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KOSAKOW v. NEW ROCHELLE RADIOLOGY ASSOCIATES

September 6, 2000

NANCY KOSAKOW, PLAINTIFF,
V.
NEW ROCHELLE RADIOLOGY ASSOCIATES, P.C., DEFENDANT.



The opinion of the court was delivered by: McMAHON, District Judge.

MEMORANDUM DECISION AND ORDER AFFIRMING THE PLAN ADMINISTRATOR'S DENIAL OF PLAINTIFF'S APPLICATION FOR SEVERANCE PAY UNDER THE ERISA PLAN AND GRANTING DEFENDANT SUMMARY JUDGMENT

Plaintiff Nancy Kosakow sued her former employer, New Rochelle Radiology Associates (the "Practice"), arguing that her termination while on medical leave violated the Family Medical Leave Act ("FMLA"), 29 U.S.C. § 2615, and, even if not in violation of FMLA, Defendant's failure to pay her severance pay was in violation of Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). In a decision and order dated March 10, 2000, this Court found that a prior New York State Department of Human Rights determination that Defendant had legitimate business reasons — unrelated to Plaintiffs medical leave — collaterally estopped Kosakow from rearguing the reasons for her termination. As a result, the Court found Plaintiff had failed to state a claim under FMLA. However, the Court found that Defendant did maintain a Plan within the meaning of ERISA and that Plaintiff was therefore entitled to a determination by the Plan Administrator as to whether she would qualify for severance benefits. The Court remanded the claim to the Plan Administrator for two determinations: (1) whether the elimination of Plaintiffs position was a termination within the meaning of the Plan, and if she was terminated; (2) whether she was entitled to severance pay. See Kosakow v. New Rochelle Radiology Assocs., P.C. 88 F. Supp.2d 199, 216 (S.D.N.Y. 2000). The Court permitted Plaintiff to submit evidence as to her alleged entitlement to severance to the Plan Administrator prior to the Plan Administrator making its determinations. Id.

On April 7, 2000, Plaintiff forwarded to Defendant a "Submission Pursuant to Remand without Prejudice to Family and Medical Leave Act Claim."*fn1 (Frumkin letter to Plan Administrator, Apr. 7, 2000.) On April 13, 2000, Plaintiff confirmed to Defendant in writing that she did not intend to present any additional evidence with respect to her ERISA claim. On May 10, 2000, Defendant responded in writing to Plaintiffs Submission and made a series of factual and legal determinations. In so doing, Defendant explicitly stated that it "contests the Court's finding that it has an ERISA Plan governing severance benefits, and expressly reserves the right to appeal that determination, notwithstanding its response to [plaintiffs] counsel's letters and its making the following determination according to Court Order." (Gargano letter to Kosakow, May 10, 2000, hereinafter "Determination Letter".) The Administrator addressed both questions posed by the Court and concluded that (1) Kosakow had not been "terminated" within the meaning of the Plan, and (2) even if she had been "terminated," Kosakow was not entitled to severance pay.

For the reasons stated below, the first determination is reversed and the second is affirmed. Defendant's motion for summary judgment is granted and the case is dismissed.

Standard

"[A] denial of benefits challenged under [ERISA] is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the Plan." Firestone Tire & Rubber v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). The Employee Manual, which constitutes Practice's ERISA Plan, does not contain language conferring the kind of broad discretion that post-Firestone decisions have held could form the basis for a more deferential review. See Masella v. Blue Cross & Blue Shield of Conn., 936 F.2d 98, 103 (plan provisions relied on by Blue Cross did not establish that is was granted discretionary authority to construe plan terms); see, e.g., Jones v. Laborers Health & Welfare Trust Fund, 906 F.2d 480, 481 (9th Cir. 1990) (plan gave trustees the power "to construe the provisions of . . . the Plan" and provided that any construction adopted by the trustees in good faith would be binding); Batchelor v. Int'l B'hood of Electrical Workers, 877 F.2d 441, 443 (5th Cir. 1989) (Plan gave trustees "full power to construe the provisions of this Agreement" as well as authority to "interpret the Plan")' Guy v. Southeastern Iron Workers' Welfare Fund, 877 F.2d 37, 39 (11th Cir. 1989) (plan conferred upon the trustees "full power to construe the provisions of [the] Trust"). I therefore apply the de novo standard to the Administrator's decision to deny Kosakow severance pay.

Under the de novo standard, this Court is required to give Plan terms "their plain meanings, . . . the interpretations given by the average person," Wickman v. Northwestern Nat. Ins. Co., 908 F.2d 1077, 1084 (1st Cir.), cert. denied, 498 U.S. 1013, 111 S.Ct. 581, 112 L.Ed.2d 586 (1990) and read the Plan as a whole. See Alfin Inc. v. Pacific Ins. Co., 735 F. Supp. 115, 119 (S.D.N.Y. 1990). The Plan Fiduciary, i.e. the Practice, must show that the claimant's interpretation of the Plan is unreasonable. Id. All ambiguities must be construed in favor of the claimant. Masella v. Blue Cross & Blue Shield of Connecticut, 936 F.2d 98, 107 (2d Cir. 1991).

Kosakow Was "Terminated"

The Practice Plan Administrator concluded that Kosakow was not "terminated" from her employment with the Practice. In support of this conclusion, the Administrator cited facts in the evidentiary record before it, including the fact that "the P.C. expressly offered you continued employment on a per diem basis", and that "Dr. Novich [the President of Practice] testified during deposition that `we weren't firing somebody.'" (Determination Letter at 3.) The Administrator further noted that the Practice Manual*fn2 "provides that per diem employees are a distinct category of `employees' — i.e. persons `employed by the P.C.'" (Id.) (citing Manual Section III. F.4.).

Plaintiff argues that the Administrator's finding is incorrect. I agree with Plaintiff. Nothing in the record supports the Administrator's finding that Defendant's inchoate offer to Plaintiff of per diem work on an "as needed" basis — and apparently as an "independent contractor" — is sufficiently definite to qualify as continued "employment." No ordinary person could have so understood Defendants' "offer." Therefore, Kosakow must have been "terminated."

Defendant notes that the Black's Law Dictionary defines "Termination of Employment" as ". . . a complete severance of relationship of employer and employee." Because the Practice offered to continue its relationship with Kosakow through per diem work "as needed," Defendant claims that it did not completely severe that relationship. However, it would appear that the Practice did in fact sever the employer-employee relationship, and then made a naked promise that it might renew the relationship (though under the rubric of independent contractor rather than employee) if and when her services were needed — which might have been never. In the absence of an offer of any definite work schedule — even one hour of assigned work — the only reasonable inference that a person in Ms. Kosakow's position could draw was that she had been "terminated" by the Practice.

Defendant apparently relies on Black's because the word "Termination" is not defined in the Plan. However, Section III(G) of the Policy Manual, entitled "Termination of Employment," lists six ways in which someone's employment can be terminated by the Practice: (1) retirement; (2) voluntary resignation; (3) termination for cause; (4) death; (5) termination without notice; and (6) reduction in force. The fair implication is that, if Plaintiffs enforced departure falls within one of these categories, her employment was "terminated." Here, Plaintiff received a letter, dated March 7, 1997, telling her that her position was being "eliminated" due to "overstaffing." Cutting staff in response to overstaffing is just another way of saying that the Practice was carrying out a reduction in force. Thus, under the terms of the Plan, Plaintiff was terminated.*fn3

In short, I find that Plaintiff was in fact terminated and that the Plan Administrator's ruling to the contrary was arbitrary, ...


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