Shelby County Health Care Corporation v. Southern Council of Industrial Workers Health and Welfare Trust Fund

1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0055P (6th Cir.)
File Name: 00a0055p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
S HELBY C OUNTY HEALTH
C ARE C ORPORATION ,
Plaintiff-Appellee,
v.
S OUTHERN C OUNCIL OF
INDUSTRIAL W ORKERS
HEALTH AND W ELFARE
TRUST FUND ,
Defendant-Appellant,
TRACY M ASON ,
Defendant.
;>

1
No. 99-5191
Appeal from the United States District Court
for the Western District of Tennessee at Memphis.
No. 98-02394—Julia S. Gibbons, Chief District Judge.
Argued: December 7, 1999
Decided and Filed: February 15, 2000
Before: JONES, BATCHELDER, and MOORE, Circuit
Judges.

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2 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
No. 99-5191
_________________
COUNSEL
ARGUED: Allison A. Madan, SLEVIN & HART,
Washington, D.C., for Appellant. Teresa A. McCullough,
Memphis, Tennessee, for Appellee. ON BRIEF: Allison A.
Madan, Lynn A. Bowers, SLEVIN & HART, Washington,
D.C., Deborah E. Godwin, ALLEN, GODWIN, MORRIS &
LAURENZI, Memphis, Tennessee, for Appellant. Teresa A.
McCullough, Gary C. McCullough, Memphis, Tennessee, for
Appellee.
_________________
OPINION
_________________
KAREN NELSON MOORE, Circuit Judge. Shelby County
Health Care Corporation (“Shelby”) brought suit in this
employee benefit case against Southern Council of Industrial
Workers Health and Welfare Trust Fund (the “Fund”) for
payment of hospital services rendered to Tracy Mason, a
former participant in the Fund. The Fund’s plan
administrator, the Board of Trustees, had denied Shelby’s
claim for benefits on the basis of untimeliness of the claim.
The district court denied the Fund’s motion to dismiss and sua
sponte granted summary judgment to Shelby reversing the
Board of Trustees’ denial of benefits. We AFFIRM the
district court’s conclusion on summary judgment that the
Board of Trustees’ interpretation of the Fund’s plan document
(the “Plan”) regarding when a claim is timely filed is arbitrary
and capricious. We REVERSE the district court’s sua sponte
grant of summary judgment to Shelby awarding it the full
amount of damages requested and REMAND to determine
the proper amount of benefits owed under the terms of the
Plan. In addition, we AFFIRM the district court’s denial of
attorney fees to the Fund.

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No. 99-5191 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
3
1The Fund disputes the amount of charges and claims that it received
a bill for $31,761.02 from Shelby.
I. FACTS AND PROCEDURE
Tracy Mason was struck by a car on June 30, 1995. Mason
was a participant in the Fund at that time. He was taken to
Shelby for medical treatment and signed an assignment of
insurance benefits to Shelby for all hospital charges. Shelby
incurred $31,770.22 for these services and billed the Fund for
this amount in late July 1995.1 After receiving this bill and in
accordance with the Fund’s established procedures for claims
involving potentially liable third parties, the Fund sent Mason
a subrogation agreement, which included a questionnaire
about the accident, on August 2, 1995; October 31, 1995;
November 14, 1995; May 22, 1996; and June 12, 1996.
These letters advised Mason that his claims would not be
processed until the Fund received a subrogation agreement
with his signature. On March 6, 1996, Shelby sent a letter to
the Fund, along with a copy of Mason’s assignment of
benefits to Shelby, following up on the bill it had sent to the
Fund and renewing its request for payment. In response, the
Fund sent a letter to Shelby on April 17, 1996, informing
Shelby that it had not received a subrogation agreement from
Mason and that it could not process the claim without this
information. Shelby filed suit seeking payment of this claim
in May 1996; the district court dismissed Shelby’s complaint
for failure to exhaust administrative remedies in May 1997.
As the litigation was pending, the Fund sent Shelby a
subrogation agreement for Mason’s signature on September
12, 1996, in response to Shelby’s request. In this letter, the
Fund warned Shelby that it was sending this agreement
“without prejudice with respect to the Fund’s ability to deny
any claim filed for timeliness or any other reason consistent
with the Fund’s rules.” J.A. at 131. Shelby submitted a
signed subrogation agreement and a copy of the police report
to the Fund on October 16, 1996.

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4 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
No. 99-5191
On January 7, 1997, the Fund denied Shelby’s claim on the
ground of untimeliness. The Fund concluded that according
to the Plan, all information necessary to process a claim,
including a subrogation agreement where there is a potentially
liable third party, must be submitted within its one-year
deadline for filing claims. Shelby appealed the denial of its
claim to the Board of Trustees and submitted for the Board’s
consideration a copy of Mason’s assignment of benefits to
Shelby, a police report for the accident involving Mason, and
the subrogation agreement signed by Mason. On April 3,
1997, the Board of Trustees met and decided to affirm the
denial of benefits to Shelby on the ground of untimeliness. It
concluded that a claim for benefits relating to an accident
involving third party action is not properly filed until all
information, including a signed subrogation agreement, is
submitted to the Fund. Under the Plan, a participant must file
a claim for benefits within one year of the date on which the
charges were incurred. In this case, Shelby provided medical
treatment to Mason beginning on June 30, 1995, and the Fund
did not receive a signed subrogation agreement until October
21, 1996. The Board of Trustees reasoned that Mason’s
failure to submit a timely subrogation agreement had
prejudiced the Fund’s ability to pursue damages from the
driver of the car that struck Mason because of Tennessee’s
one-year statute of limitations for personal injury actions.
Shelby filed a complaint in district court challenging this
conclusion under 29 U.S.C. § 1132(a)(1)(B) of the Employee
Retirement Income Security Act of 1974 (“ERISA”) on May
1, 1998. It attached as exhibits a copy of Mason’s assignment
of benefits to Shelby, the subrogation agreement with
Mason’s signature, a letter indicating that the Fund had made
some payments for claims related to Mason’s accident, and an
affidavit stating the amount owed to Shelby. In response, the
Fund filed a motion to dismiss Shelby’s complaint arguing
that the Board of Trustees’ interpretation of the Plan and
denial of benefits is not arbitrary and capricious. The Fund
attached as exhibits to its brief excerpts of the Plan, an
affidavit describing the Fund’s attempts to contact Mason for
No. 99-5191 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
17
3ERISA does not require an award of prejudgment interest to a
prevailing plan participant, although a district court has the discretion to
grant such an award in accordance with equitable principles. See Ford v.
Uniroyal Pension Plan, 154 F.3d 613, 616 (6th Cir. 1998). This
determination is reviewed for abuse of discretion. See id.
attorney fees in its appeal of the district court’s judgment.
Because we affirm the district court’s conclusion that the
Board of Trustees’ interpretation of the Plan is unreasonable,
the Fund is not entitled to attorney fees. Therefore, the
district court did not abuse its discretion in refusing to grant
attorney fees to the Fund.
Shelby also challenges the district court’s denial of attorney
fees and prejudgment interest3 claiming that the Fund acted
in bad faith in denying its claim for benefits and unreasonably
interpreted the provisions of the Plan to its detriment. We do
not have jurisdiction to consider this argument because
Shelby did not file a notice of cross-appeal. See Francis v.
Clark Equip. Co., 993 F.2d 545, 552 (6th Cir. 1993).
III. CONCLUSION
For the reasons stated above, we AFFIRM the district
court’s summary judgment determination that the Fund’s
denial of benefits to Shelby based on the Board of Trustees’
interpretation of the Plan’s one-year time requirement for
filing claims is arbitrary and capricious, we REVERSE the
district court’s grant of summary judgment sua sponte
awarding Shelby the full amount of damages, and we
REMAND for the purpose of determining the amount owed
to Shelby under the terms of the Plan. In addition, we
AFFIRM the district court’s denial of attorney fees to the
Fund.

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16 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
No. 99-5191
reasonable expectations should apply. Shelby also argues that the Fund
is estopped from denying benefits because the Fund misrepresented that
it would pay benefits upon receipt of a signed subrogation agreement
regardless of the one-year deadline and because the Fund partially
performed by making de minimis payments on claims in connection with
Mason’s accident. Because we affirm the district court’s award of
summary judgment based on the determination that the Fund’s denial of
Shelby’s claim on the ground of untimeliness is arbitrary and capricious,
we need not address these arguments. In addition, Shelby asserts that the
Fund violated ERISA by failing to comply with Shelby’s request for a
copy of the Plan pursuant to 29 U.S.C. § 1132(c)(1). However, the
district court rejected this claim because Shelby did not raise this issue in
its complaint, and we do not have jurisdiction to review this determination
because Shelby did not file a notice of cross-appeal. See Francis v. Clark
Equip. Co., 993 F.2d 545, 552 (6th Cir. 1993).
C. Attorney Fees
Under 29 U.S.C. § 1132(g)(1), a “court in its discretion
may allow a reasonable attorney’s fee and costs of action to
either party.” A district court must consider the following
factors in deciding whether to award attorney fees,
(1) the degree of the opposing party’s culpability or bad
faith; (2) the opposing party’s ability to satisfy an award
of attorney’s fees; (3) the deterrent effect of an award on
other persons under similar circumstances; (4) whether
the party requesting fees sought to confer a common
benefit on all participants and beneficiaries of an ERISA
plan or resolve significant legal questions regarding
ERISA; and (5) the relative merits of the parties’
positions.
Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir. 1998)
(quoting Secretary of Dep’t of Labor v. King, 775 F.2d 666,
669 (6th Cir. 1985)), cert. denied, 119 S. Ct. 1756 (1999).
We review a district court’s award or denial of attorney fees
for abuse of discretion. See id.
The district court denied requests for attorney fees from the
Fund and from Shelby. The Fund renews its request for
No. 99-5191 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
5
a subrogation agreement, and copies of correspondence
between Shelby and the Fund regarding the subrogation
agreement and the status of Shelby’s claim. Shelby filed a
response to the Fund’s motion to dismiss making the
following arguments: that the Board of Trustees’
interpretation of the Plan is arbitrary and capricious, that the
Plan should be estopped from denying payment of the claim,
and that the Plan failed to provide Shelby with a copy of the
Plan in violation of 29 U.S.C. § 1132(c)(1). Shelby also
attached several exhibits, including Mason’s assignment of
benefits, an affidavit describing its outstanding bill for
services provided to Mason, correspondence between Shelby
and the Fund, and a copy of the police report. Finally, the
Fund filed a reply to Shelby’s response and addressed each of
Shelby’s arguments. The Fund included as exhibits
correspondence between the Fund and Shelby.
As the parties were filing these motions, the district court
entered a scheduling order pursuant to FED . R. C IV . P. 16(b),
establishing the deadline for completing discovery on October
5, 1998, the deadline for filing potentially dispositive motions
on November 5, 1998, and setting trial for January 25, 1999.
On November 5, 1998, the Fund filed a motion for an
extension of time to file dispositive motions until 30 days
after the district court’s order ruling on the Fund’s motion to
dismiss. The district court granted this motion. However,
two months later the district court sua sponte converted the
Fund’s motion to dismiss into a motion for summary
judgment and denied the motion in an order entered on
January 5, 1999. The district court concluded that the Board
of Trustees’ interpretation of the Plan is arbitrary and
capricious, sua sponte granted Shelby summary judgment, and
ordered the Fund to pay Shelby $31,770.22, the full amount
of benefits Shelby requested. The district court rejected
Shelby’s argument that the Fund should be estopped from
denying payment and that the Fund violated 29 U.S.C.
§ 1132(c)(1) by refusing to provide Shelby with a copy of the
Plan. Finally, the district court denied both parties’ requests
for attorney fees and Shelby’s request for prejudgment

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6 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
No. 99-5191
interest. The Fund filed a timely notice of appeal of the
district court’s judgment.
II. ANALYSIS
A. Summary Judgment Sua Sponte
When a district court grants summary judgment sua sponte,
its decision is subject to two separate standards of review.
The substance of the district court’s decision is reviewed de
novo under the normal standards for summary judgment. See
Salehpour v. University of Tennessee, 159 F.3d 199, 203 (6th
Cir. 1998), cert. denied, 119 S. Ct. 1763 (1999). The district
court’s procedural decision to enter summary judgment sua
sponte, however, is reviewed for abuse of discretion. See id.
We have held that a district court may enter summary
judgment sua sponte in certain limited circumstances, “‘so
long as the losing party was on notice that [it] had to come
forward with all of [its] evidence.’” Id. at 204 (quoting
Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986)). More
specifically, we have held that FED . R. C IV . P. 56(c) mandates
that the losing party must “be afforded notice and reasonable
opportunity to respond to all the issues to be considered by
the court.” Employers Ins. of Wausau v. Petroleum
Specialties, Inc., 69 F.3d 98, 105 (6th Cir. 1995). A clear
example of the district court’s power to grant summary
judgment sua sponte is found in F ED . R. C IV . P. 12(b), which
gives a district court the authority to turn a motion to dismiss
into a motion for summary judgment where the court is
presented with materials outside the pleadings. See FED . R.
C IV . P. 12(b); see also Employers Ins., 69 F.3d at104-05.
This rule expressly states,
If, on a motion asserting the defense numbered (6) to
dismiss for failure of the pleading to state a claim upon
which relied can be granted, matters outside the pleading
are presented to and not excluded by the court, the
motion shall be treated as one for summary judgment and
disposed of as provided in Rule 56, and all parties shall
No. 99-5191 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
15
2We note that Shelby also makes a variety of other arguments on its
behalf. With respect to the Board of Trustees’ interpretation of the Plan,
Shelby argues that the rule of contra proferentum and the doctrine of
interpretation of the Plan is arbitrary and capricious as a
matter of law.
After determining that the Board of Trustees’ interpretation
is unreasonable, the district court concluded that Shelby had
filed its claim when it billed the Fund for its services shortly
after they were incurred and thus had met the one-year time
requirement. When the Fund denied Shelby’s claim, the Fund
reasoned that a complete claim had not been filed until
October 21, 1996, when the Fund received a subrogation
agreement signed by Mason. The Fund stated that it had
contacted Mason several times to request that he sign a
subrogation agreement and “advised that the claim would not
be processed until the fund received the required agreement.”
J.A. at 65. Based on the Fund’s reasoning in denying
Shelby’s claim, it is clear that the Fund considered Shelby’s
request for payment of services to be a claim for benefits.
The Fund simply did not consider the claim complete for
processing until it received the subrogation agreement. The
district court properly concluded that Shelby had filed its
claim when it billed the Fund a few weeks after the charges
were incurred and well within the one-year deadline required
by the Plan. Therefore, the district court did not err in
concluding that the Fund’s denial of benefits to Shelby for
untimeliness was arbitrary and capricious.
Having found that Shelby filed a timely claim for benefits,
the district court then awarded Shelby $31,770.22 for the
hospital services it provided to Mason. As already discussed
in Part II.A supra, the district court abused its discretion in
granting summary judgment sua sponte on the amount owed
to Shelby. Therefore, we remand this case to the district court
to determine the proper amount of benefits Shelby is entitled
to for the hospital services it provided to Mason in accordance
with the terms of the Plan.2

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14 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
No. 99-5191
Plan states only that benefits may not be paid until a
subrogation agreement is submitted as part of the proof of
loss for a claim; it does not state that this is necessary to file
a claim and that benefits may be denied altogether if such an
agreement is not filed within the one-year deadline for filing
claims.
The Fund also points to another provision in the Plan to
support the Board of Trustees’ interpretation. The Plan states
that it excludes any “[c]harges which are or may become the
responsibility of any third party. (The plan Administrator has
been authorized by the Trustees to pay benefits when the
beneficiary and legal counsel have executed a subrogation
form which is satisfactory to the plan Administrator.)” J.A.
at 36. The Fund argues that this provision gives the Trustees
discretionary authority to request documentation for claims,
including the determination of what documentation is
required in order for a claim to be filed. The Fund cites to
Bali v. Blue Cross & Blue Shield Ass’n, 873 F.2d 1043, 1047
(7th Cir. 1989), in which the court determined that a plan
administrator had discretionary authority to determine the
documentation required to prove disability based on the
language of the plan. Unlike Bali, however, in this case the
language in the Plan giving discretionary authority to the plan
administrator to require a satisfactory subrogation agreement
only relates to the plan administrator’s authority to pay
benefits. This provision only requires a satisfactory
agreement before the payment of benefits; it does not state
that such documentation is required in order to file a claim.
Although the language of the Plan regarding when a claim
is filed is ambiguous, the Board of Trustees’ interpretation
that all information, including a signed subrogation agreement
when third party liability may be involved, necessary to
process a claim must be submitted to file a claim is an
unreasonable interpretation. This requirement cannot be
found in the language of the Plan. Therefore, the district
court did not err in concluding that the Board of Trustees’
No. 99-5191 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
7
be given reasonable opportunity to present all material
made pertinent to such a motion by Rule 56.
FED . R. C IV . P. 12(b). Whether a district court must provide
actual notice that it intends to convert a motion to dismiss into
a motion for summary judgment depends on the facts and
circumstances of each case. See Salehpour, 159 F.3d at 204.
However, “[w]here one party is likely to be surprised by the
proceedings, notice is required.” Id.
The Fund argues that the district court abused its discretion
because it did not provide any notice that it was
contemplating entering summary judgment against the Fund.
Instead, the Fund asserts, the district court led the Fund to
believe that it would have an opportunity to file a motion for
summary judgment because the district court granted its
motion for an extension of time to file dispositive motions
within 30 days of ruling on its motion to dismiss. Therefore,
the Fund claims it was denied the opportunity to present all
material pertinent to a motion for summary judgment.
The district court did not abuse its discretion in sua sponte
converting the Fund’s motion to dismiss into a motion for
summary judgment pursuant to FED . R. C IV . P. 12(b). The
Fund submitted substantial extrinsic material to the district
court as exhibits to its motion to dismiss. In response to the
Fund’s motion, Shelby also included exhibits extrinsic to the
pleadings. The Fund then filed a reply to Shelby’s response
to the Fund’s motion to dismiss and thus had the opportunity
to respond to the arguments and exhibits that Shelby
submitted. In their briefs, both parties comprehensively
addressed the Fund’s argument that the Board of Trustees’
interpretation of the Plan is not arbitrary and capricious.
Because the parties both submitted numerous exhibits fully
addressing the Fund’s argument for dismissal, they had
sufficient notice that the district court could consider this
outside material when ruling on the issues presented in the
Fund’s motion to dismiss and could convert it into a motion
for summary judgment under FED . R. C IV . P. 12(b). The

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8 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
No. 99-5191
parties also had a reasonable opportunity to address the Board
of Trustees’ interpretation of the Plan. Thus, the Fund and
Shelby had sufficient notice and opportunity to address the
issues presented in the Fund’s motion. See Salehpour, 159
F.3d at 204 (affirming the district court’s conversion of a
defendant’s motion to dismiss into a motion for summary
judgment where both parties had submitted voluminous
outside material and had the opportunity to respond to the
issues and evidence presented). Furthermore, when a district
court is reviewing a plan administrator’s denial of benefits,
the court may only consider those materials that were
available to the plan administrator when it made its final
decision. See Miller v. Metropolitan Life Ins. Co., 925 F.2d
979, 986 (6th Cir. 1991). In this case, the materials Shelby
had submitted to the Board of Trustees to review on its appeal
were also submitted to the district court as exhibits to the
Fund’s motion to dismiss. Because the district court already
had all of the material it could examine in conducting its
review of the Board of Trustees’ denial of benefits, the Fund
could not have submitted any additional evidence. Therefore,
the district court did not abuse its discretion when it sua
sponte converted the Fund’s motion to dismiss into a motion
for summary judgment and ruled on the Fund’s argument that
the Board of Trustees’ denial of benefits based on the Board’s
interpretation of the Plan regarding the requirements for filing
a timely claim is not arbitrary and capricious.
Next we must determine whether the district court abused
its discretion in granting summary judgment sua sponte to
Shelby, a nonmoving party. We have noted that although “a
district court should only enter summary judgment in the
absence of a cross-motion with great caution . . . the fact that
the nonmoving party has not filed its own summary judgment
motion does not preclude the entry of summary judgment if
otherwise appropriate.” K.E. Resources, Ltd. v. BMO Fin.
Inc. (In re Century Offshore Management Corp.), 119 F.3d
409, 412 (6th Cir. 1997) (affirming the district court’s sua
sponte grant of summary judgment to a nonmoving party
where the parties had fully briefed the determinative issue and
No. 99-5191 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
13
possible liability. This allows the Fund to determine whether
or not the claim is covered under the Plan. The Fund also
argues that it must have a signed subrogation agreement in
order to pursue any action against a potentially liable third
party. In this case, the Fund argues that it could not file suit
against the driver of the car that struck Mason because the
one-year statute of limitations for personal injury suits under
Tennessee law had already expired once it received a signed
subrogation agreement from Mason. The Fund claims that
these are rational purposes behind the Board of Trustees’
interpretation of the Plan.
The Fund also argues that where there is ambiguity in the
Plan, the Board of Trustees has the discretion to resolve the
ambiguity. We have stated that “we grant plan administrators
who are vested with discretion in determining eligibility for
benefits great leeway in interpreting ambiguous terms.” Moos
v. Square D Co., 72 F.3d 39, 42 (6th Cir. 1995). A plan
administrator’s interpretation of ambiguous provisions must,
however, be reasonable. See Johnson, 970 F.2d at 1574.
Although the Fund has provided rational justifications for
requiring a subrogation agreement to be submitted within the
one-year time requirement for filing claims, it has not
established the reasonableness of this requirement based on
the language of the Plan. As previously discussed, the Plan
requires that a claim for benefits be filed within one year but
does not elaborate on what is required in order properly to file
a claim. The Plan does not state that a participant must
submit all information that is necessary to process the claim
in order to file the claim within the deadline. Nor does the
Plan give any indication that a signed subrogation agreement
is required to file a claim. It states, “[t]he participant is
required to submit a signed copy of a Subrogation Agreement
provided by the Fund office as part of proof of loss for a
claim involving third party action. Failure to submit such
signed agreement may cause payment of the claim to be
delayed until the third party action is resolved or disallowed
due to failure on the part of the participant to provide
adequate proof of loss.” J.A. at 38 (emphasis added). The

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12 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
No. 99-5191
Subrogation Agreement provided by the Fund office as part
of proof of loss for a claim involving a third party action.
Failure to submit such signed agreement may cause payment
of the claim to be delayed until the third party action is
resolved or disallowed due to failure on the part of the
participant to provide adequate proof of loss.” J.A. at 38.
Based on its interpretation of these provisions, the Board of
Trustees concluded that a claim is not “filed” until the Fund
receives all information required to process the claim. In
cases involving a potentially liable third party, a participant
must submit a subrogation agreement to process a claim.
Therefore, the Board of Trustees determined that the Fund
must receive a subrogation agreement as part of the proof of
loss within the one-year deadline for the submission of claims
for cases involving potential third party liability. Although
Shelby billed the Fund for the services it provided to Mason
soon after the charges were incurred, a subrogation agreement
with Mason’s signature was not submitted within the one-year
deadline. The Fund argues that the Board of Trustees’
interpretation of the Plan is reasonable and Shelby’s claim
should be denied accordingly.
The Plan does not explain when a claim will be considered
to have been filed for the purpose of the one-year time
requirement for filing claims. The language of a plan is
ambiguous if it is subject to more than one reasonable
interpretation. See Wulf v. Quantum Chem. Corp., 26 F.3d
1368, 1376 (6th Cir.), cert. denied, 513 U.S. 1058 (1994). In
the absence of any further explanation of when a claim is
filed, one could make several different reasonable
interpretations of this provision. The Fund argues that the
Board of Trustees’ construction of the Plan that a participant
must submit all information required to process a claim,
including a signed subrogation agreement if there is third
party action, within the one-year deadline for filing claims is
reasonable. It claims that this interpretation serves several
important purposes. The subrogation agreement includes a
questionnaire about the accident or incident, which informs
the Fund about the nature of the third party’s involvement and
No. 99-5191 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
9
had agreed that no factual dispute existed). Shelby had not
filed any dispositive motions which would have put the Fund
on notice that it had to come forward with all of its evidence
in response to Shelby’s complaint. When the district court
ruled on the Fund’s converted motion for summary judgment,
the court concluded that the Board of Trustees’ interpretation
of the Plan regarding the requirements for filing a timely
claim is arbitrary and capricious as a matter of law. As
discussed above, the district court did not abuse its discretion
in deciding this issue on summary judgment. Because the
Fund had denied Shelby’s benefits for untimeliness, the
district court then sua sponte entered summary judgment on
behalf of Shelby and awarded the full amount of damages
requested. Neither party, however, had addressed the issue of
the amount of benefits the Fund would have awarded to
Shelby under the terms of the Plan had the Fund determined
that Shelby had filed a timely claim. The Fund points out that
Shelby may not be entitled to the full amount of the claim
under the Plan. For example, the Plan states that it will not
cover “[c]harges which are not ‘Reasonable and Customary’,
or which are excessive.” J.A. at 34. Nor will it pay for
“[s]ervices which are not ‘Medically Necessary.’” J.A. at 34.
The Plan also states that it will not cover “[c]harges for
benefits that are not payable due to the application of any
specified deductible or co-payment provisions contained
herein.” J.A. at 37. Because the parties had not addressed in
their briefs the issue of the amount of benefits due under the
Plan and the district court had granted the Fund’s motion for
an extension to file dispositive motions, it was reasonable for
the parties to believe that the district court would only rule on
the issues presented in the Fund’s converted motion for
summary judgment. They were not on notice that the district
court would consider on summary judgment the amount of
benefits due. Moreover, the Fund and Shelby did not have a
reasonable opportunity to address this issue before the district
court decided it. Therefore, the district court abused its
discretion in granting summary judgment sua sponte to
Shelby on the amount of benefits due under the terms of the
Plan.

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10 Shelby County Health Care v. Southern
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No. 99-5191
B. Denial of Benefits
We now review the merits of the district court’s summary
judgment determination that the Board of Trustees’
interpretation of the Plan regarding the requirements for filing
a timely claim is arbitrary and capricious. See Salehpour v.
University of Tennessee, 159 F.3d 199, 203 (6th Cir. 1998),
cert. denied, 119 S. Ct. 1763 (1999). We review de novo the
district court’s decision, applying the same FED . R. C IV . P. 56
summary judgment standard used by the district court. See
Davis v. Sodexho, Cumberland College Cafeteria, 157 F.3d
460, 462 (6th Cir. 1998). Summary judgment is appropriate
where there is no genuine issue of material fact and a party is
entitled to a judgment as a matter of law. F ED . R. C IV . P.
56(c). In an action challenging the denial of benefits under 29
U.S.C. § 1132(a)(1)(B), a plan administrator’s decision is
reviewed “under a de novo standard unless the benefit plan
gives the administrator or fiduciary discretionary authority to
determine eligibility for benefits or to construe the terms of
the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
101, 115 (1989). If the benefit plan does grant such
discretionary authority, the plan administrator’s decision to
deny benefits is reviewed under the “arbitrary and capricious”
standard of review. See Perez v. Aetna Life Ins. Co., 150 F.3d
550, 555 (6th Cir. 1998) (en banc). This highly deferential
standard of review is appropriate only if the benefit plan
contains “‘a clear grant of discretion [to the administrator] to
determine benefits or interpret the plan.’” Id. (quoting Wulf
v. Quantum Chem. Corp., 26 F.3d 1368, 1373 (6th Cir.), cert.
denied, 513 U.S. 1058 (1994)).
In this case, the administrator of the Plan is the Board of
Trustees. The Plan states, “This Board has the primary
responsibility for decisions regarding eligibility rules, type of
benefits, administrative policies, management of Plan assets,
and interpretation of Plan provisions.” J.A. at 39. The parties
agree that this language expressly gives the Board of Trustees
the authority to interpret the Plan. We have found a clear
grant of discretionary authority in a benefit plan containing
No. 99-5191 Shelby County Health Care v. Southern
Council of Industrial Workers, et al.
11
similar language. See Smith v. Ameritech, 129 F.3d 857, 863
(6th Cir. 1997) (finding such a grant where the plan states that
its administrator is vested with “full discretionary authority to
interpret the terms of the Plan and to determine eligibility for
and entitlement to Plan benefits in accordance with the terms
of the Plan.”). Therefore, the Board of Trustees’
interpretation of the Plan, resulting in the denial of benefits,
must be affirmed unless it is arbitrary and capricious. Under
this standard of review, “we must decide whether the plan
administrator’s decision was ‘rational in light of the plan’s
provisions.’” Id. (quoting Daniel v. Eaton Corp., 839 F.2d
263, 267 (6th Cir.), cert. denied, 488 U.S. 826 (1988)). A
decision is not arbitrary and capricious if it is based on a
reasonable interpretation of the plan. See Johnson v. Eaton
Corp., 970 F.2d 1569, 1574 (6th Cir. 1992). Congress
enacted ERISA “to promote the interests of employees and
their beneficiaries in employee benefit plans and to protect
contractually defined benefits.” Firestone, 489 U.S. at 113
(quotations omitted). As part of this goal, Congress intended
ERISA plans to “be uniform in their interpretation and simple
in their application.” McMillan v. Parrott, 913 F.2d 310, 312
(6th Cir. 1990). Thus, a plan administrator must discharge its
duties with respect to the plan “‘in accordance with the
documents and instruments governing the plan.’” Id. at 311
(quoting 29 U.S.C. § 1104(a)(1)(D)). In interpreting the
provisions of a plan, a plan administrator must adhere to the
plain meaning of its language, as it would be construed by an
ordinary person. See Callahan v. Rouge Steel Co., 941 F.2d
456, 459-60 (6th Cir. 1991).
The Board of Trustees denied Shelby’s claim for benefits
because it concluded that the claim was not submitted within
the Plan’s one-year time limit. The Plan states that no
benefits will be paid for “[a]ny charges incurred more than
one year prior to the date the claim is filed.” J.A. at 37. Nor
will any benefits be paid for “[c]harges which are or may
become the responsibility of any third party.” J.A. at 36. In
cases involving a potentially liable third party, the Plan
requires a participant to “submit a signed copy of a

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