By Ron E. Peck, Esq.

If you have read the postings below (addressing the ongoing Supreme Court case of MetLife v. Glenn) you will note that the matter of what standard of review a Court applies when reviewing an administrator’s decision, is a major topic of conversation.  The issue literally dominates how much power administrators will have to interpret the terms of their plan documents.  In general, having discretion to interpret terms, and enjoying the Court deference that comes with it, is extremely important to administrators.  Discretion and deference, however, do not always guarantee Court acceptance of an administrator’s interpretation of plan terms.

Ejusdem generis is a legal concept whereby a Court will define a term based upon the meaning of terms surrounding it.  For example, “Georgia” could be a person’s name or the State.  Therefore, on its own, the name could refer to more than one entity (the definition of ambiguity).  If, however, the term “Georgia” were part of a list of terms such as “California,” “New York,” and “Florida,” the term “Georgia” clearly refers to the State.  Likewise, if it is part of a list including the names, “Mary,” “Samantha,” and “Kelly,” the term “Georgia” clearly refers to a female of that name.

If a plan administrator attempts to interpret a would-be ambiguous term one way, but the Court determines that concurrent terminology requires the term be defined another way, the Court will not show the administrator any deference.  So, if (in the example above), the administrator attempts to define “Georgia” as a State, despite its being accompanied by the names of various females, the Court will counter the administrator’s reading of the term.

This issue was recently brought to our attention by Roy F. Harmon III, posting on his blog (http://healthplanlaw.com/?p=623). He discusses the recent Fourth Circuit decision in Ahuja v. Ericsson, No. 07-1196 (4th Cir.) (May 12, 2008), where the Court reminds us that a term with an obvious meaning cannot be given an alternate meaning by an administrator, even if the administrator has discretionary authority to interpret the terms. 

In the case cited above, the employee was offered a position in another State when his employer’s two operations were merging into one.  He declined, and sought severance benefits.  The plan document stated that such benefits would be denied if the company merges with another entity, and the employee is offered a position with said other entity.  The administrator read “another entity” to include the separate, merging offices.  The Court read the term differently, however, saying that “another entity” cannot include an already affiliated branch of the same organization.  Because that reading seemed obvious and unambiguous to the Court, the administrator’s interpretation was given no deference and was reversed.

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This entry was posted by Adam V. Russo on Monday, May 19th, 2008 at 8:17 am and is filed under 4th, Summary Plan Description. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.