Appeal from the United States District Court for the Northern District of California Saundra B. Armstrong, District Judge, Presiding D.C. No.4:09-CV-02661- SBA
The opinion of the court was delivered by: M. Smith, Circuit Judge:
Argued and Submitted March 13, 2012-San Francisco, California
Before: M. Margaret McKeown and Milan D. Smith, Jr., Circuit Judges, and Barbara Jacobs Rothstein, Senior District Judge.*fn1
Opinion by Judge Milan D. Smith, Jr.
Jeff Renfro is insured under two long-term disability plans administered by Unum Life Insurance Company (Unum), namely, the Funky Door Long Term Disability Plan (the FDP), and the ServiceMaster Long Term Disability Plan (the SMP) (the FDP and the SMP collectively, the Plans). Renfro sued the Plans when Unum decided to deduct his Social Security Disability Insurance (SSDI) benefit as deductible income under each plan, resulting in what he terms a "double offset." On cross summary judgment motions, the district court granted summary judgment in favor of the Plans, found that Unum's interpretation of the Plans was not an abuse of discretion, and held that Renfro was not entitled to recovery under a theory of equitable estoppel. Renfro appeals the judgment of the district court. Because we find that Unum's decision was not an abuse of discretion, that the plain language of the Plans permits the deduction of the SSDI benefit from each plan, and that Renfro is not entitled to equitable estoppel, we affirm the district court's grant of summary judgment in favor of the Plans.
FACTUAL AND PROCEDURAL BACKGROUND
Renfro was employed since 2002 as a yoga instructor and department manager at Funky Door Yoga, and was covered under the FDP. After he suffered an injury to his right shoulder, Renfro tendered a disability claim to Unum under the FDP. Unum approved his claim.
As required under the FDP, Renfro filed an application for SSDI benefits, on March 11, 2005. The Social Security Administration (SSA) initially denied the claim but Renfro appealed the decision. On January 19, 2007, the SSA reversed its decision, and awarded Renfro benefits, along with retroactive payments extending back to June 1, 2005, the date it determined that Renfro became disabled under SSA rules. SSA's decision indicated that Renfro would receive a retroactive payment of $25,177.00.
After learning on February 26, 2007 of the SSA's approval of SSDI benefits for Renfro, Unum began deducting the SSDI award from the monthly payment under the FDP. In addition, because the SSDI retroactive payments overlapped with a period of time Unum had covered Renfro under the plan, Unum calculated an overpayment on the plan of $24,377.78, and requested reimbursement of that amount. On March 14, 2007, Unum sent Renfro another letter indicating that Renfro had not responded to its request for reimbursement of the overpayment, and stating that it would begin applying the full amount of his monthly payment under the FDP to the repayment of Unum's overpayment, until the overpayment was recovered in full.
II. The ServiceMaster Plan
In addition to working at Funky Door Yoga, Renfro was also employed at ServiceMaster, as a plumbing manager. At ServiceMaster, Renfro was covered under the SMP, which, coincidentally, was also administered by Unum. As he had done under the FDP, Renfro submitted a claim under the SMP. On August 25, 2005, Unum approved Renfro's SMP claim under a Reservation of Rights. Unum's SMP approval letter to Renfro stated that it would reduce the monthly gross benefit by the estimated SSDI amount of $1801.00.
On July 21, 2006, Unum concluded that Renfro no longer met the definition of disability under the SMP, and terminated his benefits. Renfro appealed this decision, and Unum reversed itself and reinstated his benefits under the SMP. As of this time, Renfro was still covered under the FDP, and had begun receiving SSDI benefits.
III. Handling of the SSDI Offset
On July 19, 2007, Renfro's attorney and a Unum representative engaged in a phone conversation regarding Renfro's claims. According to the following notes of the conversation taken by the Unum representative, the parties discussed the retroactive benefits due to Renfro on the SMP based on Unum's reversal of its previous decision, the overpayment Renfro owed Unum on the FDP, and how to handle the SSDI offset:
He asked about back pay and I advised based on our current considerations the back pay would be $51K. He asked if this was with offset, advised as the full offset is currently on the other file if all remains the way we are currently anticipating this would be the full back benefit with no further reduction for SSDI. Advised there is an overpayment on the other claim of $19297.78 that would need to be settled before payment and this would reduce payment to [sic] 31702.22. He asked if the paperwork could note the $51K from this claim with the payment being sent to him and a check for the [sic] 31702.22. Advised that he could drop us a note and that should not be a problem. He states he just wanted to know because the insured would have owed this on the other claim regardless of the outcome on this one.
Subsequently, Unum and Renfro's attorney exchanged two letters regarding their conversation. Unum confirmed that the overpayment from the FDP would be deducted from the retroactive benefits due under the SMP, per the phone conversation. Unum also confirmed that it would not seek an additional SSDI offset from the retroactive benefits but was "continuing to evaluate both claims for consideration of offsets going forward."
On April 29, 2009, Unum sent Renfro a letter informing him of its final decision on how it would handle the offsets. In the letter, Unum explained its position that the SSDI offset was deductible under both Plans based on the contract language of both policies. However, Unum explained that because it had incorrectly calculated benefits on the SMP due to the SSDI offset, it would not seek to recover its overpayment, but would take the offset prospectively. Renfro ...