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Gaines v. Amalgamated Insurance Fund

January 23, 1985

GAINES, EDITH, APPELLEE
v.
THE AMALGAMATED INSURANCE FUND, APPELLANT



On Appeal from the United States District Court for the Eastern District of Pennsylvania.

Garth and Sloviter, Circuit Judges and Barry, District Judge.*fn*

Author: Garth

GARTH, Circuit Judge

On essentially undisputed facts, the parties to this case dispute whether the Trustees' of the Amalgamated Pension Fund ("the Fund") interpretation of the Plan document to deny disability benefits to Edith Gaines is a permissible one. The district court found the Trustees' interpretation to be arbitrary and capricious and directed payment of benefits to Gaines. Because we believe that the Trustee's interpretation of the Plan is a reasonable one, and is therefore neither arbitrary nor capricious, we reverse the judgment of the district court.

I.

The Plan provision in question requires for eligibility, that a disability claimant:

(b) Has been Totally and Permanently Disabled, as defined in Section 2.1*fn1 hereof, such disability has continued for a period of at least 18 consecutive weeks, and is eligible to receive disability insurance benefits under Title II of the Federal Social Security Act within nine months of last date of Covered Employment.

Section 4.3(b). The Trustees interpret this provision to require for Plan eligibility that a claimant actually becomes eligible to receive benefits within nine months of termination of employment.*fn2 Under the Trustees' view, only those found to have become disabled within three months of termination are in fact eligible; the Trustees having interpreted the nine-month waiting period prescribed by Social Security.

Gaines, on the other hand, interprets this provision to require only that the Social Security Administration find that the onset of the claimant's disability, rather than the eligibility to receive Social Security benefits, occurred within nine months of termination. Since a claimant is not eligible to receive Social Security Disability benefits until six months after the date of onset of disability, this difference between the two interpretations is significant.

At trial, the parties stipulated that Gaines was a covered employee, had served the required number of years, and last worked on August 4, 1978. An Administrative Law Judge's report*fn3 found that Gaines' disability commenced on April 23, 1979 (eight months and nineteen days after her termination). According to the April 23, 1979 date of onset of disability, Gaines' Social Security benefits began in October, 1979, 14 months after termination, or five months beyond the period of time which would qualify Gaines under the Trustees' interpretation of the Plan.

II.

Judicial review of interpretation of a pension plan document by the Trustees charged with administering the Plan is limited to whether the Trustees' interpretation is arbitrary and capricious. Wolf v. National Shopmen Pension Fund, 728 F.2d 182, 187 (3d Cir. 1984); Rosen v. Hotel and Restaurant Employees and Bartenders Union, 637 F.2d 592, 596 n. 5 (3d Cir), cert. denied, 454 U.S. 898, 70 L. Ed. 2d 213, 102 S. Ct. 398 (1981).

A plan interpretation should be upheld even if the court disagrees with it, so long as the interpretation is rationally related to a valid plan purpose and not contrary to the plain language of the plan. See Miles v. New York State Teamsters Conference Pension and Retirement Fund Employee Pension Benefit Plan, 698 F.2d 593, 601 (2d Cir.), cert. denied 464 U.S. 829, 104 S. Ct. 105, 78 L. Ed. 2d 108 (1983). Our review of the district court's determination that the Trustees' interpretation was arbitrary and capricious is plenary for application of legal principles. Findings of fact are measured by a clearly erroneous standard. The question of whether ambiguity exists is a question of law, subject to plenary review. See Fox v. U.S. Department of Housing, 680 F.2d 315, 319 (3d Cir. 1982).

The terms of the Plan provide for eligibility for a disability pension if the claimant "is eligible to receive disability insurance benefits under Title II of the Federal Social Security Act within nine months of last date of Covered Employment." Under the Social Security Act (SSA), 42 U.S.C. ยง 423, the time of entitlement for disability is defined as "each month beginning with the first month after his waiting period. . . ." Section 423(c)(2) defines this waiting period as "the earliest period of five consecutive calendar months throughout which the individual with respect to whom such application is filed has been under a disability. . . ." Thus, under the SSA, benefits do not begin, nor is a claimant entitled to benefits, until the sixth ...


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