Richard S. BOND, Appellant, v. TWIN CITIES CARPENTERS PENSION FUND, sued as Twin City Carpenters and Joiners Pension Fund, Appellee, 307 F.3d 704

HEANEY, Circuit Judge. Richard S. Bond brought an action against Twin City Carpenters Pension Fund (Twin Cities Carpenters) for reimbursement of costs associated with the determination of his eligibility for benefits. He claims Twin City Carpenters’ procedures for determining his eligibility for pension benefits violate the Employment Retirement Income Security Act (ERISA). The district court granted

summary judgment in favor of Twin City Carpenters. We reverse. BACKGROUND Bond is a retired union carpenter. He is a participant in the Twin City Carpenters and Joiners Pension Fund (the Plan). Sometime after Bond retired, the Plan was amended to limit the work a retiree could do while still receiving benefits. Because Bond had been supplementing his pension with carpentry work, he sought a determination of whether the Plan’s amendments applied to him. The Plan required its participants to first seek a benefits determination through the Plan’s Board of Trustees (the Board).

If not satisfied with the Board’s determination, the participant’s sole remedy is to submit the claim to binding arbitration. The Plan directs the participants to bear half of the costs of arbitration, unless the arbitrator alters this presumption in the arbitrator’s decision. The Board found that Bond was indeed covered by the Plan’s recent amendments. Unhappy with this determination, Bond sought further review by submitting his claim to binding arbitration. The arbitrator affirmed the Board’s decision, and assessed costs and fees equally between the parties.

Bond paid his share of the costs and then filed an action in district court seeking reimbursement. He argued that while the arbitrator’s decision to split the costs of arbitration was consistent with the Plan, the Plan itself violates ERISA because its mandatory arbitration clause and its fee-splitting presumption together do not provide him a reasonable opportunity for full and fair review, as required by 29 U.S.C. § 1133. We agree.

DISCUSSION Before reaching the issue of whether Bond was denied a reasonable opportunity for a full and fair review, we must first consider whether § 1133 and its regulations apply to Bond’s case.

Section 1133 itself purports to govern decisions of Plan fiduciaries, but its accompanying regulations inform that it also governs appeals arising from that fiduciary decision. 29 C.F.R. § 2560.503-l(a) (1999) (stating scope of this

section encompasses review of claim denials). Recent amendments to the regulations confirm that § 1133 is meant to apply to all claims procedures, including appeals from adverse determinations. 29 C.F.R. §§ 2560.503-l(b), 2560.503-l(b)(3) (2001). This reading is consistent with the United States Department of Labor’s

interpretation of ERISA, articulated in an opinion letter in which the Department of Labor concluded that a Plan’s appellate procedures, particularly arbitration, are still within the purview of § 1133. Because the Department of Labor’s

interpretation is consistent with § 1133, we decline to disturb it. See Chevron U.S.A., Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (noting judicial reinterpretation of a statute should be reserved for circumstances where administrative

interpretation is “contrary to clear congressional intent.”) Accordingly, we hold that § 1133 and its regulations apply not only to fiduciary decisions, but also to appeals from fiduciary determinations. Finding that Bond’s plan is controlled by § 1133 and its regulations, we turn now to the substance of Bond’s claim. Under ERISA, a plan must provide participants a reasonable opportunity for a full and fair review of benefits determinations. 29 U.S.C. § 1133. A review procedure violates ERISA if it “unduly inhibits or hampers the initiation or processing of plan claims.” 29 C.F.R. § 2560.503-l(b)(l)(iii) (1999).

The question, then, is whether a mandatory arbitration scheme with presumptive cost-splitting unduly inhibits or hampers the processing of claims. We are guided in our analysis again by the Department of Labor’s

interpretation of this issue. In its opinion letter, the Department of Labor advises that when a plan requires participants to submit to arbitration, cost-splitting “contravenes the reasonableness standard set forth in

section 2560.503-l(b).” (Appellant’s Add. at 9-10.). This

interpretation is not “contrary to clear congressional intent.” Chevron, 467 U.S. at 843, 104 S.Ct. 2778. An independent review of the regulations at issue leads us to the same conclusion. Bond’s case is controlled by the regulations in effect in 1999, when he filed his claim. These regulations are not a model of clarity, but they unequivocally prohibit plans from using procedures that hinder the processing of claims. 29 C.F.R. § 2560.503 — l(b)(l)(iii) (1999).

Under the ERISA plan in Bond’s case, if a Plan participant wants to appeal an adverse board determination, they are faced with the presumption that they will have to shoulder half of the costs of arbitration. The threat of having to pay the arbitrator’s expenses no doubt discourages the pursuit of many legitimate claims by those who cannot afford such costs. A claims system such as this is unduly burdensome, and not permitted by ERISA. ERISA does not require a claimant participating in a covered plan to use arbitration as part of the plan’s appellate process.

However, when a plan such as the one here provides for mandatory arbitration before allowing a claimant to initiate a civil action, it may not carry a presumption of cost-splitting. To hold otherwise would permit a plan to limit claims by merely adding an expensive appellate process to its claims procedure before allowing a claimant to initiate a civil action. Such a scheme subverts the intent of ERISA’s claim provisions, as well as the regulations’ mandate that the plan not unduly inhibit or hinder the processing for claims.

CONCLUSION The plan in this case unduly inhibits the pursuit of ERISA claims, and is thus not in accord with ERISA’s statutory and regulatory framework. We reverse the district court, and remand with instructions to require Twin Cities Carpenters pay Bond’s share of the arbitration costs. . There is some question as to whether Bond in fact paid half of the costs, or whether the arbitrator accepted a lesser amount in lieu of full payment. At any rate, the arbitrator’s award required both sides to pay half the costs; any discount subsequently granted to Bond is irrelevant. .

Recent amendments to the regulations clarified this issue, and confirmed that "a provision or practice that requires payment of a fee or costs as a condition to making a claim or appealing an adverse benefit determination would be considered to unduly inhibit the initiation and processing of claims for benefits.” 29 C.F.R. § 2560.503 — 1(b)(3) (2001).