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July 19, 1985


The opinion of the court was delivered by: TROUTMAN



 Before this Court are three cases involving Bethlehem Steel's 1980 Salaried Pension Plan. All three cases involve the denial of a lump-sum form of payment of retirement benefits. Plaintiffs Raymond and Alice Foulke, Nazareno and Irene Medei, and Andrew and Marian Kavcak, allege violations of the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. (ERISA). Specifically, they contend that the General Pension Board's denial of their requests for a lump-sum payment of retirement benefits violated §§ 1132 and 1133 of ERISA. *fn1"

 Because the legal issues involved are common to all three cases and the facts particular to each set of plaintiffs are largely immaterial to the result, the decision as to the Kavcaks will not be premised upon their failure to respond to the motion for summary judgment, although such would be justified. Fed. R. Civ. P. 56(e), Local R. Civ. P. 20(c).

 Despite urging that there are factual issues in dispute, the Foulke plaintiffs are nevertheless "in substantial agreement with the statement of the case as set forth in the Memorandum filed on behalf of Defendants". (Plaintiffs' Memorandum in Opposition to Defendants' Motion for Summary Judgment, CA82-5160, Doc. #49, at 2.) The Medeis claim that the issue of fact in dispute is whether the action of the General Pension Board was arbitrary and capricious in denying them the lump-sum form of payment. That, however, is a legal conclusion rather than a factual determination. Facts which reveal inconsistencies in the application of the standards governing the granting of the lump-sum option could, of course, justify a conclusion that the Board acted arbitrarily and capriciously with respect to these plaintiffs. See, District 2, United Mine Workers of America, et al. v. Helen Mining Co., et al., 762 F.2d 1155 (3d Cir. 1985).

 There are in reality two sets of facts relevant here, those relating to the administration of the Pension Plan with respect to the lump-sum payment option and those relating to the specific reasons that the plaintiffs in these cases were denied that option. The specific facts will be more understandable against the backdrop of the Plan provisions, and so we turn to these first.

 Section 3.12 of the Bethlehem 1980 Salaried Pension Plan provides in pertinent part:

Upon application prior to retirement by a participant who would otherwise be entitled to receive a regular pension, the Plan Administrator may make a lump-sum payment to such participant (in lieu of his special payment and his regular pension and the surviving spouse's benefit for which his surviving spouse might otherwise become eligible under paragraph 4.1) in an amount equal to the sum of such special payment and the actuarial value of such regular pension and of such surviving spouse's benefit. A lump-sum payment may be made to such participant only if application therefor is made after applicant has attained the age of 55 years, and if the application is accompanied by evidence, satisfactory to the General Pension Board, of the good health of the participant and the spouse, if any, of the participant.

 It is undisputed that plaintiffs here qualified for the lump-sum option in every respect but one: they could not demonstrate that they, their spouses or both were in good health to the satisfaction of the General Pension Board.

 The Pension Plan provision relating to the lump-sum option was supplemented by regulations. Those in effect when plaintiffs applied for the lump-sum option provided, inter alia, that the request for lump-sum payment be accompanied by a Report of Physical Examination on a form supplied by the Plan Administrator. Both the applicant and his spouse were required to submit the physical examination report. The Administrator or the Board were permitted to request additional information from the applicant with respect to any condition of eligibility. The applications of all but principal officers were first reviewed by the Plan Administrator, who advised the Board, on a monthly basis, of his dispositions. The Plan Administrator submitted the physical examination reports to the Corporate Medical Director for review and was entitled to rely upon his determination of whether or not the applicant and spouse were in good health for the purpose of the lump-sum payment. The applicant was to be notified immediately of the Plan Administrator's decision. If disapproved, the notification was to inform the applicant of the reason(s), of his right to review by the Board and the procedures to be followed in requesting review.

 If the reason for disapproval was lack of good health, the Plan Administrator was to arrange for an independent agency to review the Corporate Medical Director's determination that the applicant, his spouse, or both, were not in good health. At all times that this provision was in effect, Aetna Life Insurance Company's Medical Department was the independent agency to which the disapproved applicant's physical examination report was referred. Aetna's determination was deemed satisfactory by the General Pension Board.

 When Aetna was selected as the independent reviewing agency, it made available to Bethlehem Steel's Corporate Medical Director its Manual of Medical Selection to use in making the initial determinations of good health. The manual is a standardized system for assessing the health risks of various medical conditions. Aetna relied upon the Manual in making decisions as to the insurability of and rate structure to be applied to its insurance customers. Based upon mortality studies of insured lives, the Aetna Manual assigns "debit points" to certain medical conditions of the person being evaluated and the individual's points are then totaled. For purposes of the lump-sum payment, a total in excess of 150 points resulted in a determination that the applicant was not in good health.

 Prior to 1981, the General Pension Board reviewed the Corporate Medical Director's determination that an applicant or spouse or both were not in good health by referring the physical examination reports to a third physician acceptable to both the applicant and the Corporate Medical Director, whose determination was accepted by the Board. (Affidavits of David Kempken in support of defendants' motions for summary judgment.) That procedure was changed when the Board decided, upon the recommendation of ...

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