In Ocampo v. Building Service 32B-J Pension Fund, No. 14-0877 (2nd Cir. 2015), the plaintiff was appealing the district court’s summary judgment against her, on the plaintiff’s claim under an ERISA plan (the “Plan”) for a pension based on her permanent disability. The plaintiff had alleged in district court that the denial of her claim by the plan administrator-here the Board of Trustees of the Plan- was arbitrary and capricious, because the plan administrator determined that her disability was not permanent on the sole basis that the Social Security Administration (“SSA”), in awarding her Social Security disability benefits, had stated that her eligibility for such benefits must be reviewed at least once every three years, rather than once every five years. The district court based its summary judgment against the plaintiff on the ground that the plan at issue conferred on plan administrator discretion to determine an applicant’s eligibility for benefits and that defendants’ reliance on SSA determinations, policies, and procedures in this matter was not arbitrary or capricious.
The Second Circuit Court of Appeals (the “Court”) affirmed the summary judgment. It noted the plaintiff’s argument on appeal that the plan administrator exercised no discretion of it’s own, but instead essentially delegated to the SSA the determination of whether her disability was permanent, so that its decision should be reviewed de novo. However, the Court rejected this argument. It said that the Plan provides that the plan administrator with discretionary authority to make decisions. Consequently, the denial of benefits by the plan administrator in the exercise of its discretion is reviewable only under the arbitrary-and-capricious standard. Under the facts of the case, reviewed by the Court, the decision that the plaintiff is not eligible for a disability pension under the Plan was made by the plan administrator, rather than the SSA. Further, at least two factors considered by the plan administrator-the plaintiff’s failure to demonstrate the permanence of her disability and her failure to show that she suffered a permanence of disability while working in covered employment-prove that the plan administrator’s denial of the pension benefit was not arbitrary or capricious.