Mealey's Litigation Report

Keogan v. Towers, Perrin, Forster & Crosby, et al.


Stephen Kelly Keogan,




Towers, Perrin, Forster & Crosby, Inc., et al.,


Fay E. Fishman, Peterson & Fishman, P.L.L.P., Minneapolis, Minnesota for Plaintiff

Richard G. Rosenblatt and James P. Walsh, Jr., Morgan Lewis & Bockius, L.L.P., Princeton, New Jersey, and Brian G. Belisle, Oppenheimer, Wolff & Donnelly, L.L.P., Minneapolis, Minnesota, for Defendant Towers, Perrin, Forster & Crosby, Inc.


Plaintiff Stephen Kelly Keogan brought this action against Defendant Towers, Perrin, Forster & Crosby, Inc. ("Towers") for the restoration of long-term disability ("LTD") benefits and for the imposition of a penalty due to Towers's failure to supply requested plan documents. (1) Towers provides LTD benefits to its employees under a self-funded welfare benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). Keogan began receiving LTD benefits in December 1992. In 2000, Towers evaluated his continued eligibility and determined that he was no longer "long-term disabled" within the guidelines of the LTD plan, After fifteen months of correspondence between Keogan's counsel and Towers, in which Keogan's counsel repeatedly asked for a complete copy of Keogan's file and a copy of the LTD plan documents, Keogan filed an appeal with Towers from the termination of his benefits. In support of that appeal, Keogan relied in part on a determination by the Social Security Administration ("SSA") that he has been totally disabled since May 1992. Towers never responded to Keogan's appeal, and this lawsuit followed.

Towers has asserted a counterclaim for an accounting and the recovery of LTD benefits that it claims Keogan should not retain because they "overlap" with disability insurance benefits that the SSA paid to Keogan retroactively for the period from June 1999 to May 15, 2000. Towers seeks a constructive trust on those funds, Presently before the Court are the parties' cross motions for summary judgment. For the reasons set forth below, the Court will grant in part each motion.


I. The LTD Plan at Issue

Towers is a Pennsylvania corporation whose principal place of business is Philadelphia, Pennsylvania. Effective January 1, 2000, the "Towers Perrin Company Paid Benefit Plans For US Employees" (hereinafter, "the January 1, 2000 Document") constituted the "Plan document" for several "Company Paid Benefit Plans" (including the LTD Plan) that Towers made available to its American employees. (2) (App, to Def.'s Mem. in Supp. of Summ. J. ("Def's App."), Ex. E at D0104-05.) The January 1, 2000 Document expressly provided that it "supercedes any and all prior plan documents and merges the plans contained herein into one plan." (Id. at D0104.)

The January 1, 2000 Document designates Towers as the "Plan Administrator" and "Named Fiduciary" of the Company Paid Benefit Plans. (Id. at D0110.) Pursuant to the January 1, 2000 Document, the Human Resources Committee of Tower's Board of Directors ("the Committee") handles "the general administration of the Plans on behalf of the Company as Plan Administrator." (Id.) The Committee has "full power, authority and discretion to administer the Plans and to construe and apply all of its provisions on behalf of the Employer." (Id.) The Committee's powers and duties include "[d]eciding questions relating to eligibility, continuity of employment, and amounts of benefits. Benefits under the Plans will be paid only if the Committee decides in its discretion that the applicant is entitled to them." (Id.)

The January 1, 2000 Document sets out a claim procedure for the payment of benefits under the Plans. Regarding an appeal from the denial of benefits, the January 1, 2000 Document states:

   If the claimant wishes to appeal the denial, the claimant or a duly 
   authorized representative will file a written request with the 
   committee for a review. This request must be made by the claimant 
   within sixty (60) days after receiving notice of the claim's denial. 
   The claimant or representative may review pertinent documents 
   relating to the claim and its denial, may submit issues and comments 
   in writing to the Committee and may request a hearing. Within sixty 
   (60) days after receipt of such a request for review, the Committee 
   shall reconsider the claim (and if the claimant shall have so 
   requested, and the Committee has determined that a hearing is 
   appropriate, shall afford the claimant or his representative a 
   hearing before the Committee) and make a decision on the merits of 
   the claim.... The decision on review will be in writing and include 
   specific reasons and references to the pertinent Plan provisions on 
   which the decision is based. All interpretations, determinations, 
   and decisions of the Committee in respect of any claim shall be made 
   in its sole discretion on the applicable Plan documents and shall be 
   final, conclusive and binding on all parties. 

(Id. at D0112-13 (emphasis added).)

With respect to the form of benefit and the maximum benefits payable under the Plans, the January 1, 2000 Document refers to an "Answer Book," the full title of which is the "Answer Book: A Towers Perrin Guide to TotalPay." (Id. at D0109; see also id. at D0105 (defining the "Answer Book").) The Answer Book describes itself as "a summary plan description of all Towers Perrin employee benefit plans" as required under ERISA. (Def.'s App., Ex, D at 194, 198 (the Towers "Answer Book").) It also provides that, for certain benefit plans, including the LTD Plan, the information contained in the Answer Book "also comprises part the official plan document, which, in addition to any applicable insurance contract, would govern in all cases." (Id. (emphasis added).)

According to the Answer Book, an employee becomes eligible for LTD benefits after twenty-six weeks of continuous disability. (Id. at 108.) LTD benefits are paid until the employee either recovers from the disabling illness or injury or reaches normal retirement age. (Id. at 105.)

   To maintain eligibility for LTD benefits, you must be unable to 
   perform each and every duty of your job for the first 130 weeks you 
   are disabled. To continue to receive benefits after this period, you 
   must be 
      * Unable to perform any job for which you are reasonably suited 
      based on your education, training and experience 
      * Under the continuing care of a licensed medical practitioner. 

(Id at 108 (emphasis in original).) LTD benefits will be reduced "by 100% of your primary Social Security benefit and any other statutory disability payments you might receive." (Id. at 109.) Coverage for disability benefits ends when the employee terminates his or her employment with Towers Perrin, is no longer eligible to participate in the Plan, or the Plan terminates. (Id. At 111.)

The "Disability" section of the Answer Book refers to the "Administrative Information" section for "details about the administration of this plan including how to appeal a claim." (Id at 111.) That section describes the appeal process as follows:

   If your claim for a benefit is denied in whole or in part, you (or 
   your beneficiary) will be notified in writing by the administrator 
   for that benefit plan. This written notice will include: 
      * Specific reason(s) for the denial 
      * References to plan provision(s) on which the denial is based 
      * A description of any additional material or information that is 
      necessary to perfect the claim 
      * Procedures for appealing the decision. 
   You or your authorized representative may review all documents 
   related to any denial of benefits. If you disagree with the plan 
   administrator's decision, you have 60 days from the receipt of the 
   original denial to request a review. This request should be in 
   writing and sent to HR Administration at the following address.... 

( 194.)

II. Keogan's Claim for LTD Benefits

A. The onset of Kengan's disability

Keogan began working for Towers Perrin as an actuary in January 1989. (3) In the fall of 1990, he spent time with his family in a wooded area along the St. Croix River. (Def.'s App.. Ex. B at D0059 (Administrative Record).) After that visit, he removed several ticks from himself and, although he had no rash, he experienced some joint pains within days to weeks of the incident. (Id.)

The joint pain subsequently disappeared, and Keogan was fine until March 1991, when he and his family returned from a trip to Hawaii. (Id.) Both Keogan and his wife, along with several of their children, developed chills, myalgias, and joint pain in the knees, ankles, and hands. (Id) All of the family recovered except for Keogan, who continued to have persistent chills, sweats, bouts of diarrhea, headaches, severe joint pain without swelling, and fatigue. (Id.) Kengan. "who used to be highly active prior to that, started having to sleep up to 12 hours or more a day with a nap in the afternoon." (Id)

Beginning in July 1991, Keogan began to miss significant amounts of work due to illness. (Id. at D0096-97.) He used all of his short-term disability benefits fen 1991 and 1992, and took an unpaid leave of absence in the spring of 1992. (Id, at D0094.) Towers thereafter extended Keogan's short-term disability benefits pending his qualification for LTD benefits. (See id. at D0090-91, D0098.) Keogan's salary in 1992, as of the last day he worked, was $33,900. …

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