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Coburn v. International Paper Co.

Court of Appeals of Louisiana, Second Circuit

May 20, 2015

WILLIAM E. COBURN, Plaintiff-Appellant
v.
INTERNATIONAL PAPER COMPANY, INTERNATIONAL PAPER COMPANY SALARY CONTINUANCE PLAN & SEDGWICK CLAIMS MANAGEMENT SERVICES, INC., Defendants-Appellees

Appealed from the Forty-Second Judicial District Court for the Parish of DeSoto, Louisiana. Trial Court No. 73,845-B. Honorable Charles B. Adams, Judge.

LAW OFFICES OF BRYCE J. DENNY, By: Bryce J. Denny, Counsel for Appellant.

COOK, YANCEY, KING & GALLOWAY, By: Herschel E. Richard, Elizabeth Mendell Carmody, Counsel for Appellees.

Before WILLIAMS, MOORE & PITMAN, JJ.

OPINION

Page 1188

[49,802 La.App. 2 Cir. 1] PITMAN, J.

Plaintiff William E. Coburn appeals the district court's granting of summary judgment in favor of Defendants International Paper Company (" IP" ), International Paper Company Salary Continuance Plan[1] (" the Plan" ) and Sedgwick Claims Management Services, Inc. (" Sedgwick" ). For the following reasons, we affirm.

FACTS

On June 26, 2012, Mr. Coburn filed a petition for damages for breach of contract. He stated that he was an employee of IP and was eligible to participate in its Plan, which is managed by Sedgwick and provides for a continuation of an employee's salary if the employee is disabled. He

Page 1189

stated that he became disabled on August 29, 2009, and applied for continuation of his salary. Sedgwick first denied his request, but, after an appeal, granted the request for the time period from August 31, 2009, through September 30, 2009, and denied his claim for the period from October 1, 2009, through January 31, 2010.[2] Mr. Coburn argued that this denial was a " bad faith, intentional denial of a valid claim" and that his compensation agreement was breached in bad faith by the denial. He requested the payment of wages from October 1, 2009, through January 31, 2010, plus 90 days' wages as penalty pursuant to the Louisiana Wage Payment Act (" LWPA" ), i.e., La. R.S. 23:631, et seq., in addition to all damages, including mental anguish, pain and suffering.

[49,802 La.App. 2 Cir. 2] On September 18, 2013, Defendants filed a motion for partial summary judgment, arguing that they are entitled to summary judgment on Mr. Coburn's claim that he is entitled to wages from October 1, 2009, through January 31, 2010, plus 90 days' wages as penalty, because the disability benefits to which he claimed he is entitled are not " wages" pursuant to La. R.S. 23:631.

On October 24, 2013, the district court filed a ruling granting Defendants' motion for partial summary judgment. It noted that Mr. Coburn attempted to equate disability pay to earned wages in his argument that he is entitled to unpaid wages. It determined that the Plan's " purpose is to provide a wage replacement while the employee cannot earn a wage. Plan benefits are neither earned nor accrued. As such, they are not analogous to accrued, unused vacation leave as contemplated" by the LWPA.

On March 17, 2014, Defendants filed a motion for summary judgment, contending that Mr. Coburn cannot establish that Sedgwick's denial of short-term disability benefits was arbitrary or capricious because the information before the Plan's administrator provided a rational basis for the administrator's determination pursuant to the terms of the Plan. Defendants added that, if Mr. Coburn cannot show that the denial of benefits was arbitrary or capricious, the district court need not address the issue of bad faith. They further contended that, even if the district court determines that there is a genuine issue of material fact as to the propriety of the administrator's determination, Mr. Coburn cannot establish that they exercised their discretion in bad faith.

On May 9, 2014, Mr. Coburn filed an opposition to Defendants' [49,802 La.App. 2 Cir. 3] motion for summary judgment, in which he alleged that Sedgwick's administrative processing of his application for salary continuance was " conducted in a manner designed to discourage [him] from continuing his quest to seek benefits." He reasserted that Defendants breached the contract to continue his salary during his period of short-term disability and that he is entitled to damages for Defendants' bad faith.

On May 19, 2014, a hearing was held on the motion for summary judgment. Attorneys for both parties reiterated the arguments set forth in their written motions and memoranda.

On June 4, 2014, the district court filed a ruling granting Defendants' motion for summary judgment. It noted the unique procedural posture of the case, stating that it is a " motion for summary judgment where the issue is not necessarily whether

Page 1190

a genuine issue of material fact exists, but whether the Committee's decision based on all the facts in the record was arbitrary and capricious." It opined that, in this case, a trial on the merits would add no additional facts or evidence not already in the record. It further stated that judicial review of the administration of a benefits plan is limited; and the administrator's determination is conclusive so long as the evidence before it was sufficient and the decision was not arbitrary, capricious or in bad faith. The district court also discussed the physicians' findings that were considered by Sedgwick and determined that, while it " may not agree with the Committee's determination to deny benefits, it cannot say that it was an abuse of discretion." It further noted that an employer is not bound by the recommendations of an employee's treating physician and that independent ...


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