01-2981 Perugini-Christen v. Homestead Mortgage Co. & Reliance Standard Life Ins. Co.

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“Two of our sister circuits have been faced with this issue and have reached opposite conclusions. In Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 251-52 (2d Cir. 1999), the Second Circuit was faced with language identical to the plan at issue in this case and held that ‘the language of First Reliance’s policy is insufficient to pre clude de novo review,’ because it is not clear whether the language ‘means only that the claimant must submit to First Reliance proof that is satisfactory or that the claimant must submit proof that is satisfactory to First Reliance.’ However, the Sixth Circuit found that the same language conferred deferential review. In Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 381 (6th Cir. 1996), the court found that ‘[a] determination that evidence is satisfactory is a subjective judgment that requires a plan administrator to exercise his discretion.’ While the Sixth Circuit is correct in finding that a determination that evidence is satisfactory is a subjective judgment, we agree with the Second Circuit that merely requiring satisfactory proof ‘is an inadequate way to convey the idea that a plan administrator has discretion. Every plan that is administered requires submission of proof that will “satisfy” the administrator.’ Kinstler, 181 F.3d at 252. Therefore, ‘unless a policy makes it explicit that the proof must be satisfactory to the decision-maker, the better reading of “satisfactory proof” is that it establishes an objective standard, rather than a subjective one.’ Kinstler, 181 F.3d at 252.

“The district court correctly classified the branch profits as bonuses. Certainly, the branch profits cannot be considered salary because although they were earned on a monthly basis, they were in no way fixed compensation. Additionally, the branch profits are unlike ordinary commissions because although they are calculated as a percentage of the proceeds, they are not based on Perugini’s personal sales, but rather on the sales of the branch as a whole.”

Affirmed.

Appeal from the United States District Court for the Northern District of Indiana, Lee, J., Williams, J.