Kimber v. Thiokol Corp., 1999 U.S. App. LEXIS 29533 (10^th Cir. November 10, 1999)-This court affirmed the entry of summary judgment in favor of Thiokol Corporation  and the Thiokol Corporation Disability Benefits Plan ("Plan") on Ivan Lynn Kimber’s claim for disability benefits under ERISA and the Americans with Disabilities Act ("ADA"). Mr. Kimber first argued that Thiokol acted arbitrarily and capriciously by limiting his long term disability benefits to two years pursuant to a plan provision capping benefits for disabilities "due to a mental condition." Mr. Kimber was suffering from complex symptoms related to diabetes, which included symptoms of mental illness. Second, Mr. Kimber argued that the Plan violated the ADA by establishing different levels of benefits for disabilities caused by physical or mental conditions.

Although the parties agreed that an "arbitrary and capricious" standard of review was appropriate (because the plan administrator had discretion to determine eligibility), Mr. Kimber argued that the plan administrator was operating under a conflict of interest and, therefore, the court should grant less deference to his decision. Although less deference would be appropriate, the court applied a four-part test and found there was no conflict of interest. The various factors the court considered included "whether: (1) the plan is self-funded; (2) the company funding the plan appointed and compensated the plan administrator; (3) the plan administrator's performance reviews or level of compensation were linked to the denial of the benefits; and (4) the provision of benefits had a significant economic impact on the company administering the plan."  In Mr. Kimber’s case, the court found that the first two factors were present, but the second two were not.

This court pointed out that when reviewing under the arbitrary and capricious standard, the Administrator’s decision will be upheld unless it is "not grounded on any reasonable basis." Using this standard, this court considered the several issues which Mr. Kimber raised to prove that the plan administrator's decision was arbitrary and capricious. First, this court found that regardless of its initial determination, Thiokol had the right to review Mr. Kimber's file and request additional evidence of a continuing total disability. Periodic reviews of eligibility do not constitute arbitrary action.

Second, this court concluded that the plan administrator acted within his discretion in attributing the disability to Mr. Kimber's mental condition, where there was evidence that the permanent disability was based upon a combination of physical and psychological factors.

Third, Mr. Kimber asserted that the plan administrator failed to look at all the relevant medical records before terminating benefits. But this court determined that the administrator was entitled to rely upon someone else’s analysis and summary of the report.

Fourth, this court held that the doctrine of contra proferentem [resolving ambiguities against the drafter] is inapplicable to a benefit plan when a plan administrator has discretion to interpret the plan and the standard of review is arbitrary and capricious.  Adopting the reasoning of the Seventh Circuit in Morton v. Smith, 91 F.3d 867 (7^th Cir. 1996), this court explained that Courts invoke contra proferentem only when they have the authority to construe the terms of a plan in a de novo review. Similarly, the doctrine of reasonable expectations is inapplicable to the review of an ERISA disability benefits plan under the arbitrary and capricious standard.

On the question of the alleged ADA violation, this court found that the Plan’s distinguishing between physical and mental disabilities was not the sort of discriminatory treatment the ADA was meant to address. So long as every employee is offered the same plan regardless of that employee's contemporary or future disability status, then no discrimination has occurred even if the plan offers different coverage for various disabilities.