Lockhart v. Southern Health Plan, et al
Filing
201
TRIAL ORDER finding in favor of Defendants. Plaintiff's remaining pending motions 197 and 194 are DENIED. Ordered by US Mag Judge Stephen Hyles on 5/4/12. (AGH)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
HOMER IRA LOCKHART
:
:
Plaintiff
:
:
v.
:
:
SOUTHERN HEALTH PLAN, INC. PLAN
:
ADMINISTRATOR, A SUBSIDIARY AND :
IN COOPERATION WITH BLUE CROSS/
:
BLUE SHIELD OF MEMPHIS, TENNESSEE, :
BLUE CROSS/BLUE SHIELD OF
:
CHATTANOOGA, TENNESSEE, ET AL.
:
:
Defendants.
:
CIVIL ACTION FILE
NO. 4:04-CV-0006-WLS-MSH
TRIAL ORDER
Plaintiff filed this action on January 21, 2004, against Blue Cross Blue Shield of
Tennessee and Southern Health Plan, Inc., claiming multiple violations of the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. On July
20, 2006, the Court issued an order which granted in part and denied in part Defendants’
motion for summary judgment and which denied Plaintiff’s motion for summary
judgment. (Order 9, July 20, 2006, ECF No. 98.) Thereafter, the only remaining claim
was Plaintiff’s claim for equitable relief for brief of fiduciary duties pursuant to ERISA §
502(a)(3), 29 U.S.C. § 1132(a)(3). (Id. at 10.) The parties consented to having the bench
trial in this case held before the Magistrate Judge in Columbus, Georgia. (ECF Nos. 165,
166.) The Court held a bench trial on this issue on October 17, 2011. The parties
submitted trial briefs and proposed findings of fact and conclusions of law. (ECF Nos.
188, 190-193.) The Court now makes the following findings of fact and conclusions of
law:
FINDINGS OF FACT
I.
Plaintiff’s Coverage
1.
Plaintiff began working for Burkeen Construction Company in the early 1990’s
and was a participant in Burkeen’s ERISA-governed health benefits plan (“the Plan”).
(Trial Tr. 134:1-6, 138:19-25, 143:22-144:10.)
2.
Plaintiff’s employment with Burkeen terminated on December 7, 1996. (Trial Tr.
136:7-10.)
3.
At that time, health benefits under the Plan were funded by a group insurance
policy issued to Burkeen by Jefferson Pilot Financial Insurance Company. (Trial Tr.
144:21-145:6; Pl.’s Ex. 7.)
4.
The termination of his employment was a “qualifying event” which entitled
Plaintiff to obtain continuation health insurance coverage for 18 months pursuant to the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”). 29 U.S.C. § 1163(2).
5.
Plaintiff’s COBRA continuation coverage was provided by Jefferson Pilot from
December 7, 1996, when his employment ended, through March 30, 1997, when Burkeen
2
changed insurance carriers. (Pl.’s Ex. 7; Trial Tr. 74:24-75:8.)
6.
Burkeen transferred its group health insurance from Jefferson-Pilot to BlueCross
BlueShield of Memphis [hereinafter “BCBS Memphis”] on April 1, 1997. (Pl’s Ex. 7;
Trial Tr. 75:6-8.)
7.
As a result, plaintiff’s COBRA continuation coverage was provided by BCBS
Memphis from April 1, 1997, to May 31, 1998, the end of plaintiff’s 18-month COBRA
continuation period. (Trial Tr. 74: 24 – 75:8.)
8.
Burkeen employees were offered health care benefits through either a Preferred
Provider Organization (“PPO”) or a Health Maintenance Organization (“HMO”). (Trial
Tr. 287:13-288:20.)
9.
Benefits under the PPO plan were paid by BCBS Memphis, and benefits under the
HMO plan were paid by Southern Health Plan, Inc., which was a subsidiary of BCBS
Memphis. (Trial Tr. 335:14–336:2.)
10.
Plaintiff elected health insurance under the PPO plan. (Pl.’s Ex. 14; Trial Tr.
288:21 – 289:19.)
3
II.
Summary Plan Description (“SPD”)
11.
When Plaintiff first became insured under Burkeen’s group insurance program, he
was not provided with any written materials.
(Trial Tr. 145:12-17, 148:11-149:9.)
Instead, Plaintiff was just told that he was insured by Jefferson Pilot. (Trial Tr. 145:18146:2.)
12.
Plaintiff never received an employee benefits handbook or summary plan
description from Burkeen. (Trial Tr. 150:5-151:25; 162:6-10.)
13.
The only information Plaintiff received from Burkeen regarding health insurance
or other benefits was (1) a letter from Linda Moore dated April 1, 1997 (Pl.’s Ex. 7); (2) a
Benefits Summary enclosed with that letter (Pl.’s Ex. 5); and (3) a letter from Ms. Moore
within 30 days of the termination of plaintiff’s employment enclosing a form for him to
complete to elect COBRA coverage. (Trial Tr. 150:15-151:10, 154:12-19, 157:17-159:4,
159:19-160:4, 164:10-22, 168:17-19.)
14.
The Benefits Summary that plaintiff received from Burkeen was not a Summary
Plan Description. (Pl.’s Ex. 5; Trial Tr. 286:18-287:9.)
15.
The Benefits Summary is a document that provides “the major components of the
cost sharing between the member and the carrier.” (Trial Tr. 286:23-287:1.) Such
4
documents “are typically distributed during enrollment meetings so that members can see
what the benefit plan is going to be.” (Trial Tr. 287:2-5.) A benefit summary would be
provided for each insurance option. (Id. at 287:5-9.)
16.
BCBS Memphis would not have issued a summary plan description. (Trial Tr.
285:12-286:1.) Instead BCBS Memphis would have issued a “benefit booklet” which
would require additional information to make it a summary plan description. (Id.)
III.
Contracts between Defendants and Burkeen
17.
The respective roles and responsibilities of Burkeen and BCBS Memphis were
spelled out in two documents—an Enrollment Agreement dated April 1, 1997 (Defs.’ Ex.
1), and a Comprehensive Major Medical Contract (“the Contract”) effective April 1, 1997
(Defs.’s Ex. 2).
18.
The Contract was between Burkeen (referred to as “the Group”) and Memphis
Hospital Service and Surgical Association. Memphis Hospital Service and Surgical
Association was the legal name of the company which was doing business as BCBS
Memphis. (Trial Tr. 292:14-293:2.)
19.
Under the Enrollment Agreement, Burkeen was responsible, as the employer, “[t]o
perform all functions necessary to keep the group health benefits program provided, in
part, through the group contract in compliance with [ERISA].” (Defs.’ Ex. 1 at 3 ¶ 6.)
5
20.
In the Enrollment Agreement, Burkeen acknowledged that
with respect to the establishment and maintenance of the group contract
providing health coverage for its employees and eligible dependents, it is
the “plan sponsor” as defined by ERISA and that it, or it’s [sic] duly
designated representative, will act as the “plan administrator” for all
purposes under ERISA including any and all reporting, disclosure or other
fiduciary requirements.
(Id. at 3 ¶ 6.)
21.
The Enrollment Agreement further provided that it “does not constitute an
appointment by the employer of Blue Cross and Blue Shield of Memphis as a ‘plan
administrator’ or a ‘fiduciary’ for purposes of ERISA.” (Id.)
22.
Both the Enrollment Agreement and the Comprehensive Major Medical Contract
described the rights of Burkeen employees to obtain continuation group health insurance
coverage under COBRA, and to obtain individual conversion coverage under the Health
Insurance Portability and Accountability Act of 1996 (“HIPAA”), 29 U.S.C. § 1181 et
seq. (Defs.’ Ex. 1 at 1, 3; Defs. Ex. 2 at 18-19.)
23.
The Enrollment Agreement provided that “[u]pon termination [of employment],
employer shall be solely responsible for providing, underwriting and administering any
continuation coverage.” (Defs.’ Ex. 1 at 1 ¶ 5.)
6
24.
This meant that Burkeen accepted responsibility for handling its employees’
continuation coverage under COBRA, including all of the notices required by COBRA.
(Trial Tr. 280:13-24.)
25.
Under the Enrollment Agreement, Burkeen was “[t]o provide Blue Cross and Blue
Shield of Memphis a roster of all employees” at least once a year. (Defs.’ Ex. 1 at 2 ¶ 4.)
26.
Further, Burkeen was responsible for notifying BCBS Memphis if a former
employee wished to obtain either continuation coverage under COBRA or an individual
conversion policy under HIPPA. (Defs.’ Ex. 1 at 2 ¶ 3.)
27.
The Enrollment Agreement provided (with a typographical error) as follows:
An employee [sic] agrees that it will notify Blue Cross and Blue Shield of
Memphis of those persons desiring continuation coverage and/or
conversion coverage under Federal or State Law as provided for either in
the group contract and/or herein.
(Id; Trial Tr. 281:12-282:4.)
28.
This meant that if the coverage of an employee (or a former employee) was
terminating, Burkeen was to notify BCBS Memphis of that occurrence. (Trial Tr. 282:517.)
7
29.
Upon receipt of such notification from Burkeen, BCBS Memphis agreed “[t]o
make available conversion coverage to eligible employees and their dependents as
required by applicable law consistent with the requirements set forth herein and in the
group contract.” (Defs.’ Ex. 1 at 1 ¶ 4.)
30.
The Comprehensive Major Medical Contract provided:
“It is the Group’s
[Burkeen’s] responsibility to notify the Association [BCBS Memphis] of any requested
changes in coverage.” (Defs.’ Ex. 2 at 2 ¶ 7.)
31.
Further, under the heading “Records of Member Eligibility and Changes in
Member Eligibility,” the Contract provided:
The Group must furnish the Association with any data required by the
Association for coverage of members under this contract. In addition, the
Group must provide prompt notification to the Association of the effective
date of any changes in a member’s coverage status under this contract.
All notification by the Group to the Association must be furnished on forms
approved by the Association. The notification must include all information
reasonably required by the Association to effect changes.
(Id. at 17.)
32.
In terms of the day-to-day communications and working relationship between
Burkeen and BCBS Memphis, this provision meant that BCBS Memphis was “expecting
to receive information about any new employees or new enrollees from Burkeen and with
8
as much information as is required for [BCBS Memphis] to provide the coverage. And
then if there’s any change to that, [BCBS Memphis is] expecting to be notified of that
change as well.” (Trial Tr. 294:4-295:12.)
33.
Furthermore, Burkeen agreed that it would be “liable for the cost of all contract
benefits which are provided for services rendered to a terminated member because of the
Group’s failure to notify [BCBS Memphis] of the member’s termination on or before the
termination date.” (Defs.’ Ex. 2 at 17; TT, pp. 295:13-296:4.)
34.
BCBS Memphis’ records did not show that Plaintiff’s coverage was COBRA
continuation coverage, rather than health insurance for an active Burkeen employee,
when it became the group health insurer. (Pl.’s Ex. 13.)
III.
Time period after Plaintiff’s termination
35.
BCBS Memphis merged with BCBS Tennessee (BCBST) over a period of about
two to three years. The merger was finalized in January 1999. (Trial Tr. 263:4-12.)
36.
When it was determined that the membership, contract, and billing operations
would be assumed by BCBST, a group of BCBST employees went to Memphis to box
up, inventory, and bring back documents to make sure that everything that was pending
was processed, and that records were updated. (Trial Tr. 263:21 – 264:8.)
9
37.
During that process, there was a transfer of records and data from BCBS Memphis
to BCBST that included both paper documents and computer system information. (Trial
Tr. 264:9-18.)
38.
As part of the transfer of records, information regarding Burkeen’s group health
insurance was added to BCBST’s “FACETS” computer system. (Pl.’s Ex. 13 at 3.)
39.
By that time, Plaintiff’s 18 months of COBRA continuation coverage had ended
and Plaintiff had already purchased a different insurance policy from another insurer.
(Trial Tr. 74:24-75:8, 176:3-17; Pl.’s Ex. 11 at 3.)
40.
When the member information was moved from the old computer system to the
new computer system, BCBST also changed each member’s ID number. (Trial Tr.
304:1-13.)
41.
The new computer system interpreted the change of Mr. Lockhart’s ID number as
a terminating event, and because Mr. Lockhart lived in Georgia rather than Tennessee,
the computer system automatically generated an inter-plan transfer letter to Mr. Lockhart.
(Trial Tr. 302:15-305:11.)
42.
The letter stated: “Our records indicate your recent group coverage has terminated
10
and you do not reside in this service area. You will need to notify the BlueCross
BlueShield Plan which serves the area in which you reside.” (Pl.’s Ex. 3.)
43.
In response to that letter, Plaintiff contacted BlueCross BlueShield of Georgia
(“BCBS Georgia”), in December 1998, and sought to purchase a conversion policy of
health coverage. (Trial Tr. 65:23-66:4; see Pl.’s Ex. 13 at 3-4.)
44.
BCBS Georgia informed plaintiff that he would need to provide a Certificate of
Creditable Coverage. (Pl.’s Ex. 13 at 3.)
45.
BCBS Memphis was supposed to receive notice that an employee’s coverage was
terminating. This notification would trigger BCBS Memphis to issue a certificate of
credible coverage “to [the] member so [that the member] can use [the certificate of
credible coverage] when [the member] pursue[s] insurance elsewhere.”
(Trial Tr.
300:11-25.)
46.
However, the only way BCBS Memphis would know that Plaintiff’s COBRA
period had come to an end would have been if Burkeen had notified BCBS Memphis.
(Trial Tr. 301:7-12.)
47.
Typically, under BCBS’s system, when BCBS is notified of a termination of
coverage, BCBS would do one of two things: “[e]ither the system would be programmed
11
to automatically produce a certificate of creditable coverage printed out and it goes to the
mail room and gets mailed, or it could have printed a record to a report, and that report
could have been given to an employee who takes that information about the termination
and puts it into a letter format and actually creates and mails a letter themselves.” (Trial
Tr. 301:22-302:7.)
48.
If Burkeen did not inform BCBS Memphis that Plaintiff’s COBRA continuation
coverage had ended, BCBS Memphis would not have known to send a certificate of
credible coverage. (Trial Tr. 302:9-14.)
49.
Plaintiff did not receive a certificate of credible coverage from either BCBS
Memphis, Jefferson Pilot, or Burkeen. (Trial Tr. 93:3-19, 161:11-23, 172:18-173:5.)
50.
Plaintiff offered no proof that Burkeen ever notified BCBS Memphis that his
COBRA continuation period had ended, and he specifically informed the Court that he
could not prove that Burkeen provided such notice. (Trial Tr. 296:22-297:11.)
51.
The only certificate of credible coverage Plaintiff received is Plaintiff’s Exhibit 2,
which was sent to Plaintiff by BCBST on January 13, 1999. (Pl.’s Ex. 2; see Trial Tr.
61:23-62:2.)
52.
The certificate confirmed Plaintiff’s coverage period from April 1, 1997, until
12
June 1, 1998. (Pl.’s Ex. 2.)
53.
Plaintiff presented the certificate of creditable coverage to BCBS Georgia in an
attempt to purchase an individual conversion policy. However, because Plaintiff had
more than a 63-day gap in coverage and did not have continuous coverage with BCBS for
12 months prior to his application, he was not eligible for an individual conversion
policy. (See Pl.’s Ex. 4 (“This coverage is available provided you meet the eligibility
requirements and provided you have had 12 months of continuous coverage with Blue
Cross Blue Shield.”), Pl.’s Ex. 13 at 3-4.)
IV.
BCBST’s offer of retroactive conversion coverage
54.
Because of the confusion surrounding plaintiff’s ability to purchase an individual
conversion policy, BCBST offered in January 1999 to provide a conversion health
insurance policy to plaintiff, retroactive to May 31, 1998, the date when his COBRA
continuation coverage under the Plan had terminated. (Trial Tr. 203:25-205:4; see Pl.’s
Ex. 13 at 3-4, Pl.’s Ex. 15.)
55.
In order for the offered BCBST policy to be retroactive to June 1, 1998, Plaintiff
would have been required to pay the premiums from May 31, 1998, to January 1999.
(Pl.’s Ex. 13 at 4, Pl.’s Exs. 15-16.)
56.
Plaintiff could have accepted BCBST’s offer, paid the retroactive premiums, and
13
then transferred the BCBST policy to an individual conversion policy issued by BCBS
Georgia, where he resided. (Trial Tr. 309:23 – 310:24.)
57.
Although Plaintiff understood that he could have purchased the BCBST policy and
transferred it to BCBS Georgia, he rejected BCBST’s offer to provide an individual
conversion policy because he believed that the coverage was not as good as a BCBS
Georgia policy and because he believed that the premiums were too high. (Trial Tr.
203:17-207:20.)
58.
Beginning in January 1999, Plaintiff complained to BCBST, the Tennessee
Department of Insurance, and the Georgia Department of Insurance about the failure of
BCBST to provide him with notice of his right to a conversion policy when his COBRA
continuation coverage ended in May 1998. (See Def.’s Exs. 8-9; Pl.’s Ex. 8-13.)
59.
Although BCBST offered Plaintiff in January 1999 the remedy he now seeks,
Plaintiff declined BCBST’s offer, waited five years until January 21, 2004, then filed the
present lawsuit. (See Compl. 1, Am. Compl. 5.)
60.
As of the filing of this lawsuit, neither Burkeen nor BCBS Memphis are entities in
existence. (Trial Tr. 219:10-19; 263:4-16.)
14
CONCLUSIONS OF LAW
I.
Statute of Limitations
A.
Three-year statute of limitations pursuant to 29 U.S.C. § 1113(2)
1.
When a plan participant brings an action for breach of fiduciary duty under
ERISA, there is generally a six year statute of limitations.
29 U.S.C. § 1113(1).
However, if the plaintiff “had actual knowledge of the breach or violation,” the
limitations period is three years. 29 U.S.C. § 1113(2).
2.
This three year limitations period applies “except [] in the case of fraud or
concealment,” in which case the limitations period reverts back to the six year limitations
from “the date of discovery of such breach or violation.” 29 U.S.C. § 1113.
3.
Consequently, plaintiffs who have actual knowledge of a breach cannot delay
bringing an action. Plaintiffs with actual knowledge must commence their suit within
three years of discovery of the alleged breach. 29 U.S.C. § 1113; see also, e.g., New
Orleans Emp’rs Int’l Longshoreman’s Assoc., AFL-CIO Pension Fund v. Mercer Inv.
Consultants, 635 F. Supp. 2d 1351, 1378 (N.D. Ga. 2009).
4.
“Courts have construed the ‘actual knowledge’ requirement strictly; constructive
knowledge is inadequate, rather, the plaintiff must have knowledge of the facts or
transaction that constituted the breach in order to trigger the statute of limitations.”
15
Mercer Inv. Consultants, 635 F. Supp. 2d at 1378 (citation omitted). “[I]t is not enough
that [a plaintiff] had notice that something was awry; he must have had specific
knowledge of the actual breach of duty upon which he sues.” Brock v. Nellis, 809 F.2d
753, 755 (11th Cir. 1987).
5.
However,
[a]t the same time, the relevant knowledge for triggering the statute of
limitations is knowledge of the facts or transaction that constituted the
alleged violation. Consequently, it is not necessary for a potential plaintiff
to have knowledge of every last detail of a transaction, or knowledge of its
illegality . . . . Suffice it to say that to have actual knowledge of a violation
to trigger ERISA’s three-year statute of limitations, a plaintiff must know
of the essential facts of the transaction or conduct constituting the violation.
Martin v. Consultants & Adm’ns, Inc., 966 F.2d 1078, 1086 (7th Cir. 1992) (emphasis in
original); see also Brock, 809 F.2d at 755 (“To us, section 1113(a)(2)(A) means only that
once the [plaintiff] learns of the facts that support his allegation of illegality, he has no
more than three years in which to bring his suit.”)
6.
As this Court has already found, “Plaintiff had specific knowledge of the alleged
actual breach of duty upon which he sues by March 1999 at the latest.” (Order 5, July 20,
2006, ECF No. 98.) This finding was confirmed at trial by Plaintiff’s testimony that he
called Blue Cross and Blue Shield of Georgia in January and March 1999 because he
believed that his ERISA rights had been violated. (Trial Tr. 101:1-104:13, 224:6-226:14,
ECF No. 189; Pl.’s Ex. 13 at 4.)
16
7.
Plaintiff was therefore required to file this action within three years of March
1999—March 2002. 29 U.S.C. § 1113(2).
8.
Plaintiff did not file suit until January 21, 2004, almost two years after the
limitations period expired. (See Compl. 1, ECF No. 1.)
9.
Consequently, this action is time-barred unless Plaintiff has established fraud or
concealment by Defendants which would entitle Plaintiff to the benefit of the six-year
statute of limitations. 29 U.S.C. § 1113.
B.
Fraud or Concealment
10.
In order to constitute fraud or concealment such that the six year statute of
limitations is applicable, a plaintiff must establish that the defendant engaged in “an
active step of concealment[.]” Mellon Bank, N.A. ex rel. Weiss Packing Co., Inc. Profit
Sharing Plan v. Levy, 71 F. App’x 146, 148 (3d Cir. 2003). “[T]here must be conduct
beyond the breach itself that has the effect of concealing the breach from its victims.” In
re Unisys Corp. Retiree Med. Benefit “ERISA” Litig., 242 F.3d 497, 503 (3d Cir. 2001).
11.
Thus, there must be “evidence that the defendant took affirmative steps [at any
point] to hide its breach of fiduciary duty.” Id. (internal quotation marks and citation
omitted) (emphasis and alteration in original); see also Corral v. S. Cal. Gas Co., 210
17
F.3d 382, 382 (9th Cir. 2000) (“[T]here must be evidence that the employer either
attempted to defraud the plaintiff or concealed its fiduciary breach.”); J. Geils Band Emp.
Benefit Plan v. Smith Barney Shearson, Inc., 76 F.3d 1245, 1255 (1st Cir. 1996)
(applying fraudulent concealment requirements to § 1113); Larson v. Northrop Corp., 21
F.3d 1164, 1173 (D.C. Cir. 1994) (“There must be actual concealment—i.e., some trick
or contrivance intended to exclude suspicion and prevent inquiry.”) (internal quotation
marks and citation omitted); Martin v. Consultants & Adm’rs, Inc., 966 F.2d 1078, 1095
(7th Cir. 1992) (requiring actual concealment).
12.
Plaintiff alleges in his First Amended Complaint that “[t]he Plan Administrator
failed to provide { Timely Notice } thereby concealing / misleading plaintiff of the
conversion rights free of new-preexisting waiting period as shown in plaintiffs’ [sic]
original Complaint (Document 1) and exhibits (A) (B) (C).” (First Am. Compl. 6; see
also Compl. ¶ 79.) The “Timely Notice” that Plaintiff refers to is a Certificate of
Credible Coverage. (First Am. Compl. 6.) Plaintiff appears to believe that Defendants’
failure to provide him with a Certificate of Credible Coverage is a concealment of a
material fact. (Pl.’s Mot. to File Revised Second Am. Compl. 5, ECF No. 50.1)
13.
Plaintiff, however, has presented no evidence that the Defendants’ failure to
provide a Certificate of Credible Coverage was an affirmative action on the part of
1
The Court notes that Plaintiff’s motion to file a second amended complaint was denied on July
22, 2005. (Order 7, July 22, 2005, ECF No. 71.)
18
Defendants to hide a breach of their fiduciary duty. To the contrary, Plaintiff argues that
the Defendants’ failure to provide him with a certificate of credible coverage is in and of
itself a breach of their fiduciary duty. (Trial Tr. 16:16-23, 19:23-20:7.)
14.
Plaintiff’s failure to provide any evidence of fraud or concealment on the part of
Defendants is fatal to his claim.
15.
Without fraud or concealment, Plaintiff does not get the benefit of the six-year
statute of limitations. Thus, Plaintiff’s limitations period began to run from the time the
time he received actual notice—March 1999—and expired three years later in March
2002. 29 U.S.C. § 1113(2).
16.
Plaintiff did not file this action until January 21, 2004, almost two years after the
expiration of the statute of limitations. (See Compl. 1) Plaintiff’s claims are therefore
time-barred.
II.
Breach of Fiduciary Duty
17.
Even if Plaintiff’s claims were not time-barred as explained above, Plaintiff would
not be entitled to recover under ERISA section 502(a)(3), 29 U.S.C. § 1132(a)(3).
A.
Plaintiff has failed to establish that Defendants were fiduciaries
18.
“To establish liability for a breach of fiduciary duty under any of the provisions of
19
ERISA § 502(a), a plaintiff must first show that the defendant is in fact a fiduciary with
respect to the plan. Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1277 (11th Cir.
2005) (citation omitted).
19.
A fiduciary is a person defined by the plan as a fiduciary or “anyone else who
exercises discretionary control or authority over the plan’s management, administration,
or assets[.]” Mertens v. Hewitt Assocs., 508 U.S. 248, 251 (1993); see also 29 U.S.C. §
1002(21)A. “Fiduciaries are assigned a number of detailed duties and responsibilities,
which include the proper management, administration, and investment of [plan] assets,
the maintenance of proper records, the disclosure of specified information, and the
avoidance of conflicts of interest.” Mertens, 508 U.S. at 251 (internal quotation marks
and citation omitted) (alteration in original).
20.
Under ERISA, “a party is a fiduciary only to the extent that it performs a fiduciary
function.” Cotton, 402 F.3d at 1277 (internal quotation marks and citations omitted).
Thus, “fiduciary status . . . is not an all-or-nothing concept, and a court must ask whether
a person is a fiduciary with respect to the particular activity at issue.” Id.
21.
At trial Plaintiff stated that he was going to show that Defendants had a fiduciary
obligation to “notify [him] of [his] rights and obligations under that law [ERISA.]” (Trial
Tr. 32:17-33:2.) Specifically, Plaintiff contends he should have been notified of his right
to obtain conversion coverage and that he was entitled to a certificate of credible
20
coverage. (Trial Tr. 29:18-30:1.)
22.
Since Plaintiff has complained about the administration and availability of
conversion coverage and the failure to be provided with a certificate of credible coverage,
the Court focuses on BCBS Memphis’s obligations concerning those two activities to
determine whether it was a fiduciary.
23.
The Court finds that BCBS Memphis was not a Plan fiduciary for any purpose
other than making claim decisions with respect to health care benefits.
24.
BCBS Memphis’s Enrollment Agreement with Burkeen specifically provided that
BCBS would “make available conversion coverage to eligible employees and their
dependents as required by applicable law and consistent with the requirements set forth
herein and in the group contract.” (Defs.’ Ex. 1 at 1, ¶ 4.)2
25.
BCBS also guaranteed to “make available claims processing services and coverage
for benefits under continuation coverage required by Tennessee law and . . . Federal
law[.]”
However, the Enrollment Agreement provided that “[u]pon termination,
2
The Court looks to the contract between BCBS Memphis and Burkeen to determine whether
Defendants were administrators with respect to Plaintiff’s plan because Plaintiff was enrolled in
BCBS Memphis’s PPO plan. (Pl.’s Ex. 14.) Plaintiff was not a member of Southern Health
Plan’s HMO plan. (Id.) Regardless, the contract between Southern Health Plan, Inc. and
Burkeen contains nearly identical provisions which provide that Burkeen is the plan
administrator and plan sponsor. (Pl.’s Ex. 28 at 1-3.)
21
[Burkeen] shall be solely responsible for providing, underwriting and administering any
continuation coverage.” (Defs.’ Ex. 1 at 1, ¶ 5.)
26.
Furthermore, the Enrollment Agreement provides that it was Burkeen’s
responsibility to “furnish to Blue Cross and Blue Shield of Memphis on at least a
monthly basis . . . such information as may be reasonably required by Blue Cross and
Blue Shield of Memphis for the purpose of . . . effecting changes in family status and
transfers of employment of covered employees, processing terminations[] and/or
determining when and whether eligibility under the group contract has ended.” (Defs.’
Ex. 1 at 2, ¶ 3.)
27.
Under the contract, Burkeen “agree[d] that it will notify Blue Cross and Blue
Shield of Memphis of those persons desiring continuation coverage and/or conversion
coverage under Federal or State law as provided for either in the group contract and/or
herein.” (Defs.’ Ex. 1 at 2, ¶ 3; Trial Tr. 281:12-282:17.)
28.
Burkeen also agreed to
give timely notice (but in no event more than 30 days) to Blue Cross and
Blue Shield of Memphis in writing with the following information when a
qualifying event occurs: (1) name and address of qualified beneficiaries, (2)
certificate number of qualified beneficiaries, (3) type of qualifying event,
(4) date of qualifying event, and (5) applicable premium.
(Defs.’ Ex. 1 at 3, ¶ 2.)
22
29.
Finally, Burkeen explicitly agreed under the Enrollment Agreement to perform the
duties of “plan sponsor” and “plan administrator for all purposes under ERISA including
any and all reporting, disclosure or other fiduciary requirements.” (Defs.’ Ex. 1 at 3, ¶ 6.)
30.
Plaintiff has failed to show that Defendants had any discretion, control, or
authority over the plan’s management or administration except with respect to activities
related to administering claims for health insurance benefits under the Plan.
31.
Although the Enrollment Agreement does state that BCBS Memphis would
provide “benefit booklets, notices, or other materials” to Burkeen for distribution, the
Agreement does not state that these publications are provided pursuant to ERISA or that
they must contain the information required by ERISA. (Defs.’ Ex. 1 at 3, ¶ 5.) To the
contrary, Burkeen was required “[t]o perform all functions necessary to keep the group
health benefits program . . . in compliance with [ERISA].” (Id. at 3, ¶ 6.)
32.
Plaintiff has further failed to show that BCBS Memphis in practice acted as Plan
Administrator or fiduciary. (Trial Tr. 299:3-300:25.) Rather, BCBS Memphis had the
limited role of making claim decisions, such as confirming medical necessity before
claims were paid. (Id.)
33.
Thus, BCBS Memphis’ fiduciary responsibilities were limited to claim
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administration duties delegated to it by the Enrollment Agreement with Burkeen and
BCBS Memphis was a fiduciary only with respect to its activities in administering claims
for health insurance benefits under the plan.
34.
Because Plaintiff has failed to establish that Defendants were fiduciaries with
respect to the activities of which Plaintiff’s complains, the Court finds for Defendants on
Plaintiff’s claim of breach of fiduciary duty.
B.
Plaintiff has failed to establish that Defendants breached any duty
35.
Plaintiff has likewise failed to establish that there was any fiduciary duty owed to
Plaintiff which Defendants breached.
36.
Plaintiff stated in his opening statement that he would prove that Defendants had a
duty to “notify [him] of [his] rights and obligations under that law [ERISA.]” (Trial Tr.
32:17-33:2.) Specifically, Plaintiff complained of the failure of Defendants to include in
a “plan benefit summary . . . [his] rights and obligations . . . to get conversion coverage
without pre-existing conditions.”
(Trial Tr. 29:18-30:1.)
Plaintiff refers to the
obligations provided in 29 U.S.C. § 1022 and § 1024 which concern the content of a
summary plan description and disclosures to the Secretary of Labor. (Trial Tr. 32:17-23.)
37.
Plaintiff, however, has provided no evidence that such duty existed on the part of
Defendants.
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38.
The mere fact that Defendants provided Burkeen with benefit booklets does not
somehow obligate Defendants to provide summary plan descriptions or reports to the
Secretary of Labor.
Those obligations are undertaken by the plan administrator in
accordance with 29 U.S.C. § 1021, § 1022, and § 1024.
39.
As this Court previously found, Defendants were not plan administrators with
respect to Plaintiff’s plan and did not otherwise function as plan administrators for
Plaintiff’s plan. (Order 6-9, July 20, 2006, ECF No. 98.)
40.
Thus, the Defendants do not owe the obligations contained in sections 1022 or
1024. See, e.g., Barnes v. Lacy, 927 F.2d 539, 544 (11th Cir. 1991) (district court erred
in creating implied additional duty of disclosure not found in ERISA). Furthermore, as
explained above, Defendants were not fiduciaries.
41.
Plaintiff has provided no evidence that these Defendants owed the duties to
Plaintiff of which he complains or that Defendants failed to fulfill any duties that were
owed to Plaintiff. Plaintiff’s claim must therefore fail for this additional reason.
III.
Plaintiff’s previously litigated claims
42.
At trial, Plaintiff also briefly asserted that he is entitled to default judgment and
statutory penalties pursuant to 29 U.S.C. § 1132(c)(1) and (c)(3). (Trial Tr. 30:2-12,
25
31:21-32:6.)
43.
These issues have already been litigated and decided against Plaintiff in this case.
(Order 9, July 22, 2005 (denying Plaintiff’s motion for default judgment); Order 6-9, July
20, 2006 (granting summary judgment for Defendants on Plaintiff’s § 1132(c) claims).)
44.
Under the law of the case doctrine, the Court declines to determine issues
previously ruled upon by the District Judge. See Pepper v. United States, -- U.S. --, 131
S. Ct. 1229, 1250 (2011) (discussing law of the case doctrine); Salazar v. Buono, --U.S.--,
130 S. Ct. 1803, 1825 n.1 (explaining that the law of the case doctrine “comes into play
only if an issue [the court is] asked to resolve has already been decided in the same
litigation”).
PENDING MOTIONS
After trial, Plaintiff filed two motions. The first is a Motion for Court to Take
Judicial Notice (ECF No. 194) filed on February 21, 2012. Therein Plaintiff asks the
Court to take judicial notice of one of Plaintiff’s post-trial briefs and an attachment
thereto (ECF No. 185).
Plaintiff is alleging that sanctions are appropriate against
Defendants for “fraudulent acts” committed by Defendants. To the extent that Plaintiff is
asking the Court to review his post-trial brief and all attachments thereto, Plaintiff’s
motion is GRANTED. The Court has thoroughly reviewed all submissions by Plaintiff.
However, Plaintiff has not established that there is any ground for sanctions to be ordered
by the Court against Defendants. Consequently, Plaintiff’s motion is DENIED regarding
26
sanctions.
Plaintiff filed a second Motion for Court to Take Judicial Notice (ECF No. 197)
on March 7, 2012. Therein Plaintiff asks the court to “consider in any award in its final
judgment Order to the Plaintiff be paid by the Defendants error and omission insurance
and not allow the award be passed and absorbed by the insured of the insurer the
Defendants.” (Mot. for Ct. to Take Judicial Notice 1, ECF No. 197.) Because the Court
is not granting judgment in favor of Plaintiff or any damages to Plaintiff, Plaintiff’s
motion is DENIED AS MOOT.
CONCLUSION
For the aforementioned reasons, the Court finds in favor of Defendants. Plaintiff’s
action is time-barred under 29 U.S.C. § 1113(2). Furthermore, even if Plaintiff’s claim
was not time-barred, he has failed to meet his burden of proof and establish that
Defendants breached any fiduciary duty owed to him pursuant to 29 U.S.C. § 1132(a)(3).
Judgment shall be entered in favor of the Defendants.
SO ORDERED, this 4th day of May, 2012.
S/Stephen Hyles
UNITED STATES MAGISTRATE JUDGE
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