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Estate of Jones v. Children's Hospital and Health System Inc.

United States Court of Appeals, Seventh Circuit

June 13, 2018

Estate of Linda Faye Jones, et al., Plaintiffs-Appellants,
v.
Children's Hospital and Health System Incorporated Pension Plan, Defendant-Appellee.

          Argued May 29, 2018

          Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:16-cv-01235-LA - Lynn Adelman, Judge.

          Before Bauer, Barrett, and St. Eve, Circuit Judges.

          ST. EVE, CIRCUIT JUDGE

         Three days into retirement and three days before the start of her pension, Linda Faye Jones died. The Administrative Committee, which oversees the Children's Hospital and Health System, Inc. Pension Plan, denied the pension to Linda's daughter and beneficiary, Kishunda Jones. The Committee reasoned that only spouses are entitled to benefits under the Plan when a participant dies before the start of her pension. Because the Administrative Committee's decision was not arbitrary or capricious, we affirm.

         I. Background

         Linda worked for Children's Hospital of Wisconsin for 37 years. As an employee, she was a participant in the employer-funded Plan. In August of 2015, Linda faced recurring bladder cancer, and at 60 years old, decided to retire. While formalizing her retirement, Linda received a form asking her to apply for the benefits of the Plan.

         Article IV of the Plan describes the four benefits available to employees: a normal retirement pension, an early retirement pension, a deferred vested retirement pension, and a pre-retirement surviving-spouse death benefit. Section 4.4 explains the surviving-spouse benefit, which is available to a participant's spouse when the participant dies "before the Participant's annuity starting date." No other benefit provides that it is available to beneficiaries if the participant dies before payments start.

         Article VI of the Plan details the benefits' payment structures. Section 6.2 states that early retirement pensions "commence with a payment due on the first day of the month next following" the date of termination and the election of benefits. Section 6.4 explains that a participant "may elect to have his pension payable" in alternative forms of annuities. One of those annuities is a ten-year annuity, described in Section 6.4(a)(iii) as:

A ten (10) year certain life annuity providing monthly payments to the Participant for his life and, if he dies before receiving the one hundred twentieth (120th) such payment, continuing such payments to his designated beneficiary until the aggregate payments made to him and such beneficiary total one hundred twenty (120).

         Section 6.4(d) requires a participant selecting the ten-year annuity to designate a beneficiary.

         Section 6.9(e)(i), however, limits who can constitute a designated beneficiary in certain situations. Specifically, "[i]n the case of a Participant who dies prior to the date distributions begin, the Participant's designated beneficiary will be his or her surviving Spouse, if any, pursuant to the terms of Section 4.4." Otherwise, "[i]n the case of a Participant who dies after the date distributions begin, the designated beneficiary will be the individual who is designated as the beneficiary under Article VI." These varying definitions have a purpose, according to Section 6.9(d)(iv): certain tax rules do not apply to the Plan because the beneficiary of a participant who dies before distribution must be the participant's spouse.

         Article VIII of the Plan vests the Administrative Committee with "full and complete discretionary authority, responsibility and control over the management, administration and operation of the Plan." That discretion extends to the authority to "formulate, issue and apply rules and regulations, " "interpret and apply the provisions of the Plan, " and "make appropriate determinations and calculations."

         Upon receiving the application for Plan benefits, Linda opted for the early retirement pension. She also elected to receive her pension through Section 6.4(a)(iii)'s ten-year annuity. She designated her only ...


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