHTLE, J.

 This action arises under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"). Jurisdiction exists by virtue of ERISA's jurisdictional provision, 29 U.S.C. § 1132(e)(2). Plaintiff, Joan Kelly, is suing defendants, International Business Machines Corporation ("IBM") and its ERISA regulated IBM Total and Permanent Disability Income Plan (the "Plan"), for amounts allegedly due her under the terms of the Plan. Plaintiff also asserts pendent state claims against IBM for wrongful discharge and intentional infliction of emotional distress. Presently before the Court is defendants' motion for summary judgment on all counts of the complaint. For the reasons set forth below, the motion will be granted. *fn1"

 FACTS

 Plaintiff began working for IBM as an administrative trainee on April 19, 1976, and has been an associate administrative account specialist since December, 1977. On February 18, 1980, plaintiff called in sick due to fatigue, joint and muscle pain, malaise, and a low grade fever. She has not worked since.

 When she did not return to work in February, 1980, plaintiff began receiving benefits under IBM's Sickness and Accident Income Plan ("S&A"). Plaintiff received S&A benefits until April 1, 1981, *fn2" when her benefits under this plan expired. Thereafter and until February 8, 1982, plaintiff was afforded "special consideration payments" by defendants. These are payments made after S&A benefits are exhausted while IBM gives individual consideration to an employee's case. During the individual consideration period, IBM assesses the employee's medical condition and then makes a final determination as to whether the employee should either be (1) directed to return to work, or (2) awarded any benefits under the IBM Total and Permanent Disability Income Plan.

 In the course of plaintiff's individual consideration period, she was evaluated by IBM physicians Dr. Krehl and Dr. Silverberg. Additionally, plaintiff's own physician, Dr. Utsinger, reported to IBM on plaintiff's condition. After receiving a final report from Dr. Silverberg, which took into consideration the views of Dr. Krehl and Dr. Utsinger, IBM informed plaintiff that she should return to work.

 Upon receipt of this decision by IBM, plaintiff initiated an intercompany appeal through IBM's "Open Door" policy. The Open Door procedure provides employees who are dissatisfied with management decisions the opportunity to appeal those decisions to higher management. As part of its investigation into plaintiff's appeal, IBM had plaintiff examined by an independent physician, Dr. Rubin, and thereafter by a psychiatrist, Dr. Stern, and a psychologist, Alexander Simos, Ph.D. Dr. Silverberg reviewed the reports of these three independent doctors and again concluded that plaintiff should be directed to return to work. Based on Dr. Silverberg's assessment, plaintiff was told on December 29, 1981, that she should return to work on January 13, 1982. On January 6, 1982, plaintiff wrote to John Opel, then President and Chief Executive Officer of IBM, pursuant to her Open Door rights, challenging IBM's decision that she should return to work. After investigation of plaintiff's letter, Mr. Opel concluded that management's investigation of her concerns was fair and unbiased and that therefore she should return to work. A letter to this effect was sent to plaintiff on February 3, 1982. Plaintiff notified IBM on February 8, 1982, that her health wouldn't permit her to return to work. IBM, viewing plaintiff's position as an election to resign, informed plaintiff that her resignation was effective that same day, February 8, 1982. On February 12, 1982, plaintiff replied stating that she had elected to follow the advice of her physician that she not return to work under IBM's conditions and that she had not resigned but if she was no longer employed it was because IBM had terminated her.

 Two months later, after reviewing the reports in her medical file, plaintiff again wrote Mr. Opel. In this letter dated April 4, 1982, plaintiff contended that the medical reports did not indicate that she could go back to work and further, that she was entitled to benefits under IBM's Total and Permanent Disability Plan. Upon investigation of these claims, IBM reached the following conclusions which it set forth in a letter to plaintiff dated May 24, 1982: (1) medical evidence established that plaintiff was able to return to work; (2) plaintiff was ineligible for benefits since she was not totally disabled within the meaning of the Plan; and (3) even if disabled plaintiff did not have the requisite five years of service necessary to qualify for benefits under the Total and Permanent Disability Plan. Thereafter, plaintiff filed the instant suit against IBM and the Plan raising three claims for relief. Count I alleges that IBM and the Disability Plan violated plaintiff's rights under ERISA by denying her request for Total and Permanent Disability benefits. Count II, a claim brought under state law, alleges that IBM wrongfully discharged plaintiff in order to prevent her from exercising her right to receive benefits under the Disability Plan in violation of the public policy embodied in ERISA, and with malicious intent to harm her and to interfere with her contractual rights as an IBM employee. Count III, also brought under state law, alleges that IBM intentionally inflicted emotional distress on plaintiff by its handling of her claim for disability.

 DISCUSSION

 A. Denial of Benefits

 The role of the Court in reviewing a denial of Plan benefits is quite limited. The appropriate standard of review to be applied to the Plan's decision is whether defendants acted in an arbitrary and capricious manner. The Court is not free to substitute its own judgment for that of the defendants in determining eligibility for Plan benefits. Rosen v. Hotel and Restaurant Employees & Bartenders Union, 637 F.2d 592, 596 n.5 (3d Cir. 1981), cert. denied, 454 U.S. 898, 102 S. Ct. 398, 70 L. Ed. 2d 213 (1981); Paris v. Profit Sharing Plan for Employees of Howard B. Wolf, Inc., 637 F.2d 357, 362 (5th Cir. 1981), cert. denied, 454 U.S. 836, 102 S. Ct. 140, 70 L. Ed. 2d 117 (1981); Cawley v. NMU Pension and Welfare Plan, 457 F. Supp. 301, 303 (S.D.N.Y. 1978). See also, Rosenthal v. National Life Insurance Co., 486 F. Supp. 1018 (S.D.N.Y. 1980). This holds true regardless of whether the plaintiff is challenging a denial of benefits based on a disputed interpretation of the Plan's particular language and rules, or whether the plaintiff's challenge goes to application of a Plan provision or rule not in dispute to the facts of plaintiff's individual case. See Rosen v. Hotel and Restaurant Employees & Bartenders Union, supra, 637 F.2d at 596-597; Gordon v. ILWU-PMA Benefit Funds, 616 F.2d 433 (9th Cir. 1980), reh. denied; Bickel v. Long Term Disability Plan of Western Electric, 541 F. Supp. 685 (E.D. Pa. 1982).

 Application of this standard to the present situation requires affirmance of the Plan's decision to deny plaintiff Total and Permanent Disability Income Plan benefits. Defendants' denial was based on two determinations: first, that plaintiff lacked the five years of service required for receipt of lifetime benefits under the Plan and second, that even assuming arguendo that plaintiff had sufficient service, plaintiff was not totally and permanently disabled within the meaning of the Plan. A review of the record leads the Court to conclude that the defendants' threshold determination that plaintiff did not meet the necessary service requirement was based on a reasonable interpretation of the Plan and was therefore neither arbitrary nor capricious. Accordingly, it is unnecessary to discuss whether the defendants' determination that plaintiff was not totally disabled would survive scrutiny upon judicial review.

 IBM's Total and Permanent Disability Income Plan, found in the IBM employee handbook, "About Your ...


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