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Joseph E. Brooks v. Macy's

May 6, 2011


The opinion of the court was delivered by: Pitman, United States Magistrate Judge:


I write to resolve several discovery disputes that were left open after the conference held in this matter on April 19, 2011. This is an ERISA action in which plaintiff alleges that the medical benefits to which he is entitled under his retirement plan have been improperly restricted. Plaintiff, who is 82 years old, was formerly the Chairman and Chief Executive Officer of Lord & Taylor (Complaint, dated July 12, 2010 (Docket Item 1) ("Compl."), ¶ 1). He alleges that since 1983, he and his wife have received extensive medical benefits under the plan, including reimbursement for expenses such as doctor's visits, transportation to and from those visits, medication, lab fees and gym memberships (Compl. ¶¶ 1, 29). Plaintiff alleges that all of these expenses were reimbursed without question through the end of 2009 (Compl. ¶ 1). In addition, plaintiff also received additional cash payments when such payments were necessary to offset the tax consequences of other payments he received under the plan.

Plaintiff alleges that in late 2009, after several mergers, Macy's, as the successor to Lord & Taylor, began to limit the scope of his benefits under the plan. According to plaintiff, "Macy's . . . departed from its long standing practice of reimbursing Mr. and Mrs. Brooks for the full cost of their medical and ancillary needs and notified Mr. and Mrs. Brooks that reimbursement of future claims would be judged under different, and much more stringent, standards . . ." (Compl. ¶ 2). The present action results from Macy's refusal to reimburse plaintiff for the cost of a live-in home health aide that had been ordered by plaintiff's physician.

The present discovery dispute arises out of defendant's responses to plaintiff's request for the production of documents and interrogatories. The defendant's principal objections are relevance and burden.

Defendant's relevance objection is based on its contention that the only relevant evidence are the materials that the plan administrator considered when it denied plaintiff's claim for benefits. I conclude that the law does not support such a narrow view of relevance in this case.

The pertinent provisions of the plan in issue are as follows:

All covered . . . executives are provided Executive Medical Plan coverage at no cost to the individual. [Employer] will pay the executive, upon receipt of copies of the bills, the full amount of any medical and dental expenses, including but not limited to hospitalization and the costs of medicines, incurred by the executive, his spouse and dependent children up to age 19, or in the case of dependent children who are full-time students, up to age 23.

Medical and dental expenses include amounts paid for the diagnosis, cure, mitigation, treatment or prevention of disease. The cost of prescribed medicine and drugs is included. Eyeglasses, elastic stockings, hearing aids and orthodontic braces would be included, but toiletries, lotion, toothpaste, brushes and vita-mins would be excluded.

At a conference in this matter held on April 19, 2011, defendant conceded, as it had to, that the plan does not does not grant the administrator or fiduciary discretionary authority to determine eligibility or to construe the terms of the plan and, therefore, the decision to deny benefits to plaintiff is subject to de novo review. See Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008); Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Locher v. Unum Life Ins. Co. of Am., 389 F.3d 288, 293 (2d Cir. 2004).

Central to defendant's relevance argument is the issue of whether the plan language is ambiguous. If the plan is unambiguous, evidence outside of the four-corners of the document is irrelevant. "As a general matter, unambiguous language in an ERISA plan must be interpreted and enforced in accordance with its plain meaning." Aramony v. United Way Replacement Benefit Plan, 191 F.3d 140, 149 (2d Cir. 1999); accord Perreca v. Gluck, 295 F.3d 215, 223 (2d Cir. 2002). If, on the other hand the plan language is ambiguous, extrinsic evidence is admissible as an aid to interpreting the plan. Andy Warhol Found. for the Visual Arts, Inc. v. Federal Ins. Co., 189 F.3d 208, 215 (2d Cir. 1999);

I.V. Servs. of Am., Inc. v. Trustees of the Am. Consulting Eng'rs Council Ins. Tr. Fund, 136 F.3d 114, 120 (2d Cir. 1998) ("Given that the Plan language is not, by itself, clear and unambiguous . . ., matters outside of the contract terms themselves become relevant.").*fn1 Whether contract language is ambiguous is a question of law that is resolved "by reference to the contract alone." Burger King Corp. v. Horn & Hardart Co., 893 F.2d 525, 527 (2d Cir. 1990) (citations omitted). "Language 'is ambiguous when it is "capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement . . . ."'" O'Neil v. Ret. Plan for Salaried Emps. of RKO Gen., Inc., 37 F.3d 55, 59 (2d Cir. 1994), quoting Care Travel Co. v. Pan Am. World Airways, 944 F.2d 983, 988 (2d Cir. 1991).

Because the matter has been referred to me for general pretrial supervision and not to resolve dispositive motions, I need not (and cannot) reach the ultimate issue of whether the plan is actually ambiguous; that will be a matter for Judge Jones to decide. At this stage, the issue is only whether plaintiff is entitled to discover matters that will be relevant if the plan is found to be ambiguous. Ordinarily, discovery concerning all relevant or potentially relevant issues is permitted, even if some of the discovery may ultimately prove unnecessary. For example, a plaintiff alleging that she was wrongfully terminated from her job is permitted to discover the salary and benefits paid to her replacement even though such discovery may prove to be useless if defendant prevails on liability. Similarly, a plaintiff alleging copyright infringement is ordinarily allowed to discover the alleged infringer's profits even before liability for infringement has been established. Accordingly, I conclude that plaintiff here is entitled to take discovery concerning evidence extrinsic to the plan that may be relevant to the issue of interpretation so long as it is at least fairly arguable that the plan is ambiguous. Any other standard would effectively require plaintiff to prove an aspect of his claim before he could conduct discovery.

Here, it is fairly arguable (at the very least) that the plan is ambiguous. The plan provides coverage for "[m]edical and dental expenses [which] include amounts paid for the diagnosis, cure, mitigation, treatment or prevention of disease." Among the unanswered questions this language presents are (1) does it exclude medical expenses necessitated by conditions that result from accidents as opposed to disease? (2) does it exclude medical expenses necessitated by conditions that are the result of normal aging, and, if so, what conditions are the result of normal aging? (3) are medical expenses limited to expenses incurred as a result of an order by a health care professional? (4) do medical expenses include expenses incurred as a result of a suggestion by a health care professional, e.g., a suggestion by a physician that a patient join a gym and exercise regularly? (5) what are "medical" expenses? (6) does the cost of a home health aide qualify as a medical expense if the aide's services are ordered by a physician to mitigate the effects of a disease? There can be little question that plaintiff has at least a fair argument that the plan is ambiguous.

Defendant's own conduct here also confirms that the plan is ambiguous and that resort to documents outside the plan document itself is necessary to interpret the plan. For example, on May 20, 2010, Stephen Von Wahlde, Macy's Vice President of Law & Retirement Benefits sent plaintiff's counsel a three-page, single-spaced letter "in an attempt to reach some clarity regarding Macy's obligation to cover certain expenses." In the letter, Mr. Von Wahlde refers to (1) a 1986 application for Executive medical insurance, (2) a summary plan description issued by Connecticut General Insurance Company in 1986, (3) ADG Board Minutes from May 1983 and (4) Section 213(d) of the Internal Revenue Code. The face of the ...

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