Opinion
CIVIL CASE NO. 1:02CV243.
June 21, 2004
ORDER
THIS MATTER is before the Court on the motion for summary judgment of Defendant Mark IV Industries, Inc. (Mark IV), filed January 30, 2004. For the reasons stated herein, the motion is denied.
SUMMARY JUDGMENT STANDARD OF REVIEW
Under the Federal Rules of Civil Procedure, summary judgment shall be awarded "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, . . . show 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." As the Supreme Court has observed, "this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact."Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 519 (4th Cir. 2003). A genuine issue exists if a reasonable jury considering the evidence could return a verdict for the nonmoving party. Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir. 1994), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). "Regardless of whether he may ultimately be responsible for proof and persuasion, the party seeking summary judgment bears an initial burden of demonstrating the absence of a genuine issue of material fact." Bouchat, 346 F.3d at 522, citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553 (1986). If this showing is made, the burden then shifts to the non-moving party who must convince the Court that a triable issue does exist. Id.
A party opposing a properly supported motion for summary judgment "may not rest upon the mere allegations or denial of [his] pleadings," but rather must "set forth specific facts showing that there is a genuine issue for trial." Furthermore, neither "[u]nsupported speculation," nor evidence that is "merely colorable" or "not significantly probative," will suffice to defeat a motion for summary judgment; rather, if the adverse party fails to bring forth facts showing that "reasonable minds could differ" on a material point, then, regardless of "[a]ny proof or evidentiary requirements imposed by the substantive law," "summary judgment, if appropriate, shall be entered."
Id.
Moreover, in considering the facts for the purposes of this motion, the Court will view the pleadings and material presented in the light most favorable to the nonmoving party. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).
FINDINGS OF FACT
The parties do not dispute that Mark IV is the "Plan Administrator" of the medical benefits plan provided to the retirees of Dayco who retired under the 1995 collective bargaining agreement. The parties also do not dispute that under the terms of that agreement, medical insurance would be provided by a health maintenance organization (HMO). Mark IV selected as the HMO provider Physicians Health Plan (PHP) which later became United Health Care (UHC). Mark IV has renewed the contract with UHC on a yearly basis since 1995. Mark IV does not deny that it exercises discretionary authority over the selection of the HMO provider. The parties do, however, dispute whether Mark IV conducted sufficient investigation as to the continued provision of that insurance through UHC.The Plaintiffs have asserted a claim that as to those retirees, Mark IV functioned as an ERISA fiduciary when implementing the agreement and breached its fiduciary duties by failing to conduct diligent negotiations with UHC or other providers to obtain medical coverage at a lower cost to the retirees. Mark IV argues that the negotiation of insurance contracts is not a fiduciary function and, even if it is, it did not breach that function.
Employee Retirement Income Security Act, 29 U.S.C. § 1001, et. seq.
DISCUSSION
The first issue is whether Mark IV functioned in a fiduciary capacity in the selection and subsequent renewal of insurance contracts with UHC. Because the parties do not dispute the basic facts in this regard, whether Mark IV functioned in a fiduciary capacity is a question of law. Srein v. Frankford Trust Co., 323 F.3d 214, 220 (3rd Cir. 2003); Hamilton v. Carell, 243 F.3d 992, 997 (6th Cir. 2001).
ERISA defines fiduciary status by function. A person, or entity, functions as an ERISA fiduciary to the extent that
he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.29 U.S.C. § 1002(21)(A).
"Fiduciary status attaches to a person managing an ERISA plan . . . if that person exercises discretion in the management of the plan, or if the person exercises any authority or control over the management or disposition of the plan's assets." Srein, 323 F.3d at 220-21. "`[A] court must ask whether a person is a fiduciary with respect to the particular activity in question.'" Id. Here, the activity is the continued implementation of the medical benefits provided for under the terms of the collective bargaining agreement; specifically, the negotiation of insurance contracts. The Court finds that this is not a "settlor-type function such as establishing [the] plan and designing its benefits." Coyne Delany Co. v. Selman, 98 F.3d 1457, 1465 (4th Cir. 1996). "`[O]nce [the Union] accepted the Plan, [Mark IV] became a fiduciary with respect to the Plan and all subsequent dealing with [the Union] regarding the Plan.'" Srein v. Soft Drink Workers Union, Local 812, 93 F.3d 1088 (2nd Cir. 1996) (Insurance company providing benefits to the union became a fiduciary when it collected premiums and retained control of funds that belonged to the union.). Clearly, Mark IV retains the discretion to bargain and negotiate with UHC or to terminate its relationship altogether with that HMO. Pilkington PLC v. Perelman, 72 F.3d 1396, 1398 (9th Cir. 1995) (Recognizing that plan administrator who selected a bankrupt insurer for annuity was engaging in a fiduciary function.); Larson v. Northrop Corp., 21 F.3d 1164, 1169 (D.C. Cir. 1994) (The process of choosing an annuity contract to insure pension fund's termination is a fiduciary function.); Colarusso v. Transcapital Fiscal Systems, Inc., 227 F.Supp.2d 243, 256 (D.N.J. 2002) (Plan administrator who determined which insurance policies to purchase was a fiduciary.). This is "`discretionary authority' over the management or administration of a plan within the meaning of § 1002(21)(A)." Coyne, supra. "Moreover, this authority carries with it a duty `to monitor appropriately' those subject to removal." Id.; Ed Miniat, Inc. v. Globe Life Insurance Group, Inc., 805 F.2d 732, 735 (7th Cir. 1986) ("[T]he corporate plaintiffs, by virtue of their power to amend the plan, had the power to select a new insurance company and a new administrator to administer the Plan. Thus, at least for some purposes, they may be fiduciaries[.]"). Here, the HMO is subject to removal and Mark IV had a duty to monitor the HMO, a duty which Mark IV does not deny.
Having concluded that Mark IV engaged in a fiduciary function, the Court will deny summary judgment as to the issue of breach of that function. "Viewing the evidence in the light most favorable to [the Plaintiffs], a reasonable fact-finder could conclude that [Mark IV] failed to structure, let alone conduct, a thorough, impartial investigation of which provider or providers best served the interests of the participants and beneficiaries." Bussian v. RJR Nabisco, Inc., 223 F.3d 286, 302 (5th Cir. 2000); Gregg v. Transportation Workers of America Intern., 343 F.3d 833 (6th Cir. 2003) (reversing summary judgment in favor of the defendant).