Appeal from a judgment of the Circuit Court For Walworth County: James L. Carlson, Judge.
Petition to review denied.
Nettesheim, P.j., Scott and Anderson, JJ.
The opinion of the court was delivered by: Anderson
Deborah Siska appeals from a summary judgment in favor of The Travelers. The trial court determined that Travelers did not act arbitrarily or capriciously when it denied Deborah's request for proceeds from an accidental death benefits plan insuring her husband, Donald Siska. There are three issues on appeal: (1) whether the denial of benefits based on factual findings by Travelers is subject to a deferential standard of review; (2) whether the court's review of the denial of benefits is limited to the record before Travelers at the time of the denial; and (3) whether the denial was arbitrary or capricious. We affirm the trial court on each issue. *fn1
Travelers issued a group accidental death policy through the Indiana Manufacturers' Association, Inc. The policy was made available to Donald by his employer, Wabash Tape Corporation. The policy provides $100,000 if the employee dies through accidental means and within ninety days of the date of the accident. Donald disappeared in the waters of Lake Geneva, Wisconsin, in August 1981. His second wife, Deborah Siska, was the named beneficiary at the time of his disappearance.
Deborah requested proceeds payable under the policy. An examiner from Travelers' law department litigation unit concluded that he was "unable to make a determination from the information . . . received to date, whether or not Donald J. Siska suffered an accidental death . . . ." Deborah was denied the proceeds of the policy.
Deborah then commenced this action. Travelers attempted to remove the case to federal court. The federal district court stated that the purchase of the insurance through a multi-employer trust was a plan within the meaning of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. sec. 1001 et seq. The federal district court held that the action was preempted by 29 U.S.C. sec. 1144(a) and was removable to federal court. However, Travelers waived its right to remove by not doing so within thirty days of filing the action. Because this case invoked concurrent jurisdiction under 29 U.S.C. sec. 1132(e), the case was remanded to the Wisconsin trial court.
The trial court found that state law was preempted. See 29 U.S.C. sec. 1144(a). This decision is not challenged. The trial court held that an arbitrary and capricious standard of review, rather than de novo review, applied to Travelers' denial of benefits and ordered summary judgment in favor of Travelers. The trial court instructed Travelers to consider new evidence produced by Deborah and dismissed the action with prejudice. *fn2 Deborah's claim that Travelers had a conflict of interest was not considered by the trial court.
The first issue is the standard of review that this court must use to review Travelers' decision to deny benefits. This is a civil action to recover benefits due under the terms of an ERISA plan. See 29 U.S.C. sec. 1132(a)(1)(B). ERISA does not set out the standard of review for actions under 29 U.S.C. sec. 1132(a)(1)(B) challenging benefit eligibility determinations. QuesTech, Inc. v. Hartford Accident & Indem. Co., 713 F. Supp. 956, 962 (E.D. Va. 1989).
Benefit denials can be based on an administrator's factual findings or based on the administrator's interpretation of the benefit plan. Until recently, the clear weight of federal authority gave deference to the plan administrator's decision as long as it was not arbitrary and capricious. Guisti v. General Elec. Co., 733 F. Supp. 141, 145 (N.D. N.Y. 1990). The arbitrary and capricious standard was applied whether the decision was based on factual findings or on an interpretation of the benefit plan. See, e.g., Bance v. Alaska Carpenters Retirement Plan, 829 F.2d 820, 822-23 (9th Cir. 1987) (benefits denied based on an interpretation of the plan); LeFebre v. Westinghouse Elec. Corp., 747 F.2d 197, 202 (4th Cir. 1984) (benefits denied based on factual findings).
The United States Supreme Court rejected the uniform application of a deferential standard of review of benefit denials in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). However, the scope of Firestone 's holding is uncertain and has given rise to a split within the federal courts. The split concerns the question of whether Firestone applies only to benefit denials based on an interpretation of the benefit plan or to those denials based on factual findings as well.
In Firestone, the Firestone Tire and Rubber Company maintained a termination pay plan for its employees. The plan was an employee benefit plan under 29 U.S.C. sec. 1002(3) and thus fell within the scope of ERISA. Firestone was the administrator and fiduciary of the plan. Firestone sold its plastics division to Occidental Petroleum. Several employees retained by Occidental filed for termination benefits from Firestone. Their benefits were denied because the sale of the ...