United States District Court, S.D. New York
June 24, 2004.
MICHAEL SAMMARCO, Plaintiff,
BOARD OF TRUSTEES, LOCAL 812 HEALTH FUND, Defendant.
The opinion of the court was delivered by: FRANK MAAS, Magistrate Judge
OPINION AND ORDER
This action under the Employee Retirement Income Security Act
of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq., is brought by
plaintiff Michael Sammarco ("Sammarco"), a participant in the
Local 812 Health Fund ("Fund"), to secure health benefits that
the defendant Trustees ("Trustees") declined to provide following
an accident on January 10, 2002 ("Accident"), in which he was
seriously injured. The parties previously consented to my
exercise of jurisdiction over this matter pursuant to
28 U.S.C. § 636(c). (See Docket No. 2). They now have cross-moved for
summary judgment pursuant to Rule 56 of the Federal Rules of
Civil Procedure. For the reasons detailed below, the Trustees'
motion is granted, Sammarco's motion is denied, and the complaint
is dismissed. I. Factual Background
The following facts are undisputed. In 2002, Sammarco was
employed by his own corporation, which was an independent Pepsi
Cola distributor. (See Sammarco Aff. ¶¶ 3, 7). As such, he was
a member of the Local 812 health plan ("Plan"), which is an ERISA
benefit plan. (See id. ¶ 7; Warner Aff. Ex. A at 53).
Although Sammarco had the option of also securing Workers'
Compensation coverage, his accountant advised him that New York
law permits an owner employer not to participate in that
coverage. (Sammarco Aff. ¶ 7). He therefore did not purchase any
Workers' Compensation coverage for himself. (See id. ¶ 10).
The Fund's Summary Plan Description which was in effect on the
date of the Accident and when Sammarco submitted his claims was
the version revised and restated as of June 1, 1996 ("1996 SPD").
(See id. ¶ 7; Warner Aff. ¶ 8, Ex. A). The 1996 SPD contained
nearly forty coverage exclusions. (See Warner Aff. Ex. A at
22-25). The third of these exclusions ("Exclusion 3") provided
that the Fund would not pay
[c]harges arising out of or in the course of any
occupation for wage or profit, or for which the
covered person is entitled to benefits under any
Worker's Compensation or Occupations Disease Law, or
any such similar law[.]
(Id. at 22).
Following the Accident and Sammarco's submission of his claims,
the Fund revised its Summary Plan Description to clarify the
Plan's benefits and exclusions effective January 1, 2003 ("2003
SPD"). (See id. Ex. G at 1-2). The 2003 SPD contained a third exclusion substantially similar to Exclusion 3.
(See id. at 24). However, the 2003 SPD further described the
relationship between the Fund's health benefits and Workers'
Compensation coverage as follows:
If you incur a work related injury or illness, any
claims related to that injury or illness must be
submitted through your employer for Workers'
Compensation coverage. No benefits are payable by the
Fund for claims related directly or indirectly to a
work-related injury or illness unless the claim is
denied by Workers' Compensation. Every participant
must be covered by Workers' Compensation regardless
of whether the law permits a voluntary exemption.
. . .
Where Workers' Compensation would cover your injury
or illness and you do not have Workers' Compensation
coverage, the Fund will consider your claim as if you
did have it and determine benefits accordingly.
(Id. at 29-30) (emphasis added). The 1996 SPD did not contain
any comparable explanatory language.
On the date of the Accident, Sammarco returned to the Pepsi
Cola plant from his delivery route at approximately 5:30 p.m.
after a twelve-hour shift. (Sammarco Aff. ¶ 3). As was his
custom, Sammarco parked his truck at the plant so that Pepsi Cola
employees could reload it overnight. (Id.). Sammarco also
completed certain necessary paperwork. (Id.). By about 6:15
p.m., his work for the day was done. (Id.).
At the time, Sammarco was in the process of planning a
confirmation party for his son. (Id. ¶ 5). Accordingly,
Sammarco went into a "back area" of the plant in an effort to locate Jerry Troyanos, a Pepsi Cola employee who "had a
band" (Id.). Although Troyanos was on vacation, Sammarco
contacted him by telephone and agreed to meet at the plant at 7
p.m. (Id.; Troyanos Aff. ¶¶ 4-5).
At approximately 7:15 p.m., while he was in the back area of
the plant to meet with Troyano to discuss his need for a band,
Sammarco slipped on an oil slick on the floor near several
leaking "hi-los." (Sammarco Aff. ¶ 6; Troyanos Aff. ¶ 5).
Sammarco suffered a concussion, a right shoulder dislocation, and
a collapsed lung, among other injuries, and he underwent surgery.
(Sammarco Aff. ¶ 8).
Sammarco and his health care providers submitted bills to the
Fund for his medical care, but the Plan Administrator
("Administrator") denied payment.*fn1 (Id. ¶ 9). At the
time, Sammarco's understanding was that the denial was based upon
Exclusion 3, even though he did not have Workers' Compensation
coverage. (Id. ¶ 10). He later learned from his attorneys that
the Fund was rejecting his claims because he "could have obtained
[W]orker[s'] [C]ompensation had [he] wanted to." (Id.).
On May 17, 2002, Sammarco's counsel wrote to the Administrator
in an effort to reverse the Administrator's prior decision. In
his letter, counsel stated that Sammarco
was injured while at the Pepsi Cola plant but he is
not an employee of Pepsi Cola. He therefore has no
[W]orkers [C]ompensation benefits available in connection with
the injuries he suffered in his [Accident.]
(Saunders Decl. Ex. 1). Counsel also threatened to file a lawsuit
unless the Administrator corrected its error "immediately."
On June 4, 2002, counsel again wrote to the Administrator.
(See id. Ex. 2). This second letter noted the lack of any
response to the May 17th letter. (Id.). Counsel also observed
that he previously had advised the Administrator that Sammarco
"was an independent trucker who happened to be injured in the
Pepsi Cola plant while picking up a load of goods for his
distribution." (Id.) (emphasis added).
Finally, on July 31, 2002, counsel wrote to Pat Paolucci, an
officer of the Administrator. (See id. Ex. 3). In that
letter, counsel complained that Sammarco's claim had been denied
in the mistaken belief that "he should receive [W]orkers'
[C]ompensation." (Id.). Counsel indicated that one of his
partners had "repeatedly advised" the Administrator's office
staff of this error. (Id.).
The Appeals Committee of the Board of Trustees reviewed all
three letters from Sammarco's counsel. (See Saunders Decl. ¶¶
6-9). Thereafter, on October 10, 2002, the Trustees wrote to
Sammarco to advise him that the Trustees had considered his
appeal at their September 12, 2002, regular meeting, but had
denied his request for reimbursement. (See id. Ex. 4). As the
Trustees' letter explained
[A]lthough New York State Labor Law permits you to
waive your Workers' Compensation coverage, it does
not preclude you from having such coverage. Your failure to obtain the Workers' Compensation
coverage to which you are entitled does not make a
work related injury reimbursable by this Health Fund.
This has always been the position of this Fund. The
Trustees have a fiduciary responsibility to
administer the Fund in the best interest of all
participants. Payment of benefits that should be
covered by Workers' Compensation laws will diminish
The . . .  SPD provides that "every participant
must be covered by Workers' Compensation regardless
of whether the law permits a voluntary exemption."
(Page 23). The  SPD further provides "where
Workers' Compensation would cover your injury or
illness and you do not have Workers' Compensation
coverage, the Fund will consider your claim as if you
did have it and determine benefits accordingly[.]
Having exhausted his available administrative remedies,
Sammarco then filed this lawsuit in early January 2003. (See
Docket No. 1).
A. Summary Judgment Standard
Summary judgment is appropriate only when "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 a judgment as a matter of law." Fed.R.Civ.P.
56(c). The moving party has the initial burden of "informing the
district court of the basis for its motion" and identifying the
matter that "it believes demonstrate[s] the absence of a genuine
issue of material fact." Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). If the court concludes that "the record taken as a whole could not lead a rational trier
of fact to find for the nonmoving party, there is no `genuine
issue for trial,'" and summary judgment must be granted.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986) (quoting First Nat'l Bank of Arizona v. Cities
Serv. Co., 391 U.S. 253, 289 (1968)).
In deciding a motion for summary judgment, the court must "view
the evidence in the light most favorable to the party against
whom summary judgment is sought and . . . draw all permissible
inferences in favor of that party." Fischl v. Armitage,
128 F.3d 50, 55 (2d Cir. 1997). The Court must accept as true the
non-moving party's evidence, if supported by affidavits or other
evidentiary material. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 254 (1986). Thus, "[t]he court's function is not to
resolve disputed issues of fact but only to determine whether
there is a genuine issue of material fact to be tried." Fischl,
128 F.3d at 55. "Only disputes over facts that might affect the
outcome of the suit under the governing law will properly
preclude the entry of summary judgment." Anderson, 477 U.S. at
248. "If the evidence is merely colorable, . . . or is not
significantly probative, . . . summary judgment may be granted."
Id. at 249-50 (citing Cities Serv. Co., 391 U.S. at 290;
Dombrowski v. Eastland, 387 U.S. 82, 87 (1967)).
The fact that both sides have moved pursuant to Rule 56 does
not mean that one side necessarily must be granted summary
judgment. Schwabenbauer v. Bd. of Educ., 667 F.2d 305, 313-4
(2d Cir. 1981). "Rather, the court must evaluate each party's motion on its own merits, taking care in each instance to draw
all reasonable inferences against the party whose motion is under
consideration." Id. at 314.
B. Sammarco's Motion
In his complaint, Sammarco seeks to recover damages for "Breach
of Contract," alleging that the Trustees "violated 29 U.S.C. § 1022
and Sec. 1024(b), and [have] otherwise breached the contract
[Plan]." (Compl. ¶ "Nineteenth") (brackets in original). Sammarco
also seeks a mandatory injunction requiring the Trustees to pay
any past and future medical bills arising out of the Accident.
(Id. ¶ "Twentieth"). Finally, Sammarco's complaint states that
he seeks to represent a class consisting of "all those
participants or beneficiaries of the Plan who were and are
self-employed distributors who were and are employed by their own
corporations and who were and are not required to carry
[W]orkers' [C]ompensation in New York State during the six years
preceding the commencement of this action." (Id. ¶
"Twenty-Second"). It does not appear that this last aspect of his
suit was ever pursued.
Sammarco's statement of undisputed facts pursuant to Local
Civil Rule 56.1 contains only two paragraphs. Sammarco first
contends that the injuries that he sustained as a result of the
Accident did not occur during the course of his work. (Pl.'s R.
56.1 Stmt. ¶ 1). Second, Sammarco alleges that (a) Exclusion 3
did not comply with the requirements of 29 U.S.C. § 1022 because
the Workers' Compensation exclusionary language in the 1996 Plan
was ambiguous, and (b) the Trustees' denial of his appeal was improperly "based upon the [W]orkers' [C]ompensation exclusionary
language contained in the clearer 2003 [SPD]." (See id. ¶ 2).
ERISA Section 102(a), 29 U.S.C. § 1022(a), requires that the
summary plan description of an employee benefit plan "be written
in a manner calculated to be understood by the average plan
participant, and [that it] . . . be sufficiently accurate and
comprehensive to reasonably apprise such participants and
beneficiaries of their rights and obligations under the plan." To
meet these statutory requirements, a plan administrator usually
must limit or eliminate "technical jargon" and "long, complex
sentences." Layaou v. Xerox Corp., 238 F.3d 205, 209 (2d Cir.
2001) (quoting 29 C.F.R. § 2520.102-2(a)).
ERISA Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B),
authorizes a participant in an employee benefit plan to bring a
suit in federal court to enforce a right or clarify the right to
future benefits under the terms of an ERISA benefits plan. A plan
beneficiary, such as Sammarco, who has detrimentally relied on
the ambiguous wording of a plan may therefore institute an action
to recover any damages resulting from the plan administrator's
failure to make adequate disclosure. See Layaou, 238 F.3d at
212 (citing Howard v. Gleason Corp., 901 F.2d 1154, 1159 (2d
Sammarco argues that Exclusion 3 in the 1996 SPD failed to meet
the plain language requirements of Section 102(a) because it did
not clearly state that an owner-operator who elected not to
secure Workers' Compensation coverage for himself would be ineligible to recover benefits from the Fund. (See Warner
Aff. ¶ 12; Pl.'s Mem. of L. in Supp. of Mot. for Summ. J. at
6-9). This contention is at least colorable because Exclusion 3,
by its terms, applies to participants who are "entitled" to
benefits under a "Worker's Compensation" or similar law. However,
because Sammarco failed to secure such coverage for himself, he
arguably was not such a person.
In this case, even if Sammarco were entitled to summary
judgment declaring that the Workers' Compensation language in
Exclusion 3 is ambiguous, it does not necessarily follow that he
is entitled to receive benefits for the medical charges arising
out of the Accident because Exclusion 3 also contains another,
alternative basis of disqualification. Pursuant to Exclusion 3,
the Fund also need not honor Sammarco's claim if the charges for
which coverage is sought arose out of or were incurred in the
course of "any occupation for wage or profit."
Sammarco advances two different arguments with respect to this
language in Exclusion 3. First, he alleges that the Accident was
not work related because he had finished his business at the
Pepsi Cola plant and remained there solely for personal reasons.
(See Warner Aff. ¶ 11). Second, he argues that the denial of
his claim was not based on this provision of Exclusion 3, but,
rather, the Workers' Compensation "exclusionary language
contained in the clearer 2003 Plan, which was not in effect when
[he] submitted his claim for benefits in 2002." (Id. ¶ 12). Sammarco may, in fact, be correct with respect to the first of
these contentions. However, as explained in greater detail below,
the Court must judge the Trustees' determination on the basis of
the administrative record as it existed at the time that
Sammarco's claim was denied. Here, that record consisted of the
three letters that his lawyer sent to the Administrator (and
possibly his medical bills). (See Saunders Decl. ¶¶ 7-9 & Exs.
1-3). Consequently, there is not a scintilla of evidence that
Sammarco advised the Administrator or the Trustees prior to the
date that the Trustees denied his appeal that the Accident was
not work related. Indeed, the only evidence before the Trustees
with respect to this issue was the June 4th letter from
Sammarco's counsel, which represented that Sammarco was "injured
in the Pepsi Cola plant while he was picking up a load of goods
for distribution." (Id. Ex. 2). In light of this admission by
his attorney, Sammarco plainly is not entitled to summary
judgment on the theory that the Trustees improperly found that
the Accident was not work related. See, e.g., Ali v. Reno,
22 F.3d 442, 446 (2d Cir. 1994) (appellant is bound by his
retained counsel's admission that a timely answer had not been
filed); United States v. GAF Corp., 928 F.2d 1253, 1259 (2d
Cir. 1991) (quoting United States v. McKeon, 738 F.2d 26, 30
(2d Cir. 1984)) ("statements made by an attorney concerning a
matter within his employment may be admissible against the party
retaining the attorney").
Turning to Sammarco's second point, the Trustees' October 10th
rejection letter refers to the 2003 SPD, which evidently was
intended to clarify the scope of Exclusion 3 under the 1996 SPD and ensure that there would be no
further confusion. (See Saunders Decl. Ex. 4). However, the
Trustees' letter simply does not state, as Sammarco contends,
that the 2003 SPD was the basis for the Trustees' rejection of
his claim in September 2002. Instead, the letter plainly
describes Sammarco's injury as a "work related injury." Sammarco
therefore is not entitled to summary judgment on the theory that
his claim was denied in 2002 on the basis of the 2003 SPD.
C. Trustees' Motion
Under ERISA, federal courts ordinarily review benefits
decisions by fiduciaries or plan administrators using a de
novo standard of review. Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 115 (1989). Nevertheless, when a benefit
plan grants its administrator and trustees the discretion to
determine a participant's eligibility or to construe the plan's
terms, their actions must be reviewed under the considerably more
"deferential arbitrary and capricious standard." Fay v. Oxford
Health Paln, 287 F.3d 96, 107 (2d Cir. 2002). Pursuant to that
standard, a denial of benefits will be set aside only if it is
"without reason, unsupported by substantial evidence or erroneous
as a matter of law." Id. (quoting Kinstler v. First Reliance
Std. Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999) and Pagan
v. NYNEX Pension Plan, 52 F.3d 438, 442 (2d Cir. 1995))
(internal quotation marks omitted). The plan administrator bears
the burden of proving that the arbitrary and capricious standard
applies. Kinstler, 181 F.3d at 249. The 1996 SPD, which governs Sammarco's entitlement to health
benefits in connection with the Accident, describes the Trustees'
authority in the following terms:
The Board of Trustees . . . is the sole fiduciary of
the Plan and has broad discretionary authority to
determine eligibility for benefits under the Plan,
interpret all of the provisions of the Plan, and to
control the operation and administration of the Plan
within the limit of the law. All decisions made by
the Board of Trustees shall be final and binding on
(Warner Aff. Ex. A at 54).
As Sammarco concedes, this broad delegation of authority to the
Trustees requires the Court to review their decision to deny
Sammarco's claim using the arbitrary and capricious standard.
(See Pl.'s Mem. of L. in Supp. of Mot. for Summ. J. at 6).
However, under the "arbitrary and capricious" standard of review,
the Court must also restrict itself to the administrative record
and cannot consider any evidence introduced after the fact.
Miller v. United Welfare Fund, 73 F.3d 1066, 1071 (2d Cir.
1995) ("We follow the majority of our sister circuits in
concluding that a district court's review under the arbitrary and
capricious standard is limited to the administrative record.").
Sammarco argues that there is "good cause" to expand the record
in this case because the Trustees misled him and his counsel into
believing that the denial of coverage was based on his lack of
Workers' Compensation coverage. (Warner Reply Aff. ¶ 3). The
"good cause" exception only applies, however, when the Court's
review is de novo. See Krizek v. Cigna Group Ins.,
345 F.3d 91, 98 (2d Cir. 2003) (on de novo review of an
administrator's eligibility determination, a district court did
not err in confining its review to the record before the administrator absent a showing of
good cause); DeFelice v. Am. Int'l Life Assurance Co.,
112 F.3d 61, 67 (2d Cir. 1997) (on de novo review, a district court's
discretion to admit additional evidence beyond the record before
administrator "ought not to be exercised in the absence of good
On the basis of the administrative record, the only
reasonable conclusion for the Trustees to have drawn was that the
Accident was work related because it occurred while Sammarco was
picking up a load of goods for distribution along his route.
Consequently, because the administrative record fully supports
the Trustees' decision to decline coverage on the basis that
Sammarco's injury was work related, Sammarco has not shown, as he
must, that their decision was arbitrary and capricious.
The Trustees are therefore entitled to summary judgment
dismissing Sammarco's complaint.
For the foregoing reasons, the Trustees' motion for summary
judgment is granted, Sammarco's cross-motion is denied, and the
Complaint is dismissed. The Clerk of the Court is respectfully
requested to close this case.