[00:00:01] Speaker 00: Case number 15-7150, Kelly Foster, Appellant vs. Cedric Plains Management Services, Inc., Commissioner for the District of Columbia and SunTrust Bank Short and Long-Term Disability Plans, SunTrust Bank and House Counsel. [00:00:16] Speaker 00: Ms. [00:00:16] Speaker 00: Clark for the Appellant, Mr. Abragas for the Appellees. [00:00:20] Speaker 00: Good morning. [00:00:21] Speaker 01: Good morning. [00:00:25] Speaker 01: This matter should be remanded back to the district court because of a clear error of law, even if it's one that was created by the plan. [00:00:34] Speaker 01: This case involves a very complex welfare benefit plan established by SunTrust, some portions of which that were insured and a small portion that was uninsured. [00:00:46] Speaker 01: directing the court's attention to the appendix, Joint Appendix, page 25, where it lays out some of the benefits. [00:00:54] Speaker 01: I draw your attention to the set of benefits that are outside of the brackets or the boxes, which are specifically the short-term disability benefits, which are said to be paid out of the assets of the employer, but are administered by Syntrust. [00:01:10] Speaker 01: And that is at the heart of the reason why there's an error of law here. [00:01:16] Speaker 01: On a motion for reconsideration. [00:01:17] Speaker 01: Could you say what, which error of the law you're talking about? [00:01:21] Speaker 01: The error in this instance has to do with whether or not this is a plan that was, these benefits were governed by ERISA. [00:01:27] Speaker 05: Okay. [00:01:29] Speaker 05: Well, didn't the plaintiff concede in the district court that it wasn't? [00:01:33] Speaker 01: The error of law was, in fact, that concession. [00:01:37] Speaker 05: And on the motion for reconsideration... But that's actually a waiver, isn't it? [00:01:42] Speaker 01: I don't believe that it's necessarily waiver in the instance here where the administrative record was very unclear as to what was happening. [00:01:52] Speaker 01: And let me point out specifically where that is. [00:01:56] Speaker 01: This is a record that shows that Sedgwick was wearing two hats. [00:02:00] Speaker 01: It was functioning for the employer as the FMLA administrator and also functioning as the short-term disability administrator. [00:02:09] Speaker 01: In the record, it reflects that there were letters going out to the plaintiff which indicated that she was in fact ill and eligible for FMLA coverage. [00:02:24] Speaker 01: That same entity made a determination that she was not qualified for short-term disability benefits. [00:02:30] Speaker 01: Not because the definition is different. [00:02:33] Speaker 01: The definition is the same. [00:02:34] Speaker 01: All she needed to show was that she was ill. [00:02:38] Speaker 01: And frankly, the standard for FMLA coverage was a higher standard. [00:02:42] Speaker 01: The statute requires serious illness. [00:02:46] Speaker 01: The short term disability does not make that same requirement. [00:02:50] Speaker 05: Yeah, but why was it an abuse of discretion for the district court not to reconsider the issue? [00:02:56] Speaker 05: Well, the district court didn't... Even if it was a forfeiture and not a waiver, why was it an abuse of discretion? [00:03:01] Speaker 01: The district court did two things as I read the opinion. [00:03:05] Speaker 01: The district court once said that the plaintiff should have brought a contract claim as to short term disability benefits, but then went on to say, as I read the opinion, that even if [00:03:17] Speaker 01: She did not bring that claim. [00:03:19] Speaker 01: There was no abuse of discretion in determining that the short-term disability benefits were available to her, or were not available to her, I should say. [00:03:29] Speaker 01: And it's that use of the abuse of discretion language where the court reached into the long-term disability plan, which was an ERISA plan. [00:03:38] Speaker 01: There's no factual issue concerning that to say that that is the standard that he would apply to the short-term disability benefits. [00:03:45] Speaker 01: It was suggested to the plaintiff that [00:03:47] Speaker 01: it's all one plan but went forward to say that because of this concession there's there's no we're not going to consider it and you or you should have brought a contract claim well but the district i thought the district court was saying that you know you made a concession initially and and you said it's not about arissa and then the district court said [00:04:14] Speaker 02: And then, as it plays out on reconsideration, the district court's effectively saying, well, now you're saying it's about ERISA. [00:04:21] Speaker 02: If it is, it's exempt under ERISA. [00:04:24] Speaker 02: And the question is whether or not that determination, that it's exempt. [00:04:29] Speaker 02: Because you didn't file any other cause of action. [00:04:31] Speaker 02: So if you now want to cast it as being, because that's what your complaint was, it was an ERISA complaint. [00:04:38] Speaker 01: That's correct. [00:04:38] Speaker 02: But the thing is, the district court found that this is exempt under ERISA, under the regulations. [00:04:44] Speaker 01: Correct. [00:04:44] Speaker 01: It did find that. [00:04:45] Speaker 01: And we believe that's an error that the court made. [00:04:48] Speaker 01: The main reason we say it's an error is because the regulations, when you read it with the Supreme Court decision in Fort Halifax, aren't enough. [00:04:57] Speaker 01: The regulations alone are not enough. [00:04:59] Speaker 01: And the Supreme Court has made clear that where you create an administrative scheme, even if you are paying the benefits out of general assets, it's that administrative scheme that puts you under the umbrella of ERISA. [00:05:11] Speaker 01: And it's because of the role of Sedgwick here, in particular, that they are administering these benefits. [00:05:18] Speaker 01: So this is not a one-time lump sum payment that's triggered by a single event, the illness of Ms. [00:05:25] Speaker 01: Foster. [00:05:25] Speaker 01: Instead, she had to present additional medical evidence that would come to the conclusion that, in fact, her illness rose to the level of being awarded short-term disability benefits. [00:05:37] Speaker 01: I'm not sure I'm understanding. [00:05:38] Speaker 02: Why isn't this a payroll practice as described? [00:05:41] Speaker 01: because of the role of Sedgwick. [00:05:43] Speaker 01: It's more than just paying assets, paying benefits one time for a single event. [00:05:50] Speaker 01: And that's what the Supreme Court has really held. [00:05:51] Speaker 01: And as recently as July of this year, the Fifth Circuit looked at that issue, not as it related to disability benefits, but as to a severance benefit, and looked at Fort Halifax. [00:06:02] Speaker 01: And Gomez versus Erickson, Incorporated, [00:06:04] Speaker 01: in the Fifth Circuit, the case number is 15-41479. [00:06:09] Speaker 01: That decision, which was filed on July 8th of this year, makes very clear that what the Supreme Court is looking at is the ongoing administrative program, and it's looking at the key determinant of whether welfare plans are governed by ERISA by looking at that overlay. [00:06:24] Speaker 01: And so it's not just simply if you pay it out of the assets of your general, you pay it out of your general assets, but if you are going to require these individuals to demonstrate more than just I'm ill, which she demonstrated for purposes of FMLA coverage. [00:06:40] Speaker 01: She made those facts for Sedgwick, but Sedgwick required her to do more. [00:06:46] Speaker 01: And it's that ongoing administrative process that takes this from a general asset pay plan to an ERISA plan, because that is the key. [00:06:55] Speaker 01: That is the key. [00:06:56] Speaker 01: That is what the Supreme Court is most concerned about when it's looking at whether or not a plan falls within ERISA. [00:07:03] Speaker 01: The absence of the administrative process is one that would not implicate ERISA, but where it's there, it's going to implicate potential for employer abuse. [00:07:13] Speaker 02: Where does the regulations say it can only be a one-time payment plan? [00:07:18] Speaker 01: I'm not... The regulations don't speak to that. [00:07:19] Speaker 01: That is what the Supreme Court spoke to as to why they would say it's not a plan that's... Are you... Is your argument that the regulations are unlawful? [00:07:29] Speaker 01: no, I think the regulations are just simply old. [00:07:31] Speaker 01: They were written in the 70s, and the Department of Labor has not looked at developments as to welfare benefit plans over several years, quite honestly. [00:07:42] Speaker 01: And many of the opinion letters that the appellee cites [00:07:46] Speaker 01: None of those opinion letters do the facts that are here are they necessarily presented to the Department of Labor to consider. [00:07:53] Speaker 01: That, in fact, an employer that's paying these benefits out of their general assets are also using either a Sedgwick or an Aetna or any other insurer to administer the plans. [00:08:04] Speaker 01: Not a single one of the opinion letters that are issued by the Department of Labor have those unique facts. [00:08:11] Speaker 01: The Supreme Court is the only place where these types of facts have been evaluated. [00:08:17] Speaker 01: And Fort Halifax still stands as the case where, looking at a welfare benefit plan, if there is an administrative scheme, it's an ERISA plan. [00:08:28] Speaker 04: Where does your argument that the District Court applied the wrong standard? [00:08:34] Speaker 04: He applied it [00:08:35] Speaker 04: arbitrary and capricious standard, and you argue he could have applied a de novo standard. [00:08:42] Speaker 04: Where does that fit in your argument here? [00:08:46] Speaker 01: Again, I believe what the district court was doing in order to evaluate [00:08:51] Speaker 01: the short-term and long-term disability plans, even after saying that we conceded a point, was they looked to the long-term disability provisions to see whether or not there was discretion. [00:09:06] Speaker 01: that was given to Sedgwick to make the determination. [00:09:09] Speaker 01: And there is no discretion that's in these documents. [00:09:12] Speaker 01: The administrative record does not show that Sedgwick has discretion to make these determinations. [00:09:16] Speaker 01: And if they don't, then this Court has already decided that without that clear [00:09:26] Speaker 01: concession of discretion from trustee to administrator or to whoever the entity is that there can be no discretionary authority for an entity like Cedric to interpret the terms of the plan. [00:09:41] Speaker 04: And there you're referring to the ERISA plan versus? [00:09:45] Speaker 01: I'm sorry? [00:09:47] Speaker 01: The Petaway case. [00:09:48] Speaker 04: No, you're referring to the ERISA plan or the short-term payment plan? [00:09:53] Speaker 01: We're referring to the ERISA plan. [00:09:56] Speaker 01: And to the extent that the judge was trying to extrapolate that there was discretion for making the determination for short-term disability, we would say that's not there either. [00:10:13] Speaker 01: In this matter, it's very clear that the wraparound plan that was established here creates quite a bit of confusion. [00:10:22] Speaker 01: The wraparound plan provides for a number of benefits that are covered under ERISA. [00:10:29] Speaker 01: draws out this one particular benefit saying it's going to be paid out of plan assets. [00:10:33] Speaker 01: But it still uses the same administrator for purposes of evaluating the claim, which suggests, quite frankly, that there was an intention to use that administrator, there was an intention to provide certain benefits, and that there were intended beneficiaries here. [00:10:50] Speaker 01: And to that extent, it meets the definition of a welfare benefit plan under ERISA. [00:10:55] Speaker 01: And for that purpose, we believe that the matter should go back for reconsideration under the theory, under the ERISA theory, and that the plaintiff should be permitted to present her claim for purposes of being awarded those benefits and therefore move forward with the long-term disability claim also. [00:11:17] Speaker 04: All right. [00:11:17] Speaker 01: Thank you. [00:11:18] Speaker 04: We'll give you time on rebuttal. [00:11:29] Speaker 03: Good morning, Your Honors. [00:11:30] Speaker 03: Gregory Arby-Gast on behalf of SunTrust Short and Long-Term Disability Plan and Sedgwick Claims Management Services, Inc. [00:11:38] Speaker 03: The primary issue in this case is whether the district court abused its discretion in applying the well-settled principle of law that a litigant cannot use a motion for reconsideration as a vehicle to advance new and wholly contradictory arguments to those that the litigant made in the summary judgment stage. [00:12:02] Speaker 03: And the court did not abuse its discretion in applying that well-settled principle of law. [00:12:07] Speaker 03: But since the appellant has also noted an appeal as to the district court's motion granting or order granting the defendant's motion for summary judgment, I also want to address why, one, the short-term disability program is a payroll practices plan that is not governed by ERISA, two, why ERISA does not preempt state law claims with respect to the short-term disability program, [00:12:36] Speaker 03: Three, why the district court properly applied the deferential standard of review with respect to the long-term disability plan. [00:12:45] Speaker 03: And four, why the claims administrator did not abuse its discretion under that deferential standard of review in denying benefits under the long-term disability plan. [00:12:55] Speaker 04: Now, if the district court erred in applying the deferential standard, where does that leave you? [00:13:01] Speaker 03: I would leave a remand to the district court as to the long term disability for a consideration as to under a de novo standard of review, whether the claims administrator was correct. [00:13:15] Speaker 03: Let's start with the motion for reconsideration. [00:13:19] Speaker 03: Motion for reconsideration can be granted on one of three grounds. [00:13:22] Speaker 03: One, there are new facts that were not available to the litigant prior to filing the motion for summary judgment. [00:13:30] Speaker 03: Two, there is new law, and that doesn't mean that the litigant found new law. [00:13:34] Speaker 03: That means that new binding precedent was made in the interim. [00:13:37] Speaker 03: or three, there is a clear legal error. [00:13:40] Speaker 03: There seems to be concessions by Ms. [00:13:42] Speaker 03: Foster that there's not new law and there's not new facts, and she proceeds on the clear legal error grounds. [00:13:48] Speaker 03: I think the Fourth Circuit said it best in TFWS, Inc. [00:13:52] Speaker 03: versus Franchot 572, F3D 186, when it said that to apply the clear legal error standard, the legal error must stink like a five-day-old, unrefrigerated dead fish. [00:14:06] Speaker 03: it must be dead wrong. [00:14:09] Speaker 03: And that's so because otherwise the exception would swallow the rule where anytime the district court was wrong there would be legal error and a motion for reconsideration would be appropriate vehicle for an appellant to just take a second bite or a litigant to take a second bite at the apple and argue something new and try their hand to see if they can win it that way. [00:14:28] Speaker 02: Okay let me let me just take you back a second. [00:14:30] Speaker 02: I understand your argument on 59E. [00:14:32] Speaker 02: Yes Sean. [00:14:34] Speaker 02: But the [00:14:35] Speaker 02: before you get to that motion for consideration, the district court is essentially saying you haven't presented, you're saying there's no cause of action. [00:14:43] Speaker 02: Correct, Your Honor. [00:14:44] Speaker 02: Under the statute. [00:14:45] Speaker 02: Correct. [00:14:46] Speaker 02: District court interestingly said something about no jurisdiction. [00:14:50] Speaker 02: That doesn't make any sense. [00:14:53] Speaker 02: To me, it doesn't. [00:14:55] Speaker 02: She hadn't presented a cause of action I can understand. [00:14:58] Speaker 02: And alternatively, the district court, I think, was saying, this is exempt under ERISA. [00:15:04] Speaker 02: Correct. [00:15:05] Speaker 02: That doesn't mean there's no jurisdiction. [00:15:07] Speaker 02: That means I think the district court was really meaning to say, now, if I give you the benefit of the doubt and I look under ERISA, this is an exempt thing under ERISA. [00:15:16] Speaker 02: So you have no cause of action. [00:15:17] Speaker 02: Correct. [00:15:18] Speaker 02: That's different than jurisdiction. [00:15:19] Speaker 03: That is different than jurisdiction. [00:15:21] Speaker 03: This isn't a jurisdiction case down below. [00:15:23] Speaker 02: I just want to make sure of it. [00:15:24] Speaker 02: Because the district court used that term, and I don't think it's correct. [00:15:28] Speaker 03: I agree with you, Your Honor, because there is obviously independent jurisdiction that would exist. [00:15:31] Speaker 03: One, there's ancillary jurisdiction, because the long-term disability plan is an ERISA plan, which would probably bring state law claims under the short-term disability program within the jurisdiction of the district court. [00:15:42] Speaker 03: And two, there's diversity. [00:15:43] Speaker 02: But even apart from that, if this court had jurisdiction, if it had been properly argued, [00:15:51] Speaker 02: jurisdiction to look at ERISA and say, but this is exact. [00:15:54] Speaker 03: Correct. [00:15:55] Speaker 03: Exactly right. [00:15:55] Speaker 03: If this were only brought as a state law cause of action and there is not otherwise independent jurisdiction such as diversity, then there would be no jurisdiction. [00:16:04] Speaker 03: But as an ERISA case, the court certainly has jurisdiction. [00:16:10] Speaker 03: So let's go into why the short-term disability program is a payroll practices plan under the Department of Labor regulations. [00:16:21] Speaker 03: The Department of Labor regulations say that when a benefit is paid out of the employer's general assets, as opposed to a trust fund held in trust for a third party, [00:16:33] Speaker 03: and those benefits are applied to an individual who is physically or mentally unable to perform their duties and is otherwise absent from work, then that is exempt from ERISA as a payroll practices plan. [00:16:48] Speaker 03: That regulation has been upheld and applied Chevron deference by the Supreme Court in Massachusetts versus Morash. [00:16:56] Speaker 03: And the cases cited by Ms. [00:16:59] Speaker 03: Foster, to the contrary, are in opposite. [00:17:02] Speaker 03: There's an important distinction between this case and every single case cited by Ms. [00:17:08] Speaker 03: Foster. [00:17:09] Speaker 03: They are severance cases. [00:17:11] Speaker 03: And that is an important distinguishing factor because if you look at the regulation while it talks about and it is inclusive of payments while mentally or physically unable to perform your duties while absent from work, it does not list severance payments as one of the benefits that the regulation would apply to. [00:17:30] Speaker 03: And the Fort Halifax decision that she cites as well as the other decisions that she cites say that we declined to read into the regulation that it would also apply to severance payments. [00:17:41] Speaker 03: And it declined to do so for a few reasons. [00:17:43] Speaker 03: One, severance payment is not a payment while someone is currently working for the company. [00:17:48] Speaker 03: So it's not a regular compensation payment out of the general assets. [00:17:53] Speaker 03: And two, the courts recognize that there might be some policy concerns about if there are mass layoffs and an employer would be unable to make the required severance payments, then the Department of Labor might see some reason why ERISA should apply. [00:18:09] Speaker 03: So it saw the Department of Labor's decision to exempt severance payments from the list of included benefits in the regulation as meaning something. [00:18:19] Speaker 03: And so, with respect to severance payments, the courts looked to whether there was a general administrative scheme. [00:18:26] Speaker 03: That is not the case with respect to disability payments. [00:18:30] Speaker 03: disability payments are expressly included in the regulation and are a payroll practice and are exempt from the regulations of ERISA. [00:18:42] Speaker 03: Now, I also want to talk about Ms. [00:18:44] Speaker 03: Foster's preemption argument. [00:18:48] Speaker 03: Ms. [00:18:48] Speaker 03: Foster argues that ERISA preempts any state law cause of action because the short-term disability program relates to the long-term disability plan, which is an ERISA plan. [00:19:00] Speaker 03: And Ms. [00:19:01] Speaker 03: Foster generally disregards or misunderstands the case law in this regard. [00:19:07] Speaker 03: A ERISA will preempt state law causes of action where an alternative ERISA cause of action exists. [00:19:16] Speaker 03: Basically, if you could plead an ERISA cause of action, you can't get out of ERISA by pleading a state law cause of action. [00:19:23] Speaker 03: That's out. [00:19:23] Speaker 03: The ERISA cause of action would prevail. [00:19:26] Speaker 03: Here, with respect to the short-term disability program, there is no alternative ERISA cause of action because it is exempt from ERISA under the payroll practices plan. [00:19:38] Speaker 03: Therefore, ERISA does not preempt a breach of contract state law claim, which is the claim that should have been brought at the district court level. [00:19:50] Speaker 04: You do understand the confusion that an employee might [00:19:57] Speaker 04: encounter where the same administrator is acting on behalf of the same employer for both of these plans. [00:20:07] Speaker 04: So, as I understand what the district court was getting at, she should have added, you know, a state law claim to her complaint. [00:20:21] Speaker 04: And that's fatal. [00:20:23] Speaker 04: even though the scheme is such seems to be all of a whole if you take my assumption here. [00:20:31] Speaker 03: I see what you're saying, Your Honor, but that's why I think that SunTrust tried to do its best to separate out the short-term disability program from the employee welfare benefits handbook. [00:20:41] Speaker 03: So the employee was handed the health and welfare benefits handbook. [00:20:45] Speaker 03: It listed the benefits that are inclusive within that handbook, and then explicitly stated that there is a separate short-term disability program that falls outside of the employee welfare benefits handbook. [00:20:59] Speaker 04: And that's a precondition to being eligible for the long-term plan. [00:21:06] Speaker 03: It is one of the ways that the employee can meet the preconditions. [00:21:09] Speaker 03: Yes, Your Honor. [00:21:11] Speaker 03: So either they can be entitled to short-term disability benefits for 180 days, or they can be entitled to workers' compensation benefits for 180 days, neither of which fall within the employee health and welfare benefits. [00:21:23] Speaker 04: So in this case, as you read the record, because [00:21:27] Speaker 04: The plaintiff in the district court conceded that the payroll plan was not an ERISA plan. [00:21:36] Speaker 04: It viewed the lack of a state cause of action as dispositive. [00:21:43] Speaker 03: That is correct at the summary judgment stage, Your Honor. [00:21:47] Speaker 03: separate finding at the mission for reconsideration phase. [00:21:51] Speaker 03: But at the summary judgment stage, the district court found that the short-term disability program was not an ERISA plan. [00:21:58] Speaker 03: It was exempt under the regulations. [00:22:00] Speaker 03: That the only applicable possible cause of action that could have been asserted was a state law breach of contract claim. [00:22:06] Speaker 03: Such a claim was not asserted. [00:22:08] Speaker 03: And therefore, Suntrust and Sedgwick were entitled to summary judgment as to the ERISA claim that was pled and no state law cause of action was before the district court. [00:22:17] Speaker 04: And what about this standard issue that she did raise before the district court? [00:22:24] Speaker 03: The standard that the district court applied, the deferential standard was through. [00:22:28] Speaker 04: The arbitrary and capricious. [00:22:29] Speaker 03: Correct. [00:22:30] Speaker 03: And it was through the lens of the long-term disability plan. [00:22:33] Speaker 04: Right. [00:22:34] Speaker 03: So in order to, as Your Honor noted, in order to receive benefits under the long-term disability plan, [00:22:41] Speaker 03: The employee had to either be entitled to short-term disability benefits for 180 days or entitled to workers' compensation benefits for 180 days. [00:22:51] Speaker 03: There's no claim as to workers' compensation benefits, so the only applicable analysis would be the short-term disability benefits. [00:22:58] Speaker 03: Now, the district court found that the long-term disability plan vested discretion in the claims administrator to determine benefits. [00:23:07] Speaker 04: And she raised the objection to the district court that that was the incorrect standard, that looking at the other cases, the language of discretion was not present. [00:23:25] Speaker 04: in this particular ERISA plan. [00:23:28] Speaker 04: And therefore, the district court should have applied a de novo standard of review. [00:23:33] Speaker 03: That is correct that Ms. [00:23:34] Speaker 03: Foster raised that. [00:23:35] Speaker 03: It is incorrect that the language is not present. [00:23:40] Speaker 03: And the Firestone decision by the Supreme Court, the Supreme Court held that the arbitrary and capricious standard of review is applicable where the plan vests discretion in the administrator to either one, interpret the plan, [00:23:53] Speaker 03: or two, to determine benefits. [00:23:56] Speaker 04: All right. [00:23:56] Speaker 04: So courts have said that determine benefits. [00:24:00] Speaker 04: That's ambiguous as to whether that involves discretion or not. [00:24:06] Speaker 03: Yes. [00:24:06] Speaker 04: And they've interpreted the language against the drafter. [00:24:11] Speaker 04: namely against the employer. [00:24:13] Speaker 03: Yes, Your Honor. [00:24:14] Speaker 03: So in this case, the language is pretty clear. [00:24:18] Speaker 03: It vests Sedgwick with the discretion to determine whether or not the evidence satisfies the definition of disability contained in the policy. [00:24:28] Speaker 04: But you would agree, would you not, that that is not the language that courts have found [00:24:34] Speaker 04: clearly vesting discretion in the administrator. [00:24:38] Speaker 03: I agree that satisfactory proof has not been litigated in the courts, correct. [00:24:41] Speaker 03: There is not a judicial finding as to whether satisfactory proof is sufficient at the claims administrative level as vested. [00:24:50] Speaker 04: And in those cases that have decided the question that there was discretion, the language was much clearer. [00:24:58] Speaker 03: In terms of interpreting the policy, yes, Your Honor. [00:25:01] Speaker 03: But by the same token, the cases that found no discretion, it was much more of a ministerial action by the claims administrator. [00:25:10] Speaker 03: So for example, a termination benefit. [00:25:14] Speaker 03: In the Firestone case, where there was termination, [00:25:18] Speaker 03: And where an employee had worked for X number of years, they were entitled to a certain amount of benefits. [00:25:25] Speaker 03: The court found that there, there's no discretion. [00:25:27] Speaker 03: It is a ministerial act of looking at whether the termination occurred and years of service and then rubber stamping a number. [00:25:35] Speaker 04: And so what's the discretion here? [00:25:37] Speaker 03: Here, there's a vague definition as to disability, just mentally or physically unable to perform one's material duties. [00:25:44] Speaker 03: the claims administrator gets to determine whether there has been satisfactory proof submitted and what are the material duties and whether the person is in fact unable to perform their duties. [00:25:58] Speaker 04: And so what's your best case? [00:26:00] Speaker 04: Because I haven't mentioned the case names, but you're familiar, I'm sure, with the cases that you have. [00:26:09] Speaker 03: The best language as to the standard to apply comes out from the Firestone decision in the Supreme Court, which obviously comes out the other way and is somewhat inopposite in the facts. [00:26:19] Speaker 03: The cases that we cited in our brief out of this circuit obviously come out our way, but the language is stronger in the plans. [00:26:28] Speaker 03: So we're asking the court to apply. [00:26:29] Speaker 04: The question is open. [00:26:31] Speaker 03: Correct, Your Honor. [00:26:33] Speaker 03: Forgive me, my time is out. [00:26:34] Speaker 03: I'll answer the question more further if you want. [00:26:38] Speaker 04: Please, I don't mean to cut you off. [00:26:40] Speaker 03: Oh, no, no, no, no. [00:26:42] Speaker 03: The answer is that this court should apply the rule as set forth by the Supreme Court in the Firestone decision, which said that, remember, these are trust funds. [00:26:51] Speaker 03: Or where Orissa applies, they are trust funds. [00:26:54] Speaker 03: And so courts look to the general common law principles of trust law. [00:26:59] Speaker 03: And where a fiduciary of a trust gets to make a decision, [00:27:04] Speaker 03: And it's somewhat within that fiduciary's discretion. [00:27:07] Speaker 03: That's what guides whether or not there is the favorable standard of review. [00:27:12] Speaker 04: And that begs the question. [00:27:15] Speaker 04: I mean, the question is, does he have this discretion? [00:27:17] Speaker 03: And I believe the answer is yes, Your Honor, because they get to look at all of the evidence, determine whether the evidence meets the definition of disability as set forth in the policy. [00:27:28] Speaker 03: It is more than a ministerial act. [00:27:30] Speaker 03: It is a judgment for which they have to exercise discretion. [00:27:35] Speaker 03: And because they have to exercise discretion to meet that judgment, then they would be entitled to the deferential standard of review. [00:27:43] Speaker 03: Thank you, Your Honor. [00:27:54] Speaker 01: I'd like to address two things. [00:27:57] Speaker 01: One, with regard to the last issue, we clearly disagree with the appellee here with regard to whether or not Firestone is the leading case. [00:28:08] Speaker 01: It clearly informs. [00:28:10] Speaker 01: But I believe it's this district court has been very clear about, in the Peddaway case, about the fact that there has to be a grant of discretion. [00:28:19] Speaker 01: And nowhere in this record is it clear that there was a grant of discretion [00:28:24] Speaker 04: Well, I was looking really at the circuit cases that have had to decide whether the provision for satisfactory proof is necessarily a grant of discretion, and six circuits say it isn't, two circuits say it is, and we haven't decided that question. [00:28:45] Speaker 01: You have not addressed that. [00:28:46] Speaker 01: That is right, Your Honor. [00:28:46] Speaker 01: The Court has not addressed that. [00:28:48] Speaker 04: So what do you think is your strongest case? [00:28:50] Speaker 01: Um, clearly I believe that this, I would say it is not and that the circuits that have found that would be consistent with at least the analysis of this circuit [00:29:06] Speaker 01: went through in looking at the grant of discretion in Pettaway. [00:29:11] Speaker 04: Well, in other words, the circuits had said it wasn't enough. [00:29:13] Speaker 04: They said this language is ambiguous as to discretion, and so we construe the document or the plan against the drafter. [00:29:24] Speaker 01: I think that is the appropriate fallback. [00:29:27] Speaker 01: I just feel that this circuit has gone through the evaluation in such a way that it should require those insurers that are going to issue insurance in the District of Columbia to comply with PEDAWAY. [00:29:41] Speaker 01: And those employers that use those insurers give an affirmative grant of discretion, which is exactly what happened in Pedway. [00:29:50] Speaker 01: There was an affirmative grant of discretion to the insurance company that had administered and made the claims decisions in that case. [00:30:02] Speaker 01: I want to talk about the long-term disability. [00:30:05] Speaker 01: And I believe that I'm hearing that the appellee agrees that that is an ERISA plan. [00:30:10] Speaker 01: And one of the things that I think is important to consider here is whether or not the eligibility for long-term disability would have been within the purview of Sedgwick to determine. [00:30:23] Speaker 01: I believe that it would be. [00:30:24] Speaker 01: And if the determination of whether or not one is eligible would be subject to ERISA since it, for the long-term disability benefits, would be subject to ERISA. [00:30:34] Speaker 01: That means that Sedgwick would have had to look at the denial of coverage for the short-term disability benefits to evaluate whether or not that was appropriate. [00:30:44] Speaker 01: Is that having Sedgwick evaluate itself? [00:30:48] Speaker 01: Probably, but I imagine that Sedgwick would tell me that they have someone separate dealing with short-term disability and someone else dealing with long-term disability. [00:30:58] Speaker 01: My time is up, I believe. [00:31:00] Speaker 04: Thank you. [00:31:00] Speaker 04: We'll take the case.