Slater v. Southwest Research Institute
ORDER GRANTING 38 Motion for Summary Judgment. Signed by Judge Xavier Rodriguez. (rf)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
SUSAN SLATER, Individually, and as
Surviving Spouse of DAVID C. SLATER,
and as Beneficiary of DAVID C. SLATER
SOUTHWEST RESEARCH INSTITUTE, et §
Civil Action No. SA-12-CV-1205-XR
On this date, the Court considered Defendants’ motion for summary judgment. Doc. No.
38. After careful consideration, the Court GRANTS the motion.
This case arises out of the late Dr. David Slater’s employment relationship with
Defendant Southwest Research Institute (“SWR”). Dr. Slater began his career as a staff scientist
at SWR in 1994 and had a distinguished career in the Space Science and Engineering Division.
In 2007, Dr. Slater was diagnosed with brain cancer.
He underwent an operation and was
treated with chemotherapy and radiation. After a recovery period, Dr. Slater returned to work at
SWR with no restrictions. One year later, during the summer of 2008, Dr. Slater suffered a
setback in his recovery and was required to miss work for treatment. As a result of this
treatment, Dr. Slater suffered short-term memory loss. When he returned to work in the fall of
2008, Dr. Slater’s treating oncologist recommended that he not take on any new projects and
work only on existing projects due to his memory loss. SWR accepted these restrictions and
permitted Dr. Slater to return to work.
On November 20, 2008, Dr. Slater participated in SWR’s yearly open enrollment for their
employee benefit plan.
At this time, Dr. Slater decreased his life insurance benefit from
$500,000 to $100,000.
Approximately one year later, during the 2009 open enrollment period, Dr. Slater’s wife,
Plaintiff Susan Slater, accompanied him to the SWR benefits office. The purpose of their visit
was to add an insurance plan for legal services to offset the future cost of planning Dr. Slater’s
estate. Upon reviewing Dr. Slater’s benefits with the SWR staff, Mrs. Slater discovered that her
husband’s life insurance benefit had been decreased. She alleges that Dr. Slater had no memory
of making this change and was “visibly upset” to learn that his life insurance benefits had been
decreased. Doc. No. 39, Ex. 3.
At this time, Dr. and Mrs. Slater asked SWR to correct Dr. Slater’s mistake and restore
his life insurance benefit to its original $500,000 level. Mrs. Slater testified that they were told
that SWR could do nothing about the change, and that they would need to deal directly with the
insurance company, Sun Life. Sun Life required Dr. Slater to submit evidence of insurability, as
was required under his policy, and ultimately refused to reinstate the $500,000 benefit.
On July 7, 2010, SWR changed insurance carriers from Sun Life to Hartford. SWR
communicated this information to Mrs. Slater on October 22, 2010, and advised Mrs. Slater that
her only recourse was a claim under the Employee Retirement Income Security Act (“ERISA”),
or a claim with the Texas Department of Insurance. Dr. Slater passed away on May 30, 2011.
On November 19, 2012, Mrs. Slater filed a state court petition against Defendants SWR
and Southwest Research Medical Trust Plan (“SWR Plan”) alleging common law fraud based on
the improper administration of SWR’s benefits plan.
On December 21, 2012, Defendants
removed on the grounds that Plaintiff’s claim was entirely preempted by ERISA, 29 U.S.C. §§
1001, et. seq., Doc. No. 1. On January 22, 2013, Plaintiff filed a motion to remand. Doc. No. 7.
The Court denied the motion, holding that Plaintiff’s state-law claim was completely preempted
by ERISA § 502(a). Doc. No. 18. On June 26, 2013, Mrs. Slater filed an amended complaint
alleging that Defendants violated ERISA by breaching their fiduciary duties to her husband.
Doc. No. 28. On November 22, 2013, Defendants filed this motion for summary judgment. Doc.
Summary judgment is proper when the evidence shows “that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P.
56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-252 (1986). Rule 56 “mandates the
entry of summary judgment, after adequate time for discovery and upon motion, against a party
who fails . . . to establish the existence of an element essential to that party’s case, and on which
that party will bear the burden of proof at trial.” Curtis v. Anthony, 710 F.3d 587, 594 (5th Cir.
2013) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).
The court must draw reasonable inferences and construe evidence in favor of the
nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Although the evidence is viewed in the light most favorable to the nonmoving party, a
nonmovant may not rely on “conclusory allegations, unsubstantiated assertions, or only a
scintilla of evidence” to create a genuine issue of material fact sufficient to survive summary
judgment. Freeman v. Tex. Dep’t of Criminal Justice, 369 F.3d 854, 860 (5th Cir. 2004).
As part of a complex regulatory scheme, ERISA imposes fiduciary duties on
administrators of employee benefit plans. 29 U.S.C. § 1104(a)(1). In particular, the statute
provides a private cause of action against those individuals or entities that breach their fiduciary
29 U.S.C. § 1132(a)(3).
Plaintiff asserts that as “a matter of law, being a plan
administrator and sponsor make [SWR] a fiduciary.” Doc. No. 39 at 7.
To the contrary, the
Supreme Court has held that an employer’s status as a plan administrator does not automatically
make the employer an ERISA fiduciary. Pegram v. Herdrich, 530 U.S. 211, 226 (2000); Hozier
v. Midwest Fasteners, Inc., 908 F.3d 1115, 1158 (3rd Cir. 1990) (fiduciary duties apply not “just
to particular persons, but particular persons performing particular functions.”).
Under ERISA, an employer is a fiduciary only with respect to those aspects of its benefits
program over which it exercises discretionary functions.
Id. (discussing 29 U.S.C. §
1002(21)(A)); see also Coleman v. Nationwide Ins. Co. 969 F. 2d 54, 61 (4th Cir. 1992) (status
of plan administrator as fiduciary is not “all or nothing” concept; employer is fiduciary “to the
extent” it performs discretionary functions with respect to a plan.). Thus, an employer that offers
a benefits plan does not automatically become a fiduciary in all respects and instead only
acquires fiduciary duties when it exercises discretionary functions related to its benefits plan.
Accordingly, the Court must assess whether a fiduciary duty exists at each instance that Plaintiff
alleges a breach of said duty.
In addition to establishing the existence of a fiduciary duty, a plaintiff must prove that the
defendant breached that duty. Varity Corp. v. Howe, 516 U.S. 489 (1996). ERISA § 404(a)
provides that “a fiduciary shall discharge his duties with respect to a plan solely in the interest of
the participants,” and “for the exclusive purpose of providing benefits to participants.” 29 U.S.C.
§ 1104(a)(1)(A). Such duties shall be discharged “with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent man acting in a like capacity and familiar
with such matters would use in the conduct of an enterprise of a like character and with like
aims.” 29 U.S.C. § 1104(a)(1)(B). In addition to these statutory provisions, courts are permitted
to rely on the common law of trusts to define the general scope of a fiduciary's responsibilities.
Kujanek v. Houston Poly Bag I, Ltd., 658 F.3d 483, 487 (5th Cir. 2011).
In her Amended Complaint, Plaintiff alleges that Defendants breached their fiduciary
duties when they: (1) failed to oversee Dr. Slater’s benefit election during 2008 open enrollment,
(2) failed to abide by Dr. Slater’s work restrictions; and (3) changed providers from Sun Life to
Hartford during the pendency of the Slaters’ appeal. The Court will address each of these claims
1. 2008 Benefit Enrollment
Mrs. Slater’s primary contention is that Defendants breached a fiduciary duty when they
permitted Dr. Slater to make changes to his life insurance policy during the 2008 open
enrollment period. Specifically, Mrs. Slater argues that the breach occurred when Defendants
allowed Dr. Slater to “access and change his life insurance benefits without supervision and
review.” Am. Compl. ¶ 6.5.
As an initial matter, SWR was not acting as a fiduciary when it provided its employees,
including Dr. Slater, with an open enrollment period. ERISA implementing regulations state that
“a person who performs purely ministerial functions . . . for an employee benefit plan within a
framework of policies, interpretations, rules, practices and procedure made by other persons is
not a fiduciary.” 29 C.F.R. § 2509.75-8. By providing a yearly open enrollment period, SWR
was performing a purely ministerial function. During open enrollment, SWR employees are free
to make changes to their benefit plans using an online portal. The undisputed record indicates
that any change made to a benefit plan by an employee during this period becomes effective
automatically on January 1 of the following year. Doc. No. 38, Ex. C. (emphasis added). Since
an employee’s election occurs automatically, Defendants do not exercise any discretionary
authority over what occurs during open enrollment.
“ERISA raises an employer to the status of fiduciary to the extent that it ‘exercises any
discretionary authority or discretionary control respecting management’ of the plan, or has ‘any
discretionary authority or discretionary responsibility in the administration’ of the plan.”
Martinez v. Schlumberger, Ltd., 338 F.3d 407, 414 (5th Cir. 2003) (quoting Varity Corp. v.
Howe, 516 U.S. 489 (1996)). With respect to the act of providing an open enrollment period,
Plaintiff has put forth no evidence indicating that Defendants possessed any discretionary
authority to alter or amend the elections made by its employees within the range of options
provided to them by their plan. Instead, to the extent that Defendants provide the technological
platform for employees to transmit their benefit elections to the providers, they are acting solely
in a ministerial capacity. Consequently, Defendants were not acting in a fiduciary capacity when
they provided employees with open enrollment seasons and were not subject to ERISA fiduciary
duties with respect to this particular aspect of plan administration.
Notably, even if the Court assumes that a fiduciary duty existed with respect to open
enrollment, Defendants did not breach any such duty by failing to oversee Dr. Slater’s elections.
The ERISA fiduciary duty of loyalty requires that a plan administrator act “solely in the interest
of the participants.” 29 U.S.C. § 1104(a)(1)(A).
It does not require the plan administrator to
ensure that a plan participant acts in his or her own best interest.
Such an expansive
understanding of the duty of loyalty would place employers in the unreasonable position of
having to oversee and second-guess the benefit elections made by their employees. Moreover,
Defendants provided employees with clear instructions on how to navigate the open enrollment
software, and provided benefits staff to answer any substantive questions. No case law suggests
that the duty of loyalty requires the employer to oversee specific elections to ensure that they are
actually in the best interest of the employee.
2. Failure to follow Dr. Slater’s work restrictions
The Amended Complaint could also be construed as alleging that Defendants breached a
fiduciary duty by failing to abide by the alleged representation that Dr. Slater would be “closely
supervised” when he returned to work. Am. Compl. ¶ 6.9. Dr. Slater took medical leave during
the Summer and Fall of 2008. When he returned to work, his physician indicated that he could
do so with “minimal accommodation,” but suggested that he not be assigned to new projects.
Doc. No. 38, Ex. R. Dr. Burch, Dr. Slater’s supervisor, approved these restrictions. Doc. No.
38, Ex. T.
Nothing in the physician’s restrictions indicated that SWR needed to “closely
supervise,” Dr. Slater as Plaintiff alleges.
More importantly, even assuming that SWR made such a representation, it did so solely
in its capacity as an employer and not as an ERISA fiduciary. The Supreme Court is clear that
employers who offer benefit plans are not subject to ERISA fiduciary duties with respect to the
entire employer-employee relationship. Varity, 516 U.S. at 498. When SWR decided to allow
Dr. Slater to return to work it was acting as his employer. Accordingly, Plaintiff cannot rely on
this theory of liability to obtain relief under ERISA.
3. Changing Providers from Sun Life to Hartford
Finally, Mrs. Slater alleges that Defendants breached a fiduciary duty when they changed
insurance providers from Sun Life to Hartford during the pendency of the Slaters’ appeal to Sun
Life. When Defendants made this decision to switch insurance carriers, they were not acting as
fiduciaries. The Supreme Court has held that in ERISA cases, “an employer may decide to
amend an employee benefit plan without being subject to fiduciary review.” Lockheed Corp. v.
Spink, 517 U.S. 882, 890 (1996); McGath v. Auto-Body N. Shore, 7 F.3d 665, 670 (7th Cir. 1993)
(“[E]mployer does not act as fiduciary when it amends or otherwise sets the term of a plan.”).
Here, the act of changing insurance carriers constituted an “amendment” to the terms of the
benefits plan available to SWR employees. Thus, case law indicates that when Defendants made
the decision to switch to Hartford, they were not acting as fiduciaries.
Even assuming that a duty existed in this context, there is no merit in the argument that
Defendants breached such a duty by changing insurance carriers. As noted above, the duty of
loyalty requires a plan administrator to act for the benefit of plan participants. Kujanek, 658 F.3d
at 487 (discussing ERISA duty of loyalty).
benefited from the switch.
There was no breach here because Plaintiff
Hartford, unlike Sun Life, allowed Dr. Slater to raise his life
insurance benefit from $100,000 to $200,000. Doc. No. 38, Ex. DD. This increase would not
have occurred had Defendants remained with Sun Life. Accordingly, the switch in carriers
benefited the Slaters.
Plaintiff alleges in a conclusory fashion that the change in insurance carriers was made
“in order to prevent the appeals process from correcting the error.” Am. Compl. ¶ 6.17. Plaintiff
implies that when Defendants switched to Hartford they lost any leverage they may have had
with Sun Life to help with the appeal. This argument requires the Court to assume that: (1)
Defendants wanted to interfere with the Slaters’ appeal; and (2) that this animus motivated
Defendants to switch insurance providers. Neither is a reasonable inference to draw from
Defendants’ act of switching providers. First, there is no evidence that Defendants wanted to
negatively influence Plaintiff’s appeal with Sun Life. Such an inference is unreasonable given
the fact that the Slaters had already completed one appeal before Defendants switched carriers.
Second, although the Court resolves all inferences in favor of Plaintiff as the non-movant,
it is not reasonable to assume that a large employer switched insurance carriers for the purpose of
harming Plaintiff’s interests. To the contrary, the only documentary evidence on this point
suggests that Defendants switched to Hartford in order to offer employees lower premiums. Doc.
No. 39, Ex. 20.
Defendants did not breach a fiduciary duty owed to Plaintiff by switching life
insurance carriers from Sun Life to Hartford.
In light of the foregoing analysis, Defendants’ motion for summary judgment is
GRANTED. Doc. No. 38. The Clerk is directed to CLOSE this case and issue a judgment that
Plaintiff takes nothing on her claims, which are hereby DISMISSED ON THE MERITS.
Defendants are awarded costs of court and shall file a Bill of Costs in accordance with the local
SIGNED this 23rd day of December, 2013.
UNITED STATES DISTRICT JUDGE
In response to Defendants’ motion for summary judgment, Plaintiff advances a new argument that a breach of
fiduciary duties occurred when the Slaters interacted with SWR benefits staff in 2009 and 2010. Doc. No. 39. “A
claim which is not raised in the complaint but, rather, is raised only in response to a motion for summary judgment
is not properly before the court.” Cutrera v. Bd. of Sup'rs of Louisiana State Univ., 429 F.3d 108, 113 (5th Cir.
2005); Fisher v. Metropolitan Life Ins. Co., 895 F.2d 1073, 1078 (5th Cir.1990).
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