The opinion of the court was delivered by: TERRENCE F. McVERRY, District Judge
MEMORANDUM OPINION AND ORDER
Before the Court for consideration and disposition are
PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (Document No. 21), with
brief in support (Document No. 22), Defendant's response
thereto (Document No. 25), and Plaintiff's reply (Document No.
29). Also before the Court are DEFENDANT SMS DEMAG INC.'S MOTION
FOR SUMMARY JUDGMENT (Document No. 30), with brief in support
(Document No. 31), Plaintiff's response thereto (Document No.
35), and Defendant's reply (Document No. 38).
After considering the filings of the parties, the evidence of
record and the relevant statutory and case law, Plaintiff's
Motion for Summary Judgment will be granted and Defendant's
Motion for Summary Judgment will be denied.
Plaintiff Evelyn C. Bland ("Mrs. Bland") filed this action
against Defendant SMS Demag, Inc. ("Defendant") pursuant to the
Employee Retirement Income Security Act of 1974 ("ERISA"),
29 U.S.C. § 1001 et seq. Defendant is the Plan Administrator for
the SMS Demag, Inc. Health and Welfare Plan No. 501 ("the Plan").
Pltf's Stmt. of Facts at ¶ 11; Def's Resp. to Pltf's Facts at ¶
11. Defendant has been the Plan Administrator since November of
1999. Pltf's Stmt. of Facts at ¶ 11.
On July 18, 1945, Plaintiff and Ray Bland were married. Pltf's
Stmt. of Facts at ¶ 2. As of November 23, 1987, the approximate
date of his retirement, Ray Bland had been employed by SMS
Sutton, Inc. and its predecessors in interest for approximately
thirty-seven (37) years. Id. at ¶ 4. SMS Sutton, Inc. later
became SMS Eumenco, which is the successor-in-interest to SMS Sutton, Inc. Id. at ¶ 14.
On November 23, 1987, Ray Bland entered into a Severance
Agreement with SMS Sutton, Inc. Id. at ¶ 6. Pursuant to the
Severance Agreement, and in exchange for consideration, SMS
Sutton, Inc. promised that it would "include you [Ray Bland] and
your spouse [Evelyn Bland] in the company medical plans for
life." Pltf's Stmt. of Facts at ¶ 7. Subsequently, SMS Sutton,
Inc. and SMS Eumenco included both Ray Bland and Mrs. Bland in
the company medical plans. Id. at ¶ 8. The parties agree that
"the November 23, 1987 Severance Agreement between Raymond A.
Bland and SMS Sutton, Inc. is a modification to the 1987 Plan."
Def's Resp. to Pltf's Facts at ¶ 12. However, Defendant contends
that Mrs. Bland was never "enrolled in the plan in her own
right," and that "her only status in the Plan was as the
dependent of Ray Bland." Def's Resp. to Pltf's Facts at ¶ 8.
The Blands were continuously married until Ray Bland's death on
July 14, 2003, after a long battle with cancer. Pltf's Stmt. of
Facts at ¶ 2-3. On December 10, 2003 SMS Eumenco notified Mrs.
Bland that her inclusion in the plan ceased with her husband's
death and would be discontinued, but that she would be able to
continue coverage, at her own expense, under COBRA until July of
2006. Def's Resp. to Pltf's Facts at ¶ 14. In a letter dated
December 20, 2003, Mrs. Bland requested that SMS Eumenco, Inc.
reconsider its decision to discontinue her health coverage. See
Def's Resp. to Pltf's Facts, exh. 8. The letter reads, in part,
There must be some mistake. My husband's severance
agreement with the company clearly stated that we
would both be covered for life, not his life, but
both of our lives. My husband realized that his
health insurance benefits were rather unique and he
had been given special consideration in this area. *
When Ray was ill we spoke about the various areas of
my life that would have to change when he was gone.
Missing him was of course the greatest, but other
financial matters also had to be addressed.
Repeatedly he told me that at least I did not have to
worry about my medical benefits, because I would
still be covered with Sutton until my death. He had
mentioned this many times over the years. It was one
area that there would be no change and this gave him
some sense of reassurance knowing that he would not
be there to take care of me any longer. This was my
husband's clear understanding when he retired, and
certainly the intent of Mr. Sutton as he expressed to
Mrs. Bland's request for reconsideration was forwarded to
Defendant, which treated her request as an appeal under ERISA. Def's Stmt. of Facts at ¶ 18.
Peter Fernie ("Fernie"), the Vice-President of SMS Demag., Inc.
and the decisionmaker in this case, reviewed the Master Plan
Document, Defendant's contract with Highmark Blue Cross Blue
Shield ("the Contract"), the 1987 Plan modification set forth in
the Severance Agreement, and the facts submitted by Mrs. Bland.
Id. at ¶ 19. Fernie also considered what Defendant
characterizes as "the Plan's position with respect to providing
insurance to the spouses of retirees, the spouses of deceased
employees and the spouses of deceased retired employees . . ."
Id. at ¶ 20. The Plan Administrator is authorized to "construe
and interpret this Plan and the Plan Programs including, without
limitation, correcting any defect, supplying and omitting and
reconciling any inconsistency . . ." Id. at ¶ 18.
In a letter to Mrs. Bland dated March 12, 2004, Fernie
articulated his determination that Mrs. Bland was no longer
eligible for health coverage under the plan. Def's Appx., exh. F.
Fernie found that "the Master Plan Document defers to the
eligibility provisions established by the Contract," and that
Mrs. Bland did not fulfill the definition of an "Employee" under
the Contract because she was not an hourly or salaried employee.
Id. Fernie also informed Mrs. Bland that she did not qualify
for coverage under the Plan as a dependent because "a dependent
has standing for coverage under the Plan only through the
Employee," and "there is no one to define as an Employee . . ."
Id. Significantly, Fernie's letter makes no reference
whatsoever to either the existence or the language of the 1987
modification to the Plan.
Mrs. Bland's son-in-law requested a reconsideration of the
denial. Def's Stmt. of Facts at ¶ 23. Fernie reconsidered and
reaffirmed his earlier decision. Id. at ¶ 25; see also Def's
Appx., exh. J. This action followed.
Rule 56(c) of the Federal Rules of Civil Procedure reads, in
pertinent part, as follows:
[Summary Judgment] shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories
and admissions on file, together with the affidavits,
if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled
to judgment as a matter of law. Fed.R.Civ.P. 56(c).
An issue of material fact is genuine only if the evidence is
such that a reasonable jury could return a verdict for the
non-moving party. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242
, 248 (1986). The court must view the facts in a light most
favorable to the non-moving party, and the burden of establishing
that no genuine issue of material fact exists rests with the
movant. Celotex, 477 U.S. at 323. The "existence of disputed
issues of material fact should be ascertained by ...