Summary
In Schaeffer v. Albert Einstein Health Care Network, 2004 WL 1012574 (E.D. Pa. 2004), the court found that appropriate redress of a fiduciary breach would enable plaintiff to obtain an equivalent benefit that he would have received but for the alleged breach of fiduciary duty.
Summary of this case from Leuthner v. Blue Cross of Northeastern PennsylvaniaOpinion
Civil Action No. 02-8671.
May 3, 2004
MEMORANDUM AND ORDER
Presently before the Court are Defendant Albert Einstein Healthcare Network's Motion for Summary Judgment (Docket No. 21), Plaintiff William J. Schaeffer's response (Docket No. 25), and Defendant's reply thereto (Docket No. 29).
I. BACKGROUND
To the extent the facts are in dispute, they are presented in the light most favorable to the plaintiff.
This suit concerns the consequences of Defendant's alleged misrepresentation on Plaintiff's long-term disability benefits.
Plaintiff William J. Schaeffer ("Schaeffer") was diagnosed with relapsing remitting multiple sclerosis in 1997. On October 19, 1998, Defendant Albert Einstein Healthcare Network ("Einstein") hired Schaeffer as a hospital administrator. As a benefit to its employees, Einstein offered long-term disability benefits under the Albert Einstein Healthcare Network Long Term Disability Plan ("the Plan"), which was a group disability insurance policy issued by UNUM Life Insurance Company of America ("UNUM").
In October or November of 1999, Schaeffer began to experience symptoms related to his illness. By mutual agreement with his supervisor Audrey Jadczak, Schaeffer worked from home two days a week on Tuesdays and Thursdays and was in the office on Mondays, Wednesdays, and Fridays. According to Schaeffer, on Mondays, Wednesdays, and Fridays, he worked at Einstein from approximately 8:30 am to 2:30 pm with an additional hour or two of reading at home. On Tuesdays and Thursdays, Schaeffer worked an average of ten or eleven hours, with two half-hour breaks. Under this arrangement, Schaeffer worked between thirty-seven hours to fortyfour hours per week.
Schaeffer realized that he would not be able to continue his job indefinitely, even with his accommodation. As a result, he sought advice from Jadczak, Lynne Korblatt, the vice president of human resources, and David Levin, the compensation and benefits specialist, about his departure and disability benefits. Levin provided him with a booklet describing the Plan and also suggested that Schaeffer submit an application for disability benefits before he was physically unable to work. Schaeffer submitted his application on December 8, 1999. At the time, Schaeffer had not yet selected a last day of employment but expected to continue working as long as he could.
Schaeffer consulted with Levin, Jadczak, and Korblatt in selecting his last day because he wanted to ensure that he was eligible for disability benefits under the Plan. He wrote Levin a note stating, "I don't know what to put on attending M.D. statement about `date first unable to work.'" William Schaeffer Dep. at 80 (Docket No. 21, Ex. 1). In late December 1999 or early January 2000, Schaeffer also met with Jadczak and Kornblatt to discuss his last day of employment. According to Schaeffer, both Jadczak and Kornblatt told him that as long as he terminated his employment in January of 2000, he would still be entitled to disability benefits. See Schaeffer Dep. at 73, 77. Relying on these assurances, Schaeffer ultimately selected January 28, 2000 as his last work day because it was the last day of a pay period. Thereater, Schaeffer went to the office three or four times during the first half of February to help his successor during the transition.
Schaeffer received short-term disability benefits during the second half of the year 2000. On September 26, 2000, UNUM denied Schaeffer's claim for long term disability benefits based on a preexisting condition exclusion in the Plan. UNUM concluded that Schaeffer needed to work until February 1, 2000 to be eligible for the benefits, three days after Schaeffer's final day at Einstein. Schaeffer appealed the decision on November 28, 2000, and UNUM denied the appeal on January 31, 2001.
On November 27, 2002, Schaeffer filed suit against both UNUM and Einstein. In Count I, Schaeffer asserts a claim for improper denial of benefits against UNUM and the Plan under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001-1461. Count II sets forth ERISA breach of fiduciary duty claim against Einstein. On July 16, 2003, this Court entered summary judgment in favor of UNUM and the Plan as to Count I and denied Einstein's motion to dismiss as to Count II (Docket No. 15). Einstein now moves for summary judgment as to Count II.
II. LEGAL STANDARD
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The party moving for summary judgment has the initial burden of showing the basis for its motion. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant adequately supports its motion pursuant to Rule 56(c), the burden shifts to the nonmoving party to go beyond the mere pleadings and present evidence through affidavits, depositions, or admissions on file showing a genuine issue of material fact for trial. See id. at 324. The substantive law determines which facts are material. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If the evidence is such that a reasonable jury could return a verdict for the nonmoving party, then there is a genuine issue of material fact. See id.
When deciding a motion for summary judgment, all reasonable inferences are drawn in the light most favorable to the non-moving party. See Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992), cert. denied, 507 U.S. 912 (1993). Moreover, a court may not consider the credibility or weight of the evidence in deciding a motion for summary judgment, even if the quantity of the moving party's evidence far outweighs that of its opponent. See id. Nonetheless, a party opposing summary judgment must do more than just rest upon mere allegations, general denials, or vague statements. See Trap Rock Indus., Inc. v. Local 825, 982 F.2d 884, 890 (3d Cir. 1992).
III. DISCUSSION
A. Breach of Fiduciary Duty
In order to state a claim for misrepresentation by an ERISA fiduciary, Schaeffer must allege that (1) Einstein was acting as a fiduciary, (2) that Einstein made a misrepresentation, (3) that the misrepresentation was material, and (4) that Schaeffer relied on the misrepresentation to his detriment. See Burstein v. Ret. Account Plan for Employees of Allegheny Health Educ. and Research Found., 334 F.3d 365, 384 (3d Cir. 2003); Horvath v. Keystone Health Plan East, Inc., 333 F.3d 450, 459 (3d Cir. 2003); Daniels v. Thomas Betts Corp., 263 F.3d 66, 73 (3d Cir. 2001). For the purposes of this motion, Einstein challenges only the fourth element of the claim.
Einstein argues that Schaeffer did not rely detrimentally on its misrepresentation. First, Einstein contends that Schaeffer's physical condition rendered him unable to work beyond January 28, 2000. In response, Schaeffer argues that he was more than willing to work into February and could have worked at least an extra three or four days to qualify for the long term disability benefits. Schaeffer also notes that he completed all of his work through his final day in January and worked at Einstein a few times in February. Because there is a genuine dispute of a material fact as to Schaeffer's ability to work after January 28, 2000, the Court is precluded from granting summary judgment to Einstein.
Alternatively, Einstein contends that Schaeffer was not eligible for disability benefits because he did not satisfy the Plan's "active employment" requirement. Under the Plan, "active employment" means:
[Y]ou are working for your Employer for earnings that are paid regularly and that you are performing the material and substantial duties of your regular occupation. You must be working at least the minimum number of hours as described under Eligible Group(s) in each plan.
Your work site must be:
your Employer's usual place of business; an alternative work site at the direction of your Employer, including your home; or a location to which your job requires you to travel.See Albert Einstein Healthcare Network, Long Term Disability Income Plan, at 9 (Docket No. 21, Ex. 4). Further, the Plan requires a minimum of thirty-two hours per week to be eligible for coverage. See id. at 14. Einstein contends that the hours Schaeffer worked at home on Tuesdays and Thursdays do not count toward the required thirty-two hours because it was not at Einstein's "usual place of business" nor "at the direction" of Einstein. Einstein interprets "at the direction of" to mean an "order." Schaeffer responds that the alternative work arrangement was reached by mutual agreement with his supervisor and that, as a result, he worked between thirty-seven hours to forty-four hours per week.
The determination of whether an ERISA plan term is ambiguous is a question of law. See Allegheny Int'l, Inc. v. Allegheny Ludlum Steel Corp., 40 F.3d 1416, 1424 (3d Cir. 1994). A term is "ambiguous if it is subject to reasonable alternative interpretations." Bill Gray Enter., Inc. Employee Health and Welfare Plan v. Gourley, 248 F.3d 206, 218 (3d Cir. 2001). To determine whether a term is ambiguous, the court looks at the language of the document, the meanings suggested by counsel, and the extrinsic evidence offered in support of each interpretation.See Teamsters Indus. Employees Welfare Fund v. Rolls-Royce Motor Cars, Inc., 989 F.2d 132, 135 (3d Cir. 1993). If the court finds as a threshold matter that a term is ambiguous, then "the interpretation of that term is a question of fact for the trier of fact to resolve in light of the extrinsic evidence offered by the parties in support of their respective interpretations."Einhorn v. Fleming Foods of Pa., Inc., 258 F.3d 192, 195 (3d Cir. 2001) (quoting Sanford Inv. Co. v. Ahlstrom Machinery, 198 F.3d 415, 421 (3d Cir. 1999)).
Here, the parties dispute the meaning of "at the direction of." In support of its narrow interpretation, Einstein points to Schaeffer's deposition testimony in which Schaeffer stated that "no one directed me" to work from home. See Def.'s Mot. for Summ. J., at 25-26 n. 6. However, the fact that the alternative work schedule was approved by Schaeffer's supervisor argues for the inclusion of the hours worked at home. Moreover, on Tuesdays and Thursdays, Schaeffer focused on his duties that did not require face-to-face contact, such as drafting the operating budget. The Court thus concludes that the term "at the direction of" is sufficiently ambiguous to require a trier of fact's attention. Because the parties dispute whether Schaeffer met the "active employment" requirement of thirty-two hours per week, the Court also denies Einstein's summary judgment motion on this ground.
The complete testimony is as follows:
QUESTION: Mr. Schaeffer, did anyone at Einstein direct you to work from home?
ANSWER: No, no one directed me. I talked about it with my boss, Audrey Jadczak. At her suggestion I tried the schedule that's articulated here for, I guess, close to three months.
Schaeffer Dep. at 138-39 (Docket No. 21).
B. Whether the Claim is Barred by Knudson
Einstein also asserts that the relief Schaeffer seeks is not available under § 502(a)(3) of ERISA, codified at 29 U.S.C. § 1132(a)(3). Section 502(a)(3) provides in pertinent part:
A civil action may be brought . . . by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan. . . .29 U.S.C. § 1132(a)(3) (emphasis added). The statutory language, on its terms, provides only for equitable remedies.
In Mertens v. Hewitt Assoc., 508 U.S. 248, 255 (1993), the United States Supreme Court stated that the phrase "equitable relief" under § 502(a)(3) refers to "remed[ies] traditionally viewed as `equitable,' such as injunction or restitution." More recently, in Great-West Life and Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002), the Court held that only equitable relief was available under the catch-all provision of § 502(a)(3). InKnudson, Great-West (as an assignee of the rights of the Knudson's medical plan) sought reimbursement from the Knudsons for the money recovered by settlement on their personal injury claims. The terms of the plan required the Knudsons to reimburse Great West their settlement proceeds up to the amount of medical benefits paid by the plan. See id. at 207. In a 5-4 decision rejecting Great-West's claim, the Court held that an injunction ordering the payment of money owed under the terms of the plan was not equitable relief, observing that "[Great-West] seek[s], in essence, to impose personal liability on [the Knudsons] for acontractual obligation to pay money — relief that was not typically available in equity." Id. at 210-11 (emphasis added). More significant for the purposes of the present dispute, the Supreme Court that an action for "restitution in equity" may be sustained where "money or property identified as belonging in good conscience to the plaintiff could clearly be traced to particular funds or property in the defendant's possession." Id. at 213.
Here, Schaeffer seeks redress for Einstein's alleged breach of fiduciary duty by providing him with misinformation that caused him to lose his entitlement to long-term disability benefits. Specifically, Schaeffer seeks an order requiring Einstein to contribute to the Plan, or to a comparable plan, the funds in its possession that Einstein would have continued to pay into the Plan had Einstein provided Schaeffer with the proper information. Such redress would enable Schaeffer to obtain a benefit equivalent to what he would have received but for Einstein's alleged breach of fiduciary duty. In essence, Schaeffer asks that such funds be used by Einstein in a way that would cure Einstein's alleged breach. Under these circumstances, the Court concludes that the remedy sought lies in equity and relates to "money or property . . . belonging in good conscience to the plaintiff [that] could clearly be traced to particular funds or property in defendant's possession." Id. The Court's conclusion is firmly supported by one of the underlying purposes of ERISA, that is, to "promote the interests of employees and their beneficiaries in employee benefit plans." Shaw v. Delta Airlines, Inc., 463 U.S. 85, 90 (1983);see also 29 U.S.C. § 1001(a). Accordingly, Schaeffer's claim seeks relief available under § 502(a)(3) of ERISA.
CONCLUSION
For the reasons stated, Defendant's motion for summary judgment is denied.
An appropriate Order follows.