ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDMENT; DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDMENT

JAMES WARE, District Judge.

Presently before the Court are the parties' Cross-Motions for Partial Summary Judgment on the Offset Issue.1 The Court conducted a hearing on April 5, 2010. At the April 5 hearing, the Court ordered further briefing from the parties on the issue of whether the Plan language allows offset of pension benefits. Both parties timely filed their supplemental briefs.2 Based on the papers submitted to date and oral argument, the Court GRANTS Defendant's Motion for Summary Judgment and DENIES Plaintiffs Motion for Summary Judgment.

A. Background

A detailed outline of the factual background and procedural history of this case may be found in the Court's March 21, 2008 Order Granting in Part and Denying in Part Plaintiffs Motion for Summary Judgment; Denying Defendant's Motion for Summary Judgment; Remanding for Reconsideration. (hereafter, "March 21, 2008 Order," Docket Item No. 68.) The Court reviews the relevant procedural history to the extent it implicates the present Motion.

In its March 21, 2008 Order, the Court remanded the case for determination of Plaintiffs claim for short-term disability ("STD") benefits. In a Joint Case Management Statement filed on June 13, 2008, the parties represented that on remand, the Claims Administrator ("Sedgwick") awarded Plaintiff the STD benefits in question. (hereafter, "Statement," Docket Item No. 98.) In the Statement, Plaintiff sought an order declaring that he was disabled throughout the "own occupation" STD period, or alternatively (1) reinstatement of his long-term disability ("LTD") through entry of judgment without further showing; (2) a finding by the Court that he remained disabled from any occupation through entry of judgment; or (3) retention of jurisdiction and an additional remand for a determination by the Plan Administrator that he is entitled to LTD benefits through entry of Judgment. (Statement at 3.)

In a June 17, 2008 Order Staying the Case, the Court found Plaintiffs request that the Court determine whether he was entitled to LTD improper since he had not yet filed his request for LTD with the Plan Administrator. (See Docket Item No. 99.) Upon filing his request, Sedgwick awarded Plaintiff LTD benefits, as offset by his pension benefits. (Defendant's Motion at 2.) In a subsequent Joint Case Management Statement, Plaintiff objected to the offset of his LTD benefits. (See Docket Item No. 109.) In a December 9, 2008 Order following a Case Management Conference, the Court remanded to the Plan Administrator the issue of whether Plaintiffs LTD benefits should be offset by Plaintiff's pension benefits. (See Docket Item No. 113.) In a letter dated February 11, 2009, Sedgwick denied Plaintiffs appeal of its decision to offset his LTD benefits on the ground that such offset is permitted under the plain language of the Plan. (hereafter, "February 11, 2009 Letter," Plaintiffs Motion, Ex. 18.)

B. Standards

Summary judgment is proper "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). The purpose of summary judgment "is to isolate and dispose of factually unsupported claims or defenses." Celotex v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Where the abuse of discretion standard applies in an ERISA benefits denial case, "a motion for summary judgment is merely the conduit to bring the legal question before the district court and the usual tests of summary judgment, such as whether a genuine dispute of material facts exists, do not apply." Nolan v. Heald College, 551 F.3d 1148, 1154 (9th Cir.2009).

C. Discussion

1. Standard of Review

Defendant contends that the Court should review Sedgwick's denial of Plaintiff's claim regarding offset of benefits for abuse of discretion only. (Defendant's Motion at 7-8.) Plaintiff responds that a less deferential standard is appropriate. (Plaintiffs Motion at 22-25.)

"Where the plan vests the administrator with the discretionary authority to determine eligibility for benefits, ... a district court may review the administrator's determination only for an abuse of discretion." Taft v. Equitable Life Assur. Soc., 9 F.3d 1469, 1471 (9th Cir.1993) (citing Firestone, 489 U.S. at 115, 109 S.Ct. 948; Eley v. Boeing Co., 945 F.2d 276, 278 (9th Cir. 1991)) (abrogated on other grounds). Under this standard, the court may review only that evidence which was before the plan administrator. Id. The court may not disturb the administrator's decision unless the decision rendered (1) is without any explanation, Eley, 945 F.2d at 279, (2) conflicts with the plain language of the plan, id., or (3) is based on clearly erroneous findings of fact, Taft, 9 F.3d at 1473.

(Administrative Record at 995, hereafter, "AR," Docket Item No. 36.)

Further, the Plan grants to each Claims Administrator "full and exclusive authority and discretion to grant and deny claims under the Plan, including the power to interpret the Plan and to determine the eligibility of any individual to participate in and receive benefits under the Plan." (AR at 1065.) The Claims Administrator's decisions in this regard "shall be final and conclusive and shall not be subject to further review." (Id.)

Plaintiff contends that Sedgwick's decision is not entitled to deference on the grounds that: (1) Sedgwick was biased; (2) Sedgwick offered inconsistent reasons for its denial; and (3) Sedgwick engaged in procedural irregularities.3

As an initial matter, the Court finds that Plaintiff does not present material or probative evidence to support its naked assertion that Sedgwick "worked hand in hand with AT & T on the interpretation." (See Plaintiffs Opposition at 12.) Plaintiff presents correspondence between counsel for the Plan Administrator and the Claims Administrator regarding Plaintiffs claim as to offset of his LTD benefits. (See Plaintiffs Motion, Ex. 29.) However, the referenced letter only appears to forward a letter from Plaintiffs counsel to the Claims Administrator so that it could be processed as a formal claim. There is no indication that the Plan Administrator's counsel attempted to influence the Claims Administrator's ultimate decision. Furthermore, there is no structural conflict as described by the Ninth Circuit in Abatie v. Alta Health & Life Ins. Co. because the Plan grants unreviewable decisionmaking authority to the Claims Administrator. 458 F.3d 955, 966-67 (9th Cir.2006) (a reviewing court must always consider the "inherent conflict that exists when a plan administrator both administers the plan and funds it"). Thus, the Court finds that there is no actual or structural bias or conflict that would justify a less deferential standard of review.

The Court does not find any evidence that Sedgwick changed its reason for applying the offset during the administrative appeal. In its February 11, 2009 letter denying Plaintiffs appeal of Sedgwick's decision to offset Plaintiffs LTD benefits, Sedgwick cited the Summary Plan Document ("SPD") provision that allows certain pension benefits to be subtracted from LTD payments. (Plaintiffs Motion, Ex. 18.) Plaintiff provides no evidence that Sedgwick ever provided any other inconsistent explanation.

Finally, the Court does not find any evidence of procedural irregularities. Plaintiff contends that his claim was unduly delayed because the Plan provided one address for appeals submissions, a second address to request Plan and SPD documents, and a third address to request the claim file. (See Plaintiffs Opposition at 9, 23.) In support of his contention, Plaintiff cites an ERISA regulation that obligates Plans to "establish and maintain reasonable claims procedures." 29 C.F.R. § 2560.503-1(b)(3). As examples of claims procedures that unduly inhibit or hamper processing of benefits claims, the regulation offers: (1) "a provision or practice that requires payment of a fee or costs as a condition to making a claim or to appealing an adverse benefit determination"; and (2) "the denial of a claim for failure to obtain a prior approval under circumstances that would make obtaining such prior approval impossible or where application of the prior approval process could seriously jeopardize the life or health of the claimant." (Id.) The Court finds that maintaining different mailing addresses for different categories of processing requests is not the type of procedure that could reasonably fall into the same category as a pre-payment or prior approval requirement.

In sum, the Court finds that the Plan language unambiguously imparts full discretionary authority on the Plan Administrator to interpret the provisions of the Plan and to make eligibility determinations as needed. Accordingly, the Court finds that Sedgwick's denial of Plaintiffs claim regarding offset of benefits is properly reviewed for abuse of discretion only.

2. Denial of Plaintiffs Appeal for Offset Benefits

At issue is whether Sedgwick abused its discretion when it determined that Plaintiffs LTD benefits were subject to offset by a transfer of Plaintiffs entire accrued pension benefit to an Individual Retirement Account ("IRA").

An ERISA plan administrator abuses its discretion if it renders decisions without any explanation, construes provisions of the plan in a way that conflicts with the plain language of the plan, or relies on clearly erroneous findings of fact in making benefit determinations. Taft v. Equitable Life Assur. Soc., 9 F.3d 1469, 1472-73 (9th Cir.1993). On the other hand, the administrator's decision is not an abuse of discretion if it is based on a reasonable interpretation of the plan's terms and was made in good faith. Estate of Shockley v. Alyeska Pipeline Service Co., 130 F.3d 403, 405 (9th Cir.1997).

Here, the Plan provides the following benefit offset provision: "In addition to those listed in the applicable SPD, other benefits that reduce Benefits paid under the Plan include all benefits for which the Employee would be eligible if he applied for them, whether or not he actually receives them." (AR at 1060.) The SPD further provides:

(AR at 968-69.)

On or around November 7, 2005, Plaintiff and his wife executed a "Retirement Election—Lump Sum" form that authorized a direct rollover of Plaintiffs entire accrued pension benefit to an IRA account with Charles Schwab. (Plaintiffs Motion, Ex. 3.) On December 16, 2005, Charles Schwab confirmed that the transfer of funds had occurred. (Plaintiffs Motion, Ex. 6.) In a letter dated August 12, 2008, Sedgwick notified Plaintiff that his request for LTD benefits had been approved, and that his "LTD benefit is reduced by certain other disability benefits such as Pension." (hereafter, "August 12, 2008 Letter," Plaintiffs Motion, Ex. 5.) In its August 12, 2008 letter, Sedgwick also stated that it had "received information that [Plaintiff] elected a lump-sum rollover [of his] pension in November 2005," and that the Plan had "calculated an estimated single-life monthly annuity of $74.71, and this amount also reduced [his] payable LTD monthly benefit." (Id.)

The issue then becomes whether Sedgwick abused its discretion in denying Plaintiff's appeal of Sedgwick's decision to offset his LTD benefits.

a. Sedgwick's Explanation of the Reason for the Benefit Denial

At issue is whether Sedgwick provided Plaintiff with any explanation of its decision to offset his LTD benefits.

The Court finds that on several occasions, Sedgwick provided Plaintiff with an explanation of the reason for the benefit offset. Namely, the August 12, 2008 Letter explained that since Plaintiff elected a lump-sum rollover of his pension, his monthly LTD benefit would be reduced by an amount representing a single-life monthly annuity. Moreover, in its February 11, 2009 Letter denying Plaintiff's appeal of the offset decision, Sedgwick again explained that under the terms of the Plan as set out in the SPD, the Plan may reduce LTD benefits by benefits received from another source, such as a pension. (February 11, 2009 Letter at 1.) Sedgwick stated that since Plaintiff elected to receive his pension in a lump-sum cashout, his monthly LTD benefit would be reduced by an equivalent amount. (Id. at 2.) Thus, the Court finds that Sedgwick did not deny Plaintiffs claim without any explanation. See Eley, 945 F.2d at 279.

b. Conflict with Plain Language of the Plan

At issue is whether Sedgwick's decision to offset Plaintiff's LTD benefits conflicts with the plain language of the plan.

As previously discussed, the Plan expressly authorizes the Claims Administrator to reduce the LTD benefit by any pension benefits the participant may receive from any company pension plan. The issue then becomes whether Plaintiff "received" a benefit from his pension plan when he rolled over his entire accrued pension benefit to an IRA account. In light of the SPD's language specifically referring to a pension "cashout" as a manner in which to receive a pension benefit,4 and the Retirement Election form's inclusion of a rollover to an IRA as a "lump sum" payout,5 the Court finds that it is not unreasonable to interpret the Plan to include such a rollover within the ambit of "pension benefits [the participant] may receive."

Plaintiff relies on Blankenship v. Liberty Life Assurance Co. of Boston for the proposition that retirement benefits transferred to an IRA account are not "received" by the plan participant as a matter of law.6 However, Plaintiffs reliance on Blankenship is misplaced. Unlike here, the plan at issue in Blankenship "did not give the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Id. at 624 (internal quotation omitted). Thus, the district court in that case applied a de novo, rather than abuse of discretion, standard of review. Id. In reviewing the district court's determination that the plan could not offset benefits by the amount of pension benefits transferred to an IRA account, the Ninth Circuit found that the term "receives" was not defined in the plan. Id. at 624. Since the term "receives" was thus ambiguous in the context of the plan, the court applied the rule of contra proferentem, which holds that "if, after applying the normal principles of contractual construction, the insurance contract is fairly susceptible of two different interpretations, another rule of construction will be applied: the interpretation that is most favorable to the insured will be adopted." Id. at 625 (internal citation omitted). Here, however, the Plan Administrator is expressly granted "sole and absolute discretion to interpret the provisions of the Plan." (See AR 995.) Thus, there is no need to apply principles of contract construction—under the abuse of discretion standard, the Court must affirm Sedgwick's decision to offset Plaintiff's LTD benefit unless a reasonable interpretation of the Plan language "pension benefits you may receive" could not encompass a rollover of Plaintiffs pension into an IRA account. See Estate of Shockley, 130 F.3d at 405.

Finally, the Court acknowledges that there is an inherent tension in the Plan language because a common sense understanding of the term "disability income" does not naturally include "pension benefits." Standing alone, the term appears to refer to sources of replacement income that would typically be provided to an employee as a result of being disabled, such as workers' compensation or social security disability insurance. A pension, on the other hand, is normally a benefit that is intended to provide for employees during their retirement and is not at all dependent on whether the beneficiary is disabled. Here, however, the Plan language explicitly enumerates pension benefits as an example of a source of disability income, and thus the Court must conclude that it is reasonable for the Plan to interpret the term disability income to include pension benefits. Since ERISA does not impose on employers an obligation to provide their employees with any benefits at all, ERISA does not provide any legal basis for the Court to question the fairness of the Plan's substantive provisions, as long as the Plan interprets those provisions reasonably. See, e.g., Fuller v. Liberty Life Assurance of Boston, 302 F.Supp.2d 525, 535 (W.D.N.C.2004) ("Although ERISA establishes a comprehensive regulatory scheme for employee welfare benefit plans, it does not mandate any minimum substantive content for such plans.").

Accordingly, the Court finds that Sedgwick's decision to offset Plaintiffs LTD benefits did not contradict the plain language of the Plan. See Eley, 945 F.2d at 279.7

In sum, the Court finds that Sedgwick did not abuse its discretion when it denied Plaintiffs appeal of Sedgwick's decision to offset Plaintiff's LTD benefits.

3. ADEA Benefit Offset Requirements

In the alternative, Plaintiff contends that Sedgwick's decision to offset Plaintiffs LTD benefits violated the Age Discrimination in Employment Act ("ADEA"). (Plaintiffs Motion at 12.)

Here, there is no evidence that Plaintiffs election to rollover his lump-sum pension benefit into an IRA account was not fully voluntary. Furthermore, unlike in Kalvinskas, the Plan here did not require participants to retire before they could receive any pension benefit, so the offset did not effectively force Plaintiff to retire in violation of the ADEA.8 Thus, the Court finds that Sedgwick's decision to offset Plaintiffs LTD benefits did not violate the ADEA.

D. Conclusion

The Court GRANTS Defendant's Motion for Summary Judgment and DENIES Plaintiffs Motion for Summary Judgment. Judgment will be entered in favor of Defendant and against Plaintiff.