                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

VORRIS BLANKENSHIP,                     
                  Plaintiff-Appellee,
                 v.
LIBERTY LIFE ASSURANCE                       No. 05-15077
COMPANY OF BOSTON, as
Administrator and Fiduciary of the            D.C. No.
                                            CV-03-01132-SC
KPMG Employee Long-term
                                              OPINION
Disability Plan and the KPMG
Employee Long-term Disability
Plan,
               Defendant-Appellant.
                                        
        Appeal from the United States District Court
           for the Northern District of California
          Samuel Conti, District Judge, Presiding

                Argued and Submitted
      November 13, 2006—San Francisco, California

                     Filed May 18, 2007

    Before: William C. Canby, Jr., John T. Noonan, and
             Richard A. Paez, Circuit Judges.

                 Opinion by Judge Paez;
               Concurrence by Judge Noonan




                             5877
5880       BLANKENSHIP v. LIBERTY LIFE ASSURANCE


                       COUNSEL

Mark G. Bonino, Pamela E. Cogan, Kathryn C. Curry, Elisa
Nadeau, San Jose, California, for the defendant-appellant.

Scott Calkin, San Francisco, California, for the plaintiff-
appellee.
            BLANKENSHIP v. LIBERTY LIFE ASSURANCE          5881
                          OPINION

PAEZ, Circuit Judge:

   Liberty Life Assurance Company of Boston (“Liberty
Life”) appeals the district court’s award of disability benefits
to Vorris Blankenship, following a court trial on his claims
under the Employment Retirement Income Security Act
(“ERISA”) § 502(a)(1)(B) and § 502(a)(3). 29 U.S.C.
§ 1132(a). Liberty Life does not challenge the district court’s
ruling that Blankenship was entitled to long-term disability
benefits. Instead, Liberty Life argues that the disability bene-
fits owed Blankenship should have been reduced by the
amount of retirement benefits transferred to his Individual
Retirement Account (“IRA”) upon his retirement. Liberty Life
also challenges the use of a 10.01-percent interest rate to cal-
culate prejudgment interest. We have jurisdiction under 28
U.S.C. § 1291, and we affirm.

           FACTS & PROCEDURAL HISTORY

   The facts are not in dispute. Vorris Blankenship, an attor-
ney employed by KPMG LLP (“KPMG”), developed cancer.
He suffered severe complications as a result of his medical
treatment. Blankenship’s treating physician informed him
that, although he could undergo surgery to attempt to improve
his situation, it was not advisable because the surgery could
cause further complications and exacerbate his condition.

   Liberty Life, administrator and fiduciary of the KPMG
Employee Long-Term Disability Plan (“Disability Plan”), of
which Blankenship was a member, initially determined in
June 1998 that Blankenship qualified for long-term disability
benefits under the Disability Plan. However, on April 20,
2000, Liberty Life sent Blankenship a letter informing him
that his benefits would be terminated because it had deter-
mined that there were alternative treatments that could
improve his condition. Blankenship appealed the decision to
5882        BLANKENSHIP v. LIBERTY LIFE ASSURANCE
Liberty Life. Five months later, in September 2000, Liberty
Life rejected Blankenship’s appeal, reaffirming its prior deci-
sion to terminate benefits, and adding additional reasons for
the determination. Liberty Life also informed Blankenship
that he had exhausted his administrative remedies and that its
decision was final.

   On September 13, 2000, KPMG terminated Blankenship,
who was 64 at the time, for failure to return to work. Upon
termination, Blankenship became eligible to receive retire-
ment benefits from several of his retirement plans with
KPMG. In a written letter, KPMG informed Blankenship of
his options for distribution of these benefits. The KPMG Pen-
sion Plan offered the benefits as either a joint and survivor
annuity for the lives of Blankenship and his spouse or as a
lump-sum payment. The lump-sum payment could be distrib-
uted directly to Blankenship, or he could elect to “roll it over
into an IRA or other tax qualified vehicle.” The KPMG Per-
sonal Account for Retirement (“PAR Plan”), a defined-
contribution plan in which the employer contributed an
amount equal to 1.5 percent of Blankenship’s salary each
year, also allowed for an annuity, a lump-sum payment, or a
lump-sum direct rollover to an IRA, with the additional
options of payment in monthly installments or deferred distri-
bution of the funds until Blankenship reached the age of 70½.

   Blankenship chose to roll over both accounts directly into
an IRA managed by the Vanguard Fiduciary Trust Company
(“Vanguard”). On December 11, 2000, KPMG transferred
$29,291, representing the amount in Blankenship’s Pension
Plan account, to his Vanguard IRA. On January 9, 2001,
KPMG transferred $761,149, the amount in Blankenship’s
PAR Plan account, to the Vanguard IRA. The Disability Plan
requires that “other income benefits” be deducted from the
total monthly disability benefit paid to the insured. These
other income benefits are defined to include “[t]he amount of
benefits the insured receives under the employer’s retirement
plan as follows: (a) any disability benefits; (b) any retirement
                  BLANKENSHIP v. LIBERTY LIFE ASSURANCE              5883
benefits.” (emphasis added). “Retirement benefits” are
defined as money from a retirement plan1 which:

      (1) is payable under a retirement plan either in a
      lump sum or in the form of periodic payments;

      (2) does not represent contributions made by an
      employee . . . ; and

      (3)   is payable upon:

            (a)     early or normal retirement; or

            (b) disability if the payment does not
            reduce the amount of money which would
            have been paid at the normal retirement age
            under the plan if the disability had not
            occurred.

   Blankenship sued Liberty Life and the Disability Plan to
recover benefits under ERISA § 502(a)(1)(B) and appropriate
equitable relief under ERISA § 502(a)(3). See 29 U.S.C.
§§ 1132(a)(1)(B) and (a)(3). The parties agreed, as did the
district court, that the court should apply a de novo standard
of review in determining whether Blankenship was entitled to
disability benefits because the Disability Plan did not give
“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); see also Abatie v. Alta Health & Life Ins.
Co., 458 F.3d 955, 963 (9th Cir. 2006) (en banc) (discussing
standards of review to be used by courts in reviewing cases
in which ERISA-covered plan administrators have denied
benefits). Following a court trial, the court issued Findings of
Fact and Conclusions of Law, which it subsequently
  1
    Both parties agree that the Pension and PAR Plans fall within the defi-
nition of “retirement plan” under the Disability Plan.
5884        BLANKENSHIP v. LIBERTY LIFE ASSURANCE
amended. The district court found that Blankenship was “to-
tally disabled” under the terms of the Disability Plan and enti-
tled to an award of benefits, attorney’s fees, costs, and
prejudgment interest. The district court also determined that
Liberty Life was not entitled to reduce the benefits owed by
the amount of outside retirement benefits transferred to
Blankenship’s IRA because these benefits were not “re-
ceived” by Blankenship as required by the Disability Plan.
The court based its ruling on: (1) the text of the Disability
Plan; (2) the distinction in the Internal Revenue Code (“IRC”)
between a trustee-to-trustee transfer (a “direct rollover”) and
a 60-day rollover; (3) the plain meaning of the word “re-
ceives”; and (4) the policy behind the Age Discrimination in
Employment Act (“ADEA”) provision which permits employ-
ers to offset long-term disability benefits with pension bene-
fits. The court entered judgment in favor of Blankenship in
the amount of $325,451.28, which included prejudgment
interest at a rate of 10.01 percent, attorney’s fees, and costs.

   Liberty Life does not appeal the district court’s determina-
tion that Blankenship was entitled to long-term disability ben-
efits. Instead, Liberty Life argues that the disability benefits
owed Blankenship should have been reduced by the retire-
ment benefits from the Pension and PAR Plans. Liberty Life
also appeals the interest rate used to calculate prejudgment
interest.

                        DISCUSSION

                              A.

   We first address Liberty Life’s challenge to the district
court’s ruling that it is not entitled to deduct the long-term
disability payments due Blankenship by the retirement bene-
fits transferred to Blankenship’s IRA at Vanguard. The Dis-
ability Plan requires that “other income benefits” be deducted
from the total monthly disability benefit payments paid to the
insured. These other income benefits are defined to include
            BLANKENSHIP v. LIBERTY LIFE ASSURANCE           5885
“[t]he amount of benefits the insured receives under the
employer’s retirement plan as follows: (a) any disability bene-
fits; (b) any retirement benefits.” (emphasis added). The issue
here is whether Blankenship “received” his retirement funds
when they were transferred to his Vanguard IRA under the
terms of the Disability Plan.

   We review de novo a district court’s determinations regard-
ing the text of an ERISA plan, including whether plan terms
are ambiguous. Cisneros v. UNUM Life Ins. Co. of Am., 134
F.3d 939, 942 (9th Cir. 1998); see also Metropolitan Life Ins.
Co. v. Parker, 436 F.3d 1109, 1113 (9th Cir. 2006) (citing
Cisneros, 134 F.3d at 942).

   [1] We begin by recognizing that the term “receives” is not
defined in the Disability Plan. On appeal, both parties accept
the term “receive” to mean “to take into possession or con-
trol,” with Blankenship focusing on the possession aspect,
arguing that it means “to accept custody of; collect.” How-
ever, a definition of receipt based on possession and one
based on control may lead to two separate outcomes. Thus,
when considered in the context of the Disability Plan, the
term “receives” is ambiguous. We therefore apply the rule of
contra proferentem, and we conclude that it supports the dis-
trict court’s determination.

   [2] Contra proferentem, which is recognized by federal
common law and the law of every state and the District of
Columbia, see Kunin v. Benefit Trust Life Ins. Co., 910 F.2d
534, 538-40 (9th Cir. 1990), holds that “if, after applying the
normal principles of contractual construction, the insurance
contract is fairly susceptible of two different interpretations,
another rule of construction will be applied: the interpretation
that is most favorable to the insured will be adopted.” Id. at
539. The rule applies in interpreting ambiguous terms in an
ERISA-covered plan except where the plan: (1) grants the
administrator discretion to construe its terms, (2) is the result
of a collective-bargaining agreement, or (3) is self-funded.
5886          BLANKENSHIP v. LIBERTY LIFE ASSURANCE
See Winters v. Costco Wholesale Corp., 49 F.3d 550, 554 (9th
Cir. 1995); Eley v. Boeing Co., 945 F.2d 276, 279-80 (9th Cir.
1991); Kunin, 910 F.2d at 540. None of these exceptions
apply here. Applying contra proferentem, we construe the
term “receives” to mean possession through actual receipt of
funds.

   [3] This interpretation is buttressed by the terms of the Dis-
ability Plan. As discussed above, the Disability Plan requires
that “other income benefits” be deducted from the total
monthly disability benefits paid to the insured. “Other income
benefits” is defined to include two categories of benefits:
those which an insured “receives,” and those for which an
employee is “eligible.” The latter category includes benefits
under workers’ compensation, occupational disease, and other
related laws, disability income benefits under any other group
insurance plan of the employer, and benefits under a govern-
mental retirement system as a result of the job with the
employer. The fact that the Disability Plan reduces disability
benefits based on eligibility for certain types of payments,
without requiring evidence that the individual received the
payments or even applied for them, supports the conclusion
that, where the Disability Plan requires a deduction of benefits
because of funds “received,” the term is properly read to
mean funds that actually come into the possession of the
insured.

   [4] Blankenship elected to have the retirement funds
directly rolled over into his Vanguard IRA. We hold that,
under these circumstances, Blankenship did not obtain posses-
sion of his retirement funds.2 We base this determination on
Vanguard’s status as a trustee under the IRC and the fact that
Blankenship’s funds were transferred from KPMG to his Van-
  2
   It is undisputed by the parties that had Blankenship elected to directly
receive the benefits, whether in the form of an annuity, monthly install-
ments, or a lump-sum payment, the Disability Plan benefits owed
Blankenship would have been reduced accordingly.
              BLANKENSHIP v. LIBERTY LIFE ASSURANCE                   5887
guard IRA through a trustee-to-trustee transfer. See 26 U.S.C.
§§ 401(a)(31)(A), 402(e)(6), 408(a).

   [5] Liberty Life argues that Vanguard is more properly des-
ignated as an agent than as a trustee for the purposes of deter-
mining its role in receiving Blankenship’s retirement funds.
According to Liberty Life, if Vanguard is acting as a mere
agent, the transfer to the IRA would constitute receipt by
Blankenship through Vanguard. In our view, however, if Van-
guard is properly characterized as a trustee, the funds are no
more in Blankenship’s possession than they were before the
transfer, and possession would be gained only at the time the
funds were withdrawn from the IRA. In the latter circum-
stance, the transfer of funds to Vanguard would not constitute
actual receipt within the meaning of the Disability Plan.

   [6] Vanguard, in this context, lacks most of the traditional
powers and responsibilities that characterize a trustee. It is
Blankenship who directs the investment choices, Blankenship
who controls the flow of funds in and out of the account, and
Blankenship who can at any time terminate the account.
Nonetheless, an IRA established in accordance with IRC
§ 408(a) constitutes a special type of trust account, in which
the custodian of the account must fulfill particular obligations
and must conform to certain restrictions. See 26 U.S.C.
§ 408(a). The custodian, acting as a trustee, must ensure that
contributions to the account are made in cash; that the contri-
butions not exceed the amount the individual is permitted to
contribute each year; that the funds not be commingled with
other property except in a common trust or investment fund;
that the funds not be invested in life insurance contracts; and
that the interest of an individual in the balance of his or her
account be nonforfeitable. See id. It is compliance with these
requirements that establishes the custodian of a IRA as a trustee.3
  3
   The IRC further supports the conclusion that Blankenship did not
receive the retirement funds through the direct rollover: under IRC
§ 402(a), a disbursal from an employee trust is taxable only if it is “actu-
5888          BLANKENSHIP v. LIBERTY LIFE ASSURANCE
   [7] Liberty Life argues that the IRS’s categorization of the
transfer to a trustee account has no bearing on whether the
funds were “received” by Blankenship. However, the IRC is
clearly relevant; it provides the backdrop for Liberty Life’s
arguments. That is, Liberty Life argues that Blankenship pos-
sessed and controlled his retirement funds because at the time
the funds were transferred to Vanguard, Blankenship was
over the age of 59½ and was therefore permitted under the
IRC to withdraw money from his IRA without an early-
withdrawal penalty. See 26 U.S.C. § 72(t)(2)(A)(i). This argu-
ment implies that if Blankenship were under the age of 59½
at the time the funds were transferred into his Vanguard
account, the 10 percent penalty for early withdrawal would
create a restriction on the account that limited his possession
and control of the funds.4 See 26 U.S.C. § 72(t)(1). Thus, the

ally distributed” to the employee. See 26 U.S.C. § 402(a). However, a
trustee-to-trustee transfer in which the employer plan distributes funds
directly to the employee’s IRA is exempt from taxation. See 26 U.S.C.
§§ 401(a)(31)(A), 402(e)(6). In contrast, a 60-day rollover transfer, in
which the plan distributes funds directly to the employee, requires the
withholding of 20 percent of the proceeds for tax purposes. See 26 U.S.C.
§§ 402(c)(3), 3405(c). Under a 60-day rollover, the employee receives the
funds, maintaining control over them, but he must transfer some or all of
the funds to an IRA within 60 days to avoid income tax on the transferred
funds. See 26 U.S.C. § 402(c)(3).
   4
     Blankenship’s age cannot be overlooked. Our holding is consistent
with the policy purposes behind the ADEA safe harbor, § 4(l)(3)(B),
which is the statutory authority for an employer-provided disability plan
to reduce payments paid to an employee by pension benefits despite the
age-based impact of such a plan provision. See 29 U.S.C. § 623(l)(3) (per-
mitting an employer-sponsored plan to reduce disability benefits by pen-
sion benefits “(A) paid to the individual that the individual voluntarily
elects to receive; or (B) for which an individual who has attained the later
of age 62 or normal retirement age is eligible.”). As explained in Kalvin-
skas v. California Institute of Technology:
    [The] legislative history demonstrates that the purpose of
    § 4(l)(3)(B) was to prevent an employee from receiving the wind-
    fall of simultaneous payments of long-term disability and pension
              BLANKENSHIP v. LIBERTY LIFE ASSURANCE                   5889
IRC defines the relationship between an IRA account holder
and the custodian/trustee of the account through the duties
and obligations it imposes on each, and is directly relevant to
our analysis. See id.; 26 U.S.C. § 408(a). Vanguard was not
a mere agent for Blankenship, but was a trustee as established
under the IRA provisions of the Internal Revenue Code. We
therefore conclude that Blankenship did not obtain possession
of his retirement funds through the trustee-to-trustee transfer
from KPMG to Vanguard.

   [8] Although we hold that under the doctrine of contra
proferentem, the definition of receipt is one that requires pos-
session, we also note that Blankenship did not gain any addi-
tional authority to control his retirement funds through the
transfer to the Vanguard IRA. Liberty Life acknowledged at
oral argument before this court that if Blankenship had
elected upon retirement to defer distribution of his funds by
leaving them in his KPMG account, he would not have “re-
ceived” the funds under the terms of the Disability Plan.
There is no significant difference, however, between Blanken-
ship electing to keep the funds in KPMG’s care through
deferred distribution and electing to transfer the funds to the
Vanguard IRA. In both instances, Blankenship could choose
to take out some or all of the money without penalty; in both
instances, the money belonged to Blankenship and would be
held for him by a trustee. As the district court explained:

    benefits in full. In other words, Congress created § 4(l)(3)(B) to
    permit employers to offset disability benefits by pension benefits
    when necessary to avoid double payments.
96 F.3d 1305, 1309 (9th Cir. 1996) (holding that an employer violated the
ADEA’s prohibition of involuntary retirement by reducing an employee’s
disability benefits by the pension benefits the employee could only receive
by retiring, effectively coercing him to retire). We agree with the district
court that the policy of avoiding “double dipping,” that is, receiving two
independent benefit payments at once, did not apply here. By electing to
directly roll over his retirement benefits into an IRA, Blankenship deferred
collecting additional income during the relevant time period, avoiding
concurrent income streams.
5890        BLANKENSHIP v. LIBERTY LIFE ASSURANCE
    Blankenship did not receive anything through this
    transfer. He did not receive the funds as income, nor
    did he obtain the use and enjoyment of the funds.
    Although Blankenship has beneficial ownership of
    the funds in the Vanguard IRA, as well as the rights
    to obtain those funds and appoint a beneficiary of
    them, he similarly possessed these rights and bene-
    fits when the funds were held by the KPMG plans,
    and therefore cannot be said to have received any-
    thing in the transaction.

  Thus, the fact that Blankenship could withdraw the retire-
ment funds distributed into his Vanguard IRA did not change
Blankenship’s ability to control his funds.

   [9] Because Blankenship had the same type of possession
(and control) of the funds once transferred into the Vanguard
account that he would have had were the funds left with
KPMG, he did not “receive” these funds for the purposes of
offset under the Disability Plan. Therefore, the district court
properly concluded that Blankenship’s award of disability
benefits was not subject to reduction based on the distribution
of his retirement benefits under the PAR and Pension Plans.

                               B.

   [10] A district court may award prejudgment interest on an
award of ERISA benefits at its discretion. See, e.g., Dishman
v. UNUM Life Ins. Co. of Am., 269 F.3d 974, 988 (9th Cir.
2001); Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d
1154, 1163-64 (9th Cir. 2001); Blanton v. Anzalone, 813 F.2d
1574, 1575 (9th Cir. 1987). Generally, “the interest rate pre-
scribed for post-judgment interest under 28 U.S.C. § 1961 is
appropriate for fixing the rate of pre-judgment interest unless
the trial judge finds, on substantial evidence, that the equities
of that particular case require a different rate.” Grosz-
Salomon, 237 F.3d at 1164 (quoting Nelson v. EG & G
Energy Measurements Group, Inc., 37 F.3d 1384, 1391 (9th
            BLANKENSHIP v. LIBERTY LIFE ASSURANCE          5891
Cir. 1994)). “Substantial evidence” is defined as “such rele-
vant evidence as a reasonable mind might accept as adequate
to support a conclusion.” Blanton, 813 F.2d at 1576 (holding
that district court abused its discretion by awarding, on an
ERISA award, a prejudgment interest rate below the Treasury
bill rate without making a finding as to the equities which jus-
tified the departure) (citations omitted). The court may com-
pensate a plaintiff for “the losses he incurred as a result of
[the defendant’s] nonpayment of benefits.” Dishman, 269
F.3d at 988 (holding that the district court abused its discre-
tion in awarding a 16 percent prejudgment interest rate on an
ERISA award — double the rate of return on the defendant’s
investment portfolio — because “[p]rejudgment interest is an
element of compensation, not a penalty”).

   [11] Here, the district court determined that prejudgment
interest was necessary to compensate Blankenship. The court
deviated from the standard Treasury bill rate, awarding a
10.01-percent rate. In doing so, the court made factual find-
ings necessary to support the deviation. The court cited
Blankenship’s declaration that as a result of Liberty Life’s
nonpayment of benefits, Blankenship was forced to replace
the $6,093.82 per month he would have received with his own
personal funds. Those funds would otherwise have been
invested in a Vanguard mutual fund in which he had already
invested over one half million dollars, and which had a 10.01-
percent return since its inception in June 2000. Based on this
factual record, the court concluded that “in order for Blanken-
ship to be adequately compensated for Liberty’s wrongful
nonpayment of benefits,” it was awarding prejudgment inter-
est at a rate of 10.01 percent, compounded monthly. These
factual findings are supported by the record, and are adequate
to satisfy the “substantial evidence” requirement. Therefore,
the district court did not abuse its discretion in awarding pre-
judgment interest at a rate that exceeded the standard Trea-
sury bill rate.

   For the foregoing reasons, the judgment of the district court
is AFFIRMED.
5892        BLANKENSHIP v. LIBERTY LIFE ASSURANCE
NOONAN, Circuit Judge, concurring:

   By the principles of law distinguishing trusteeship and
agency, Vanguard was an agent, not a trustee. The restrictions
on Vanguard’s power of investment imposed by the Internal
Revenue Code 26 U.S.C. § 408(a), however, infringe on
Blankenship’s control as does the provision in the same stat-
ute that the balance of his account be nonforfeitable. If Van-
guard were his agent, Blankenship would be free to invest the
account as he chose, and he could not confer upon it a nonfor-
feitable status. Because of these peculiarities of the position
of Vanguard — peculiarities owed to the Internal Revenue
Code — Vanguard does not completely meet the criteria of
agency, and, therefore, Blankenship prevails in this case.
