UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

ALAN R. TROMINSKI, THE REGENTS

OF THE UNIVERSITY OF MICHIGAN,

a Michigan constitutional corporation, on 

behalf of its health system, and HURON

VALEEY-SINAI HOSPITAL, a Michigan

non-profit corporation,

Plaintiffs,

CASE NO. 02-73176

v. HON. LAWRENCE P. ZATKOFF 

BUSINESS INTERLINK SERVICES, INC.,

a Michigan corporation, VINCENT I. MANZO,

and BUSINESS INTERLINK SERVICES, INC.

EMPLOYEE HEALTH BENEFIT PLAN,

Jointly and Severally,

Defendants.

__________________________________/

OPINION AND ORDER

AT A SESSION of said Court, held in the Theodore Levin United States Courthouse, 

in the City of Port Huron, State of Michigan, on June 24, 2005

PRESENT: THE HONORABLE LAWRENCE P. ZATKOFF

UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This matter is before the Court on cross motions for judgment on the administrative record.

Defendants responded to Plaintiffs’ motion, but Plaintiffs did not respond to Defendants’ motion.

The Court finds that the parties have adequately set forth the relevant law and facts, and that oral

argument would not aid in the disposition of the instant motions. See E.D. MICH. L.R. 7.1(e)(2).

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Accordingly, the Court ORDERS that the motions be decided on the briefs submitted. For the

reasons set forth below, Plaintiffs’ Motion to Overturn Administrative Decision will be GRANTED

IN PART. Defendants’ Motion for Judgment on the Administrative Record will also be GRANTED

IN PART.

II. BACKGROUND

This is an action for medical benefits under an employee fringe benefits plan subject to the

Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132(a)(1)(B). Plaintiffs in this

matter are Alan Trominski, (hereinafter “Plaintiff” or “Plaintiff Trominski”), the Regents of the

University of Michigan (hereinafter “U of M”), and Huron Valley-Sinai Hospital (hereinafter

“HVSH”). Defendants are Business Interlink Services, Inc. (hereinafter “BIS”), Vincent Manzo,

and the Business Interlink Services, Inc., Employee Health Benefit Plan (hereinafter “Plan”). The

facts of this case were previously set forth in this Court’s December 5, 2003, Opinion and Order in

which the Court denied Defendant BIS’s motion for judgment on the administrative record without

prejudice, granted in part Plaintiff’s motion for judgment on the administrative record, and remanded

this matter to the plan administrator. Nevertheless, the Court will briefly set forth the relevant facts

in this matter. 

A. Facts

Plaintiff Trominski is a former employee of Defendant BIS. Defendant BIS is an employee

leasing company that specializes in providing truck drivers to the trucking industry. It is undisputed

that Defendant BIS’s trucking customers interview and select potential employees, who are then

approved and hired by Defendant BIS. A trucking company called T&L Transport, one of

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Defendant BIS’s customers, interviewed Plaintiff Trominski and recommended him to Defendant

BIS for approval. Defendant BIS approved Plaintiff Trominski’s application and he became an

employee of Defendant BIS in January 2000. For the entire period of Plaintiff’s employment,

Defendant BIS leased Plaintiff Trominski to T&L Transport to work as a truck driver. Plaintiff quit

his employment in December 2000. 

As an employee of Defendant BIS, Plaintiff Trominski enrolled in Defendant BIS’s health

benefits plan in January 2000. The Plan is funded by Defendant BIS and plan participants. (Ar. 19.)

Defendant BIS is the Plan Administrator, and a consulting company called Mid-America Associates,

Inc., (hereinafter “Mid-America”) is the Plan’s Third Party Administrator. (Ar.19, 28, 66.) 

Defendant Manzo owns and operates Defendant BIS, and he denied Plaintiff Trominski’s medical

claims on behalf of Defendant BIS. 

In June 2000, approximately five months after enrolling in the Plan, Plaintiff Trominski

began seeking treatment for severe chest pain that he experienced in March or April of 2000. It is

undisputed that Plaintiff Trominski was born with a congenital heart defect requiring two heart

surgeries before he reached the age of 3. Medical records also indicate that in 1987, at

approximately age 17, Plaintiff experienced “residual pulmonary insufficiency secondary to his

corrective surgery.” (Ar. 302.) 

In the fall of 2000, Plaintiff Trominski’s doctor recommended treatment for the chest pain,

noting that Plaintiff had “congenital heart disease and evidence of severe tricuspid regurgitation and

right ventricle dysfunction . . . .” (Ar. 303.) The treatment included a heart catheterization,

performed in December 2000, and a heart valve replacement, performed in January 2001. Both

procedures were done by Plaintiff U of M and resulted in charges allegedly in excess of $60,000.00.

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Plaintiff also underwent a bone scan on June 13, 2001, at Plaintiff HVSH. (Ar. 876-77.) As a

condition of receiving treatment, Plaintiff assigned his rights to any employee benefits under ERISA

to Plaintiffs U of M and HVSH. 

In December 2000, between the heart catheterization and the heart valve replacement,

Plaintiff Trominski voluntarily quit his employment to allegedly pursue a real estate career in

Florida. He also elected to continue his medical coverage under the Consolidated Omnibus Budget

Reconciliation Act (hereinafter “COBRA”) amendments to ERISA. See 29 U.S.C. § 1162. Plaintiff

claims that after he quit, but before the heart valve replacement, he specifically asked Defendant

Manzo if the valve replacement would be covered:

I called Manzo and I said this needs to be done, would it be covered

through the insurance that I’m paying right now and he told me

specifically it would be covered. I had been there for more than a

year and I paid my COBRA already, and I elected to take the

COBRA . . . and he said that no matter what the cost was it wouldn’t

be pre-existing and he would pay for it despite whatever the final cost

would be. And based on him telling . . . me that, that’s when I called

Dr. Lloyd back and that’s when I scheduled for the surgery. I did not

schedule the surgery until after Manzo specifically told me, go ahead,

take care of yourself and we’ll pay . . . the bill no matter what it costs.

Trominski Dep. at 113. Plaintiff alleges that his doctor told him that the surgery should be done

within a year and that it was not an emergency situation. Because it was not an emergency, Plaintiff

asserts that he would not have had the surgery had he known that it was not going to be covered.

See id. at 112. He further alleges that after the surgery he began experiencing arrhythmia, which

was not present before the surgery. Although medication stops the arrhythmia, Plaintiff alleges that

he cannot afford the medication without health insurance. See id. at 113. Defendant Manzo testified

that he did not remember speaking with Plaintiff about whether the surgery would be covered. See

V. Manzo Dep. at 29. 

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Defendants have not covered any of the medical expenses incurred by Plaintiff Trominski.

Defendant BIS denied Plaintiff Trominski’s January 2001, heart valve replacement claim on July

5, 2001, and, according to Plaintiff, Defendant BIS has not taken any action on the claim for the

December 2000, heart catheterization or the June 13, 2001 bone scan. Defendant Manzo testified

in his deposition that after he received the bill for Plaintiff’s heart valve replacement, he began to

“smell something here . . . [t]his guy, he leaves, he goes on COBRA and two weeks later he’s in the

hospital. And I looked at his application; no preexisting condition, nothing about a heart problem.

So I put my people to work to review it.” V. Manzo Dep. at 30. 

One of the individuals Defendant Manzo hired to investigate Plaintiff’s medical claims is

an individual named Charles Garavaglia. Before purchasing Defendant BIS, Defendant Manzo

worked for Mr. Garavaglia, who was the previous owner of Defendant BIS. See V. Manzo Dep. at

11. Defendants maintain that Mr. Garavaglia’s investigation revealed primarily two things: (1)

Plaintiff had omitted previous employers from his employment application and (2) Plaintiff

misrepresented the condition of his health on his application for health coverage under the Plan. 

With respect to the employment history, Defendant BIS’s employment application required

Plaintiff to “[g]ive a complete and consecutive history of your employment for the past ten years,

starting with your present or most recent employer. Account for every month.” (Ar. 148.) The first

employer listed by Plaintiff was “Georgia International X-press.” Id. Plaintiff indicated that he

worked for Georgia International Express from October 1998 until January 1999. Thus, a cursory

reading of Plaintiff’s application reveals that Plaintiff did not account for approximately one year

of employment history that immediately preceded his application for employment with Defendant

BIS in January of 2000. Defendant Manzo stated in his deposition that although he reviews each

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1

 Great Lakes Petroleum is also referred to as Superior Management Group, Inc., in the

administrative record. (Ar. 846); Trominski Dep. at 80. 

6

application “carefully,” he “must have missed” Plaintiff’s omission. V. Manzo Dep. at 41. Another

question asked Plaintiff to state whether he had ever been discharged from a previous employer.

(Ar. 149.) Plaintiff answered “no.” (Ar. 149.) 

Defendants maintain that Plaintiff intentionally omitted a previous employer called Great

Lakes Petroleum Corporation (hereinafter “Great Lakes”).1

 It is undisputed that Plaintiff worked

for Great Lakes for approximately three weeks between November 13, 1999, and December, 1999.

Plaintiff admitted in his deposition that he did not list Great Lakes on his application. See Trominski

Dep. at 20. 

Defendants claim that Plaintiff omitted any reference to Great Lakes on the application

because Great Lakes fired him for staying home and getting drunk instead of coming into work.

When Plaintiff filed for unemployment benefits after his employment with Great Lakes ended, Great

Lakes sent the following statement to the Michigan Unemployment Agency, describing the

termination as follows, in pertinent part:

On December 8th, Alan came in early, before being called; and found

that the truck was not in, so he left. When the dispatcher called him,

to let him know the truck was in the yard, he got no answer. He tried

repeatedly to reach him, and finally had to reassign the loads, so our

customers would not run out of fuel. When he finally did hear from

Alan, he found he had been out drinking all day, and was still drunk.

Since it was a work day for Alan, and he spent it drinking, he was

fired. . . . We do not feel we should pay unemployment to Alan. If

he had been interested in keeping his job, and had shown better

judgment, we would not have had problems with him. 

(Ar. 846-47.) Although Plaintiff testified that he “assumed” that he was fired because he “didn’t

come back in,” id. at 30, he now believes that he “voluntarily quit,” or at least that it was

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“ambiguous as to how [he] left.” Id. at 82. Plaintiff described the termination of his employment

with Great Lakes as follows:

It was kind of complicated. I wasn’t given a schedule and I went in

there one day when I was scheduled - or I was told to come in. And

the supervisor there told me to come in early, I came in early and

when I showed up there, they didn’t have a truck for me to use. They

had problems for whatever reason and they told me to go home, and

I told them if I go home I’m not coming back out again that day

because I was supposed to work the day shift. 

So, I went home and they called me in the evening at about 5:00 or

6:00 p.m., and then they said they wanted me to come in in the

evening and work a 12-hour shift. That’s about - by the time I started

it would have been 7:00 p.m. and I’d have to work until 7:00 a.m. I

said, I would have been up for 24 hours having worked the last 12 of

them straight. . . . They said if I didn’t come back that I would be

fired. And I said I was already in there today when I was told to so

I’m not coming in again, and that’s where it was left and I never went

in again. 

Trominski Dep. at 29-30. Thus, Plaintiff argues that because he quit his employment with Great

Lakes, he was being truthful when he denied being fired from any previous employer on his

employment application. 

As for the application for health coverage, it required Plaintiff to indicate whether he had any

“indication, diagnosis, consultation, treatment, taken any medication, or received counseling for,”

among other things, a “heart or circulatory disorder,” “joint disorder,” or “birth defects,” within the

past five years. (Ar. 521.) Plaintiff answered “no.” (Ar. 521.) Defendant Manzo’s investigation,

however, revealed that Plaintiff told his doctor he had been having episodes of chest constriction and

shortness of breath in the “past few years.” (Ar. 302.) In his deposition, Plaintiff admitted to “one

or two” such episodes in the years preceding his employment with Defendant BIS. Trominski Dep.

at 61. Plaintiff also admitted telling his physician about his shortness of breath, but he maintained

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that he did not believe it had anything to do with his heart. He claimed that he thought at the time

that it was just a breathing problem, asthma, or possibly an allergic reaction. See Trominski Dep.

at 62, 117. According to Defendant Manzo’s investigator, however, Plaintiff admitted during a

phone conversation that he has “had heart problems all his life . . .” stemming from congenital heart

disease. (Ar. 128.) The investigation also revealed that on June 5, 2001, Plaintiff told his

rheumatologist that he “had joint pain for two years in his right greater than left hip and sacroiliac

area, and a lot of joint pain for at least 10 to 15 years with morning stiffness lasting all day long at

times.” (Ar. 906-907). This information was uncovered after Plaintiff Trominski quit, after he

elected continuation coverage under COBRA, and after he received both heart surgeries. 

In a July 5, 2001, letter, Defendant Manzo denied Plaintiff’s medical claims, stating as

follows:

We have completed our investigation of your health claim stated above. It is denied

for the following reasons:

1. Falsified application for Employment

2. Falsified application for Health Insurance in reference to Pre-Existing

Condition

3. Failure to cooperate in the investigation of your claim

4. Failure to answer written communication for additional information sent to

you by the third party administrator Mid-America

(Ar. 124.) The references to Plaintiff’s failure to cooperate and failure to answer written

communications were apparently based on Defendant Manzo’s belief that Plaintiff had not

responded to certain requests from Mid-America, the Plan’s Third-Party Administrator. In his

deposition, however, Defendant Manzo was shown a letter from Mid-America indicating that

Plaintiff did respond to Mid-America’s requests. After reading the letter, Defendant Manzo stated:

“Well, this letter says that he did reply. I’m sorry.” V. Manzo Dep. at 51. Nevertheless, when

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Plaintiff’s counsel pointed out that Mid-America apparently disagreed with Defendant Manzo’s

conclusion that Plaintiff had ignored Mid-America’s requests, Defendant Manzo stated that he

“disagree[d] with Mid-America.” V. Manzo Dep. at 52. Defendant Manzo could not, however,

produce any documentation to show that Plaintiff had not cooperated with either the investigation

or Mid-America. See V. Manzo Dep. at 52-53. 

After the initial denial of his claims, Plaintiff Trominski’s counsel attempted to persuade

Defendant BIS and Defendant Manzo to reconsider the denial. On October 9, 2001, Plaintiff

Trominski’s counsel sent Defendant Manzo a letter requesting that the claims be paid and warning

Defendant Manzo of the penalties for failing to comply with ERISA and its related regulations. See

Plaintiff’s Motion for Judgment on the Record and for Summary Judgment, at Ex. B. Defendant

Manzo replied on October 18, 2001, denying liability on behalf of Defendant BIS and “reaffirm[ing]

its denial” of Plaintiff Trominski’s claim. Apparently, however, additional review was undertaken

by Defendant BIS because on July 10, 2002, in a letter to Plaintiff Trominski’s counsel, Defendant

Manzo indicated that “[u]ntil we complete our review with all of the facts from former employers,

doctors, hospitals and insurance companies, we cannot say what the position will be.” (Ar. 212.)

The administrative record does not indicate whether this review was ever formally completed. 

B. Procedural History

Having failed to receive a favorable review of his claim, Plaintiff Trominski filed his

Complaint on August 8, 2002, alleging the following five counts:

Count I Claim for Benefits

Count II Violation of COBRA

Count III Violation of ERISA 503

Count IV ERISA 502(C)

Count V Breach of Fiduciary Duty 

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See Complaint. Plaintiff Trominski subsequently amended his Complaint to add an additional claim

for benefits, (Count VI), on behalf of his assignees, Plaintiff U of M and Plaintiff HVSH.

collectively. Plaintiff asserted that Defendant BIS arbitrarily and capriciously denied his claims for

medical benefits. In addition, because Plaintiff Trominski’s employment ended before the denial

of his claims, he alleged that Defendants violated COBRA and its amendments to ERISA. Finally,

Plaintiff alleged that Defendants violated ERISA claims procedures and that both Defendant BIS

and Defendant Manzo breached their fiduciary duties.

On December 5, 2003, the Court remanded this matter back to the Third Party Administrator,

Mid-America, for an appeal required by the terms of the Plan. When the parties first submitted

cross-motions for judgment on the administrative record in September 2003, neither indicated

whether Plaintiff Trominski’s claims were ever appealed beyond the initial denial. The Plan

provides that whenever a claim for benefits is denied, the covered person may appeal the decision

within 60 days to the Third Party Administrator for a “full and fair review.” (Ar. 64.) (“Upon

request for review, the person in charge of the local personnel office of the Company shall arrange

a full and fair review of the claim by the Third Party Administrator.”) (emphasis added). Under 29

U.S.C. § 1133(2), every employee benefit plan must “afford a reasonable opportunity to any

participant whose claim for benefits has been denied for a full and fair review by the appropriate

named fiduciary of the decision denying the claim.” In addition, under regulations in effect when

Plaintiff filed his claims, employee benefit plans were required to notify participants of

“[a]ppropriate information as to the steps to be taken if the participant or beneficiary wishes to

submit his or her claim for review.” See 29 C.F.R. 2560.503-1(f). Plaintiff argued that he was never

notified of his right to appeal. Since it did not appear that Plaintiff was informed of his right to an

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 The Court also granted Plaintiff’s claim that Defendant BIS failed to provide a summary

plan description for more than a year after Plaintiff requested it. See 29 U.S.C. 1132(c) (An

administrator who fails to “comply with a request for any information which such administrator

is required by this subchapter to furnish to a participant. . . within thirty days after such request

may in the court’s discretion be personally liable to such participant . . . in the amount of $100

per day from the date of such failure or refusal . . . .”). The Court imposed a fine of $10,325.00,

which is less than 25 percent of the maximum fine authorized by the statute. 

3

 Current ERISA regulations require an appeal “that does not afford deference to the

initial adverse benefit determination and that is conducted by an appropriate named fiduciary of

the plan who is neither the individual who made the adverse benefit determination that is the

11

appeal, nor did it appear that any “full and fair” review was completed by Third Party Administrator

as required by the Plan, the Court remanded this matter under VanderKlok v. Provident Life & Acc.

Ins. Co., 956 F.2d 610, 616-17 (6th Cir. 1992).2

 See Trominski v. Business Interlink Servs. Inc., No.

02-73176 (E.D. Mich. Dec. 5, 2003) (hereinafter “Trominski I”).

After remand, Defendants’ counsel submitted a document entitled “Final Decision With

Respect to Plaintiff Trominski’s Claims.” Attached to the document were two letters, one from MidAmerica and another from Defendant Manzo in his capacity as an officer of Defendant BIS. Both

letters were dated March 3, 2004. The letter from Mid-America explained only that Mid-America

is not a plan fiduciary and, therefore, “does not control or have responsibility concerning the final

disposition of any claim made to the Plan.” Mid-America also stated that “[t]he Plan renders and

is responsible for final determination of all claims made to the Plan.” Thus, although the Plan

requires Mid-America to conduct a “full and fair” review at the appeals stage of the claim process,

if Defendant BIS as the Plan Administrator disagrees with any of Mid-America’s findings, the

appeal appears to be pointless. 

The letter submitted by Defendant Manzo is addressed to Plaintiff Trominski and it sets forth

Defendant Manzo’s reasons for affirming his earlier decision to deny Plaintiff’s claim.3

 His letter

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subject of the appeal, nor the subordinate of such individual.” 29 C.F.R. § 2560.503-1(h)(3)(ii)

(emphasis added). Defendant Manzo was responsible for the initial denial, the “administrative

review” that took place during 2001 and 2002, (Ar. 184, 212-215, 218, 219, 220, 229, 232), and

the appeal that took place post-remand. Nevertheless, Defendant Manzo need not comply with

subsection (h)(3)(ii) because the effective date of that portion of the regulation was January 1,

2002, after Plaintiff filed his claims. See 66 Fed. Reg. 35886 (July 9, 2001). Thus, Defendant

Manzo was apparently free to review his own decision and rely on his own affidavit in support

of the appeal determination. 

12

states that “[w]e independently and thoroughly reviewed all the evidence presented during the

course of the claim, including depositions, motions, and briefs filed in the Federal Court litigation,

and determine that the previous decision to deny benefits was correct.” V. Manzo Letter, at 1.

Defendant Manzo also quotes his own affidavit in which he claims: “If I knew that Trominski failed

to disclose [his] last employment, that he was previously fired, that he failed to appear for work as

scheduled, or that he had recurrent symptoms from serious heart disease, I would have rejected his

employment application.” V. Manzo Letter, at 2. Defendant Manzo’s letter also repeats

Defendants’ earlier arguments before remand; specifically, (1) Plaintiff’s omission of Great Lakes

as a previous employer constituted gross misconduct justifying a retroactive denial of COBRA

benefits, and (2) Plaintiff’s misrepresentations on his health coverage application render the contract

for medical benefits voidable by Defendant BIS. 

On March 11, 2004, Mid-America filed a number of documents with the Court. According

to these documents, the March 3, 2004, Mid-America denial letter that Defendants filed on March

4, 2004, was not the actual final denial letter. Instead, according to Mid-America, the letter

submitted by Defendants was a “prior determination from December 9, 2003, before Mid-America

was aware of the court’s order and before the appeal review was performed . . . .” March 10, 2004,

Letter from Mid-America. Mid-America claims that the March 3, 2004, letter “was redacted and

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submitted as if it were the claim review.” Id. In other words, Mid-America either sent or was going

to send a letter to Plaintiff denying the medical claims on December 9, 2004, before it was aware

of the Court’s order requiring Mid-America to conduct a “full and fair” review of Defendant

Manzo’s initial denial, pursuant to the terms of the Plan. (Ar. 64.) This was the letter that was

submitted to the Court by Defendants as if it set forth Mid-America’s findings on remand. MidAmerica, however, sent a new denial letter to Defendants’ counsel on March 1, 2004, after learning

of the Court’s order. See Mid-America Fax Cover Sheet. This denial letter provides as follows, in

pertinent part:

Mid-America’s responsibility is to determine whether per the

language of the Business Interlink’s Plan Document, you were

entitled to health benefits during your period of eligibility with the

Plan.

Following an extensive pre-existing investigation and a five-year

application misrepresentation review, Mid-America was unable to

confirm that your heart condition was pre-existing. The five-year

misrepresentation review failed to provide proof that you were

treated for the heart condition within the five years preceding the date

you signed your health application. Mid-America does acknowledge

that you had a known heart condition and you received prior

treatment for such. However, the review did not confirm receiving

heart care or treatment within the five year review period.

Mid-America’s determination was to pay all heart related expenses.

Claims were processed and checks issued by Mid-America during

5/2001. In December 2001, the checks were returned by Business

Interlink Services advising that you misrepresented information on

your Employment Application. As such, it was the position of

Business Interlink that they would not have hired you, therefore, you

were not entitled to Plan benefits. Mid-America was advised to void

all checks and reissue no-payment explanations of benefits to all

providers. This was completed by Mid-America on 1/3/03. All

denials to providers indicate the reason for denial as “Denied Due to

Misrepresentation.” 

It is not the responsibility of Mid-America Associates to consider the

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employment aspects in this case, that is the responsibility of Business

Interlink Services. Although based upon our medical pre-existing

investigation we made the determination to issue payment, Business

Interlink as the Plan Fiduciary has full discretionary authority over

the Plan and is responsible for rendering the final determination of all

claims. . . . 

March 1, 2004, Letter From Mid-America. This denial letter was not submitted to the Court by

Defendants. Instead, Defendants submitted a re-dated version of Mid-America’s earlier December

9, 2004, denial letter that was drafted “before Mid-America was aware of the court’s order and

before the appeal review was performed . . . .” March 10, 2004, Letter from Mid-America.

None of the parties actively pursued this case after March 2004. On November 30, 2004,

the Court set January 12, 2005, as the deadline for filing cross-motions for judgment on the

administrative record in light of Defendant BIS’s denial of the claim appeal. Since Plaintiff has not

alleged any procedural deficiencies in the manner in which his claim was reviewed on remand, the

remaining claims in this matter are Claim for Benefits (Counts I and VI), Violation of COBRA

(Count II), and Breach of Fiduciary Duty, (Count V). 

 

III. LEGAL STANDARD

A. Summary Judgment Under Rule 56

Summary judgment is appropriate only if the answers to interrogatories, depositions,

admissions, and pleadings combined with the affidavits in support show that no genuine issue as to

any material fact remains and the moving party is entitled to a judgment as a matter of law. See FED.

R.CIV. P. 56(c). A genuine issue of material fact exists when there is “sufficient evidence favoring

the non-moving party for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 249 (1986) (citations omitted). In application of this summary judgment standard,

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the Court must view all materials supplied, including all pleadings, in the light most favorable to the

non-moving party. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587

(1986). “If the evidence is merely colorable or is not significantly probative, summary judgment

may be granted.” Anderson, 477 U.S. at 249-50 (citations omitted).

The moving party bears the initial responsibility of informing the Court of the basis for its

motion and identifying those portions of the record that establish the absence of a genuine issue of

material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has

met its burden, the nonmoving party must go beyond the pleadings and come forward with specific

facts to demonstrate that there is a genuine issue for trial. See FED. R. CIV. P. 56(e); Celotex, 477

U.S. at 324. The non-moving party must do more than show that there is some abstract doubt as to

the material facts. It must present significant probative evidence in support of its opposition to the

motion for summary judgment in order to defeat the motion for summary judgment. See Moore v.

Philip Morris Co., 8 F.3d 335, 339-40 (6th Cir. 1993).

B. ERISA Standard of Review

A separate legal standard applies to the extent that a plaintiff seeks to recover benefits under

an employee benefits plan. In the Sixth Circuit, “in an ERISA claim contesting a denial of benefits,

the district court is strictly limited to consideration of the information actually considered by the

administrator.” Killian v. Healthsource Provident Administrators, Inc., 152 F.3d 514, 522 (6th Cir.

1998). Accordingly, in Wilkins v. Baptist Healthcare System Inc., 150 F.3d 609, 619 (6th Cir. 1998),

the Sixth Circuit held that “the summary judgment procedures set forth in [FED. R. CIV. P.] 56 are

inapposite to ERISA actions and thus should not be utilized in their disposition.” Therefore, to the

extent that Plaintiff seeks to remedy the denial of benefits, the Court is limited to reviewing only the

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16

information contained in the administrative record. According to Defendant Manzo’s final denial

letter on remand, he considered “all the evidence presented during the course of the claim, including

depositions, motions, and briefs filed in the Federal Court litigation . . . .” V. Manzo Letter, at 1.

In evaluating an administrator’s denial of benefits under an ERISA governed plan, courts

must apply a de novo standard of review unless the plan gives the administrator or fiduciary

discretionary authority to determine eligibility for benefits or to construe the terms of the plan. See

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Williams v. Int’l Paper Co., 227

F.3d 706, 710 (6th Cir. 2000). The de novo standard of review applies to both the factual

determinations and legal conclusions of the plan administrator. See Wilkins 150 F.3d 613. 

In contrast to the de novo standard, federal courts review the administrator’s decision under

an “arbitrary and capricious” standard when the plan clearly confers discretion upon the

administrator to determine eligibility or construe the plan’s provisions. See Wells v. U.S. Steel &

Carnegie Pension Fund, Inc., 950 F.2d 1244, 1248 (6th Cir. 1991). The arbitrary and capricious

standard “is the least demanding form of judicial review of administrative action. When it is

possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that

outcome is not arbitrary or capricious.” Davis v. Kentucky Fin. Cos. Retirement Plan, 887 F.2d 689,

693 (6th Cir. 1989) (quoting Pokratz v. Jones Dairy Farm, 771 F.2d 206, 209 (7th Cir. 1985)). In

applying this standard, the Court must defer to the administrator; an administrator’s determination

will be overturned only upon a showing of internal inconsistency in the plan, bad faith, “or some

other ground for calling the [administrator’s] determination into question . . . .” See Davis, 887 F.2d

at 695. When an administrator is acting under a conflict of interest, however, the conflict must be

taken into account to determine the proper deference to afford the plan administrator. See Firestone,

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17

489 U.S. at 115 (noting that courts should be attentive to conflicts of interest); Davis, 887 F.2d at

693-94 (noting the potential for a conflict of interest when an employer acts as plan administrator).

In the present case, since the Plan provides that “it is the express intent of this Plan that the

Plan Administrator shall have discretionary authority to construe and interpret the terms and

provisions of the Plan [and] to make determinations regarding issues which relate to eligibility for

benefits . . . , ” (Ar. 66.), the Court will apply an “arbitrary and capricious” standard of review to

Defendant BIS’s decisions under the Plan. See Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555 (6th

Cir. 1998). Additionally, however, the Sixth Circuit has made it clear that when an employer also

acts as an administrator of a self-funded benefit plan, an actual conflict of interest exists which must

be considered in determining whether the employer/plan administrator’s decision was arbitrary and

capricious. See Killian v. Healthsource Provident Administrators, Inc., 152 F.3d 514, 521 (6th Cir.

1998) (holding that where an employer also acts as an administrator of a plan that it funds, “there

is an actual, readily apparent conflict . . ., not a mere potential for one.”); Stephens v. Westinghouse

Benefits Plan, No. 99-6144, 2001 WL 45249, * 4 (6th Cir. Jan. 12, 2001) (“[T]his court has

expressly rejected the notion that the conflict of interest inherent in a self-funded and -administered

plan alters the standard of review. Instead, that fact should be taken into account as a factor in

determining arbitrariness or capricious.”) (citing Peruzzi v. Summa Medical Plan, 137 F.3d 431, 435

(6th Cir. 1998)). With these considerations in mind, the Court will now turn to the parties’

arguments.

IV. ANALYSIS

A. Plaintiff’s Denial of Benefits Claim

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It is undisputed that Plaintiff Trominski quit his employment with Defendant BIS and elected

to continue his medical coverage under the COBRA amendments to ERISA. The COBRA

amendments to ERISA require an employer who sponsors a group health plan to give the plan’s

“qualified beneficiaries” the opportunity to elect “continuation coverage” under the plan when the

beneficiaries might otherwise lose coverage because of certain “qualifying events.” See 29 U.S.C.

§ 1161(a)-(b). “Qualifying events” include “termination (other than by reason of such employee’s

gross misconduct) . . . .” See 29 U.S.C. § 1163(2). “Termination” is not defined in the statute, but

it has been held to include voluntary resignation. See Sigurdson v. Southmark-National Heritage,

Inc., 1992 WL 331438, * 5 (D. Kan. 1992) (noting that the legislative history of COBRA refers to

termination as “the separation from service of the covered employee (whether voluntary or

involuntary)”); see also 26 C.F.R. § 54.4980B-4 (termination can be voluntary or involuntary). 

Defendants admit that Plaintiff Trominski resigned his employment in December 2000.

Defendants claim, however, that because Plaintiff Trominski could have been fired for gross

misconduct at the time of his resignation, the denial of his medical claims was not arbitrary or

capricious. In addition, Defendants maintain that Plaintiff’s allegedly false answers on his group

health coverage application renders any agreement to provide medical benefits voidable by

Defendant BIS under traditional contract principles. Finally, Defendants maintain that Plaintiff is

precluded from asserting a denial of benefits claim because he assigned the right to payment of

benefits to Plaintiffs U of M and HVSH. 

Plaintiff responds by arguing that at the time he completed his employment application, he

believed that he voluntarily quit his employment with Great Lakes; thus, he maintains that his

omission did not constitute gross misconduct. Plaintiff also argues that even if the omission did

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19

amount to gross misconduct, he quit his employment with Defendant BIS. Therefore, Plaintiff

argues that he could not have been terminated “by reason of . . . gross misconduct” under COBRA.

29 U.S.C. § 1163(2) (emphasis added). Plaintiff further argues that even if Defendant BIS could

properly deny a medical claim based on after-acquired evidence of alleged gross misconduct,

Defendant BIS could only deny any claims arising after the discovery of the misconduct. See

McKennon v. Nashville Banner Publishing, Co., 513 U.S. 352, 362 (1995) (holding that although

equitable principles allow an employer in a wrongful discharge case to put forth after-acquired

evidence of an employee’s misconduct as a legitimate reason for termination, the aggrieved

employee is nevertheless entitled to recover backpay from the date of the unlawful discharge to the

date the after-acquired evidence was discovered). Thus, Plaintiff argues that Defendants are

precluded from retroactively cancelling coverage based on misconduct uncovered after the claims

have been submitted. Plaintiff also asserts that he truthfully answered the questions posed to him

by the health insurance application. Plaintiff did not respond to Defendants’ contention that his

claims are barred because he assigned his rights to benefit payments to Plaintiff U of M and Plaintiff

HVSH. 

The Court will address the parties’ arguments below.

1. Whether the Omissions in Plaintiff’s Employment Application Warrant Retroactive

Cancellation of Medical Coverage

Each party claims that the issue of whether after-acquired evidence can legitimately support

a retroactive termination of COBRA continuation coverage is an issue of first impression. The

Court notes, however, that the issue has been mentioned, but not extensively discussed, by various

courts. Compare Jones v. Officemax, Inc., 38 F. Supp. 2d 957, 961 (D. Utah 1999) (ERISA penalty

assessed against employer for failing to issue COBRA election notice notwithstanding after-acquired

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evidence of employee drug use), and Conery v. Bath Associates, 803 F. Supp. 1388, 1396 (N.D. Ind.

1992) (holding that employer’s agreement to allow employee to resign despite gross misconduct

waived the employer’s right to deny COBRA continuation benefits); with Karby v. Stardard

Products Co., 1992 WL 333931, *6 (D.S.C. 1992) (holding that COBRA continuation benefits can

be denied if after the termination it was discovered that the employee had engaged in gross

misconduct), and Mlsna v. Unitel Communications, Inc., 41 F.3d 1124, 1128, n. 2 (7th Cir. 1994)

(“Milsna I”) (“An employee could quit his job and his employer could later discover facts leading

it to change the employee’s departure status to termination for gross misconduct. [W]e simply note

that it would be strange for an employee to have the power to preempt his employer’s decision to

terminate him for gross misconduct.”). Although these decisions represent different opinions on

whether after-acquired evidence of gross misconduct may justify denying COBRA benefits, none

of these decisions support Defendants’ position.

Statutory terms must be accorded their plain and ordinary meaning. See Geib v. Amoco Oil

Co., 29 F.3d 1050, 1058 (6th Cir. 1994). Section 1163 provides that COBRA continuation coverage

must be provided upon the happening of certain “qualifying events” including “termination (other

than by reason of such employee’s gross misconduct) . . . .” See 29 U.S.C. § 1163(2) (emphasis

added). Defendants’ argument that COBRA benefits may be denied where the employee quits and

the employer later discovers that it could have fired the employee for the alleged misconduct reads

the words “by reason of” out of the statute. See Mlsna I, 41 F.3d at 1131 (Cudahy, J., concurring

in part and dissenting in part) (“The statute states that ‘termination’ is a qualifying event. This

occurs, surely, when an employee stops working. The gross misconduct provision, however, looks

to the reason for which an employee stops working (i.e., the cause of the termination).”) It is

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21

impossible for one’s employment to be “terminated,” in the voluntary sense of the word, “by reason

of gross misconduct.” 29 U.S.C. § 1163(2). In other words, even assuming that an employer could

change an employee’s departure status from voluntary to involuntary based on after-acquired

evidence of gross misconduct, which is an issue that this Court need not decide, the change in

departure status must actually take place for there to be a termination for gross misconduct. See

Mlsna v. Unitel Communications, Inc., 91 F.3d 876, 882-83 (7th Cir. 1996) (“Milsna II”) (noting

that although “it would be strange for an employee to have the power to preempt his employer’s

decision to terminate him for gross misconduct [by quitting first],” the defendant had submitted no

evidence “that it initially or formally designated Mlsna’s termination as one for gross misconduct.”)

(emphasis and alteration in original); Karby, 1992 WL 333931, at * 6 (upholding the employer’s

decision to change the former employee’s separation from “a release to a discharge for gross

misconduct” based upon after-acquired evidence of theft and false statements.”). 

Based on the evidence of record, Defendant BIS never formally or informally terminated

Plaintiff’s employment for gross misconduct. Instead, Defendant BIS has consistently argued that

Plaintiff quit his employment. See Defendants’ Answer to Plaintiffs’ Motion to Overturn

Administrative Decision, at 1 (“Here, Trominski was not fired. He simply ‘never showed up for

work.’ AR 0153. Also see AR 0155 (‘you are considered to have quit your job’) and AR 0157

(Trominski ‘voluntarily resigned’).”). Defendants fail to explain how an employee may quit “by

reason of gross misconduct.” 29 U.S.C. § 1163(2). If Congress wanted to allow benefit plans to

deny COBRA benefits where an employee “could” have been terminated “by reason of gross

misconduct,” it would have done so. There are legitimate reasons, however, for limiting the penalty

provision to situations where the alleged gross misconduct actually motived a decision to terminate

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4

 The Court determined above that Defendant BIS is entitled to an arbitrary and

capricious standard of review. The issue of whether an employer may deny COBRA benefits

based on after-acquired evidence of misconduct is a question of law, however, not of plan

interpretation or factual determination. See Penn v. Howe-Baker Engineers, Inc., 898 F.2d 1096,

1100 (5th Cir. 1990 ) (“[I]n contrast to the great deference we grant the Committee’s

interpretations of the Plan, we accord no deference to the Committee’s conclusions as to the

controlling law, which involve statutory interpretation. The interpretation of ERISA itself must

be made de novo by the court.”); see also Holt v. Winpisinger, 811 F.2d 1532, 1536 (D.C. Cir.

1987) (“We owe no more deference to the District Court when deciding questions of law than

that court owed to the Plan’s Administrators.”). Therefore, Defendant BIS’s belief that it may

properly deny COBRA benefits based on after-acquired evidence of alleged misconduct is

entitled to no deference. 

22

the employee’s employment. See Mlsna I, 41 F.3d at 1131 (Cudahy, J., concurring in part and

dissenting in part) (“The gross misconduct provision is punitive and ought to be interpreted

narrowly.”); Jones, 38 F. Supp. 2d at 961 (“this Court is leery of creating an incentive for employers

to accuse employees of gross misconduct after-the-fact.”). Accordingly, the Court finds that the

omission of Great Lakes from Plaintiff’s employment application does not support the denial of

benefits.4

2. Whether Plaintiff’s Alleged Misrepresentations on his Health Coverage Application

Render the Contract for Health Coverage Voidable

Defendants also argue that Plaintiff’s medical expenses are not covered because Plaintiff

indicated on his health coverage application that he had not had any “indication” of a “heart or

circulatory disorder” within the preceding five years when he knew that he had been having episodes

of chest constriction and shortness of breath in the “past few years.” (Ar. 302.) Defendants also

claim that Plaintiff misrepresented on the application that he had no “indication” of “birth defects”

within the five year period because Plaintiff should have connected the shortness of breath and chest

constriction to the heart problems he had as an infant. Finally, Defendants argue that Plaintiff

misrepresented that he had no “indication” of a “joint disorder” within five year period (Ar. 141),

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23

because on June 5, 2001, he told his rheumatologist that he had “a lot of joint pain for at least 10 to

15 years with morning stiffness lasting all day long at times.” (Ar. 906-907). Plaintiff responds by

arguing that he only had “one or two” episodes of shortness of breath, which he attributed to asthma

or an allergy, in the years leading up to his employment with BIS. Plaintiff did not respond to

Defendants’ assertions regarding his joint pain or alleged birth defects. 

Because ERISA does not include a provision relating to misstatements in an application for

benefits, federal common law governs the issue. See Davies v. Centennial Life Ins. Co., 128 F.3d

934, 943-44 (6th Cir. 1997); Tingle v. Pac. Mut. Ins. Co., 996 F.2d 105, 107-110 (5th Cir. 1993);

McDaniel v. Med. Life Ins. Co., 195 F.3d 999, 1002 (8th Cir. 1999). Federal common law supports

the rescission of a contract for insurance that is obtained through material misstatements or

omissions of the insured. See Davies, 128 F.3d at 943. In addition, the misrepresentation need not

be related to the specific condition for which the insured sought treatment. See id. at 944. It is

enough that the misrepresentation or omission “materially affect[ed] the insurer’s risk or the hazard

assumed by the insurer.” Id. (quoting Tingle v. Pacific Mut. Ins. Co., 837 F. Supp. 191, 193 (W.D.

La. 1993)). Statements or omissions are deemed “material” if they could “reasonably be considered

as affecting the insurer’s decision to enter into the contract or its evaluation of the degree or

character of the risk, or its calculation of the premium to be charged.” Id. at 944 (quoting Barry R.

Ostranger & Thomas R. Newman, Handbook on Insurance Coverage Disputes § 3.01(d) (6th ed.

1993)); Shipley v. Arkansas Blue Cross & Blue Shield, 333 F.3d 898, 905 (8th Cir. 2003) (“In cases

governed by ERISA, misstatements or omissions have been deemed material where knowledge of

the true facts would have influenced the insurer’s decision to accept the risk or its assessment of the

premium amount.”); 6 COUCH ON INSURANCE § 82:13 (3d ed.) (“Broadly speaking, the test of

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24

materiality is whether the fact or circumstance represented or misrepresented operated to induce the

insurer to accept the risk, or to accept it at a lower premium.”); Tingle, 837 F. Supp. at 193 (“[I]n

the context of an insurance policy, in order to avoid a policy, the insurer must prove that the insured

made a fraudulent or material misrepresentation in his application for enrollment that justifiably

induced the issuance of the policy.”). 

The Court finds that Defendant BIS acted arbitrarily and capriciously in relying upon

Plaintiff’s alleged misrepresentations to deny his medical claims. First, Plaintiff’s alleged

misrepresentation involving joint pain did not render the health coverage voidable because

Defendants have not shown that the alleged misrepresentation was material. The administrative

record lacks evidence that Plaintiff’s denial of a joint disorder affected any decision to employ him

or to offer him benefits. Nor is there any evidence that if Plaintiff had admitted to having joint pain

within the last five years that he would have been required to contribute more to the Plan or pay

higher COBRA premiums. See e.g., Shipley, 333 F.32d at 905 (finding the plaintiff’s

misrepresentations material because the defendant’s underwriting guidelines showed that the

defendant would have treated the plaintiff’s application differently had he truthfully disclosed his

medical history); Provident Life & Accident Ins. Co. v. Sharpless, 364 F.3d 634, 641-42 (5th Cir.

2004) (finding that insured’s misstatements were material because the insurer’s “administrator

testified that he would not have issued [the insured] a policy if he had known of her prior suicide

attempt, her continuing history of depression, or her continuing treatment for alcohol use.”);

Massachusetts Cas. Ins. Co. v. Reynolds, No. 1:94-CV-194, 1998 WL 1158403, * 11 (E.D. Tenn.

July 16, 1998) (finding the insured’s misrepresentation “materially affected the risk of loss

underwritten” by the insurer because the underwriting manual clearly advised that the application

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5

 It should be noted that Defendant Manzo testified that he considered Plaintiff’s answer

to the question about heart disorders to be Plaintiff’s only false statement. See V. Manzo Dep. at

48. 

25

should have been denied given the insured’s medical history). In addition, the absence of any

indication from the application that pre-existing conditions are excluded further supports the finding

that any misstatements about joint pain were immaterial. See Shipley, 333 F.3d at 905 (noting that

“the fact that the questions were contained in an application form that clearly limited coverage for

preexisting conditions indicates that [the plaintiff’s] answers to those questions were relevant for

determining the extent of his coverage and his premium amounts.”). Indeed, the only preexisting

conditions that are excluded under the Plan, which are not mentioned on the application, are those

conditions “for which medical advice, diagnosis, care or treatment was recommended or received

within the six (6) months prior to a person’s Enrollment Date.” (Ar. 0108.) There is no evidence

that Plaintiff was offered medical advice, diagnosis, or treatment for his alleged joint problems

within the six months prior to enrolling. Accordingly, in the absence of any evidence that the Plan

relied on Plaintiff’s answer to the question regarding joint disorders in (1) evaluating its risk, (2)

making a decision to offer benefits, or (3) determining the amount of contribution or COBRA

premiums, the Court finds that Plaintiff’s statement, even if false, would not be material.5

Second, the Court finds that it was arbitrary and capricious for Defendant Manzo to

determine that Plaintiff falsely denied having any “indication” of a “heart or circulatory disorder”

or “birth defect” in the preceding five years. To demonstrate materiality, Defendants rely on

Defendant Manzo’s affidavit in which he claims that had he known Plaintiff “had recurrent

symptoms from serious heart disease,” he would have “rejected [Plaintiff’s] employment

application.” (Ar. 892.) There was no basis, however, for rejecting Plaintiff’s explanation that he

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6

 Plaintiff also indicated on his application that he had not had any indication of asthma

in the five years preceding the date of the application. Defendants, however, have not mentioned

Plaintiff’s statement regarding asthma, nor have Defendants shown that the possible

misstatement was material. 

26

thought the shortness of breath and chest constriction was simply a breathing problem, or possibly

asthma. See Trominski Dep. at 62, 117. Plaintiff testified that he had no pain associated with the

episodes of shortness of breath, and he also testified that his doctor told him that these episodes were

probably not related to the subsequent chest pains for which he ultimately sought treatment. See

Trominski Dep. at 62-63. Indeed, simple reference to a medical manual reveals that shortness of

breath and chest tightness are symptoms of asthma.6 See THE MERCK MANUAL OF DIAGNOSIS AND

THERAPY, at 558 (Mark H Beers, M.D., and Robert Berkow, M.D. et al. eds., 17th ed. 1999) (“An

asthmatic usually first notices dyspnea, cough, shortness of breath, and tightness or pressure in the

chest and may hear wheezes.”). Defendants have pointed to no medical evidence that Defendant

Manzo relied upon to determine that Plaintiff’s “one or two” episodes of shortness of breath and

chest constriction in the years leading up to his employment were “indication[s]” of a “heart or

circulatory disorder” or “birth defect.” Thus, even assuming that Defendant Manzo’s self-serving

affidavit establishes the materiality of any misrepresentations involving heart conditions, there is

no evidence that Plaintiff’s statement denying any indication of a heart disorder within the last five

years amounted to a misrepresentation. 

Defendant Manzo’s deposition provides some insight into why he seized upon Plaintiff’s

episodes of shortness of breath to deny Plaintiff’s medical claims. It is undisputed that Plaintiff had

corrective surgery to his heart as an infant and also received some sort of heart-related treatment in

1987. In his deposition, Defendant Manzo testified that Plaintiff should have divulged his history

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27

of heart problems as an infant and young adult. See V. Manzo Dep. at 46-47 (“All I’m saying I think

it’s very critical when you fill out an application, any application, if you’ve had any kind of heart

problems it should be stated.”). The application, however, did not ask for a complete history of any

heart-related or potentially heart-related problems. The application could have asked Plaintiff

whether he had ever experienced shortness of breath or chest constriction, or whether he had ever

experienced an indication of a heart disorder in his lifetime. The application, however, asked none

of these questions and instead limited the inquiry to the preceding five years and only to those

symptoms which Plaintiff knew were indications for a heart or circulatory disorder. In limiting the

questions in this way, Defendants took the risk that Plaintiff would not be able accurately selfdiagnose every health problem in the past five years when completing the application. There is no

evidence that Plaintiff ever sought treatment for the shortness of breath and chest constriction, and

Defendants have presented no evidence that Plaintiff thought that the episodes of shortness of breath

and chest constriction were related to a heart disorder. Therefore, since there is no evidence that

either (1) Plaintiff’s episodes were related to a heart disorder, or (2) even if they were related, that

Plaintiff was aware of the relationship when he completed the application, the Court finds that

Defendant Manzo’s decision to deny benefits on behalf of the Defendant Plan was arbitrary and

capricious.

The Court’s holding that Defendant Manzo abused his discretion in denying benefits is

further bolstered by the conflict of interest present in this case. It is undisputed that Defendant

Manzo is the owner of Defendant BIS. Defendant BIS administers the benefits plan, which it

partially funds. The person acting on behalf of Defendant BIS was, of course, Defendant Manzo.

“As administrator, [Defendant BIS] interprets the plan, deciding what expenses are covered, and as

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28

issuer of the policy, it ultimately pays those expenses.” Killian v. Healthsource Provident Adm’rs,

Inc., 152 F.3d 514, 521 (6th Cir. 1998) (quoting Peruzzi v. Summa Medical Plan, 137 F.3d 431, 433

(6th Cir. 1998)). Although Defendants argue that employees also contribute to the funding of the

Plan, there is no evidence in the administrative record showing what percentage of the Plan is funded

by employees. Furthermore, the Plan provides that Defendant BIS is “protected” from paying large

medical claims by a separate reinsurance contract. (AR. 0019.) There is no indication of how large

a claim or claims must be to be covered by the reinsurance contract, but its existence is strong

evidence that Defendant BIS would incur costs associated with paying medical bills, at least below

the amount covered by the reinsurance contract. Accordingly, “there is an actual, readily apparent

conflict here, not a mere potential for one.” Killian, 452 F.3d at 521. 

Moreover, the conflict of interest in this case is clearly demonstrated by Defendant Manzo’s

behavior from the moment Plaintiff submitted his medical claims to the conclusion of the Courtordered appeal review on remand. To begin, Defendant Manzo did not undertake a routine or

standard investigation of Plaintiff’s claims. Instead, after he received the bill for Plaintiff’s heart

valve replacement, he began to “smell something here . . . [t]his guy, he leaves, he goes on COBRA

and two weeks later he’s in the hospital.” V. Manzo Dep. at 30. Defendant Manzo then hired Mr.

Garavaglia, who was Defendant Manzo’s former boss and the former owner of Defendant BIS, to

investigate. See id. at 11. Defendant Manzo testified that after he started to “smell[] . . . a setup”

by Plaintiff, he hired Mr. Garavaglia to investigate and “let him run with it.” Id. at 31.

Defendant Manzo also had Mid-America review the claim, but as evidenced by MidAmerica’s final denial after the Court remanded the matter, Defendant Manzo rejected Mid2:02-cv-73176-LPZ Doc # 30 Filed 06/24/05 Pg 28 of 36 Pg ID 267
7

 It is also worth noting that rather than submit Mid-America’s actual denial to the Court,

Defendants apparently altered an earlier denial letter that did not contain reference to MidAmerica’s findings and submitted the letter as if it contained Mid-America’s findings on remand. 

29

America’s determination that Plaintiff’s claims should be covered under the terms of the policy.7

After rejecting the conclusion of what appears to be the only objective entity involved in the claim

review process, Defendant Manzo acted with hostility towards Plaintiff’s requests for information

and further review of his claim. 

For instance, as this Court has previously found, Defendant Manzo’s initial denial letter

contained no reference to Plan provisions or appeal rights, in violation of ERISA regulations. See

Trominski I, at 10. When Plaintiff requested a copy of the summary plan description, which he had

every right to do, Defendant Manzo responded that Plaintiff “ was supplied a copy when he got the

insurance in the beginning[,]” but that another copy could be provided for a fee of $50.00, which

is approximately twice the maximum fee allowed under ERISA regulations. See id. at 13.

Defendant Manzo also testified that he denied Plaintiff’s claims because the surgeries “were not

medically necessary,” but he admitted that the Plan covered elective surgeries and that he had no

medical basis upon which to conclude that Plaintiff’s surgeries were not necessary. Id. at 56-59; see

also id. at 58 (“We’re not denying - that’s part of the denial, but - Well, I’d refer to my attorney.

You’ve got why we denied it.”). Finally, Defendant Manzo determined without any input from

medical providers, including Plaintiff’s treating physician, that Plaintiff’s episodes of shortness of

breath and chest constriction were indications for a heart disorder instead of a breathing problem of

some sort. The Court finds that this behavior “makes no sense in the absence of an improper

financial motive” and, therefore, Defendant BIS’s actions as Plan Administrator “were shaped by

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8

 The lack of evidence tying Plaintiff’s dyspnea episodes to a heart condition, or

demonstrating that Plaintiff thought or knew the episodes were related to a heart condition that

he had as a child and young adult, sufficiently demonstrates the arbitrary and capricious nature

of the denial regardless of any conflict of interest. 

30

its conflict of interest.” Killian, 152 F.3d at 522 (finding that employer/administrator’s decision to

stop accepting information in pre-authorization appeal based on plan language applicable to postauthorization appeal demonstrated conflict of interest was at work). Accordingly, Defendant BIS’s

conflict of interest further supports the Court’s finding that the denial of benefits was arbitrary and

capricious.8

3. Whether Plaintiff’s Assignments to Co-Plaintiffs Preclude him from Succeeding on

his Denial of Benefits Claim

Defendants also argue that Counts I and II of the Complaint alleging a wrongful denial of

benefits on behalf of Plaintiff should be dismissed because Plaintiff assigned his rights to his

medical providers, Plaintiffs U of M and HVSH. Plaintiff Trominski does not dispute that any

monetary recovery for the denial of benefits would go to Plaintiffs U of M and HVSH. See

Trominski Dep. at 108-109. On January 31, 2003, Plaintiff Trominski amended the Complaint to

add Count VI, which alleges claims on behalf of Plaintiffs U of M and HVSH as his assignees. In

addition, Plaintiff never responded to Defendants’ argument that Counts I and II should be

dismissed. Accordingly, the Court will grant Defendants’ motion for judgment on the administrative

record with respect to Counts I and II insofar as the relief requested by those counts encompasses

a monetary award to Plaintiff Trominski personally. Nevertheless, given the Court’s finding that

Defendant BIS’s denial of Plaintiff Trominski’s claims was arbitrary and capricious, the Court will

grant Plaintiffs’ motion for judgment on the administrative record with respect to Count VI. 

B. Plaintiff Trominski’s Breach of Fiduciary Duty Claim

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31

Defendants argue that Plaintiff’s breach of fiduciary duty claim fails because Plaintiff is

simply recharacterizing his denial of benefits claim as a separate breach of fiduciary duty claim.

Plaintiff Trominski responds by arguing that although he is seeking to remedy the denial of benefits,

Defendant Manzo breached his fiduciary duty by leading him to believe that his medical claims

would be covered. The Court finds Defendants’ argument persuasive.

ERISA imposes significant standards of fiduciary responsibility upon administrators of an

ERISA plan. See 29 U.S.C. § 1104(a)(1). A “fiduciary must give complete and accurate

information in response to participants’ questions . . . .” Krohn v. Huron Memorial Hospital, 173

F.3d 542, 547 (6th Cir. 1999) (quoting Drennan v. General Motors Corp., 977 F.2d 246, 251 (6th

Cir. 1992)). In addition, “a fiduciary breaches its duties by materially misleading plan participants,

regardless of whether the fiduciary’s statements or omissions were made negligently or

intentionally.” Krohn, 173 F.3d at 547 (quoting Berlin v. Michigan Bell Telephone Co., 858 F.2d

1154, 1162 (6th Cir. 1988)); see also Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, n.2 (6th

Cir. 2003) (“Even if [the plaintiff] could bring a breach-of-fiduciary-duty claim, we have recognized

such claims only where the misrepresentation in question involves the availability or extent of plan

benefits.”). Nevertheless, the Sixth Circuit has held that “[b]ecause § 1132(a)(1)(B) provides a

remedy for [the plaintiff’s] alleged injury that allows him to bring a lawsuit to challenge the Plan

Administrator’s denial of benefits to which he believes he is entitled, he does not have a right to a

cause of action for breach of fiduciary duty pursuant to § 1132(a)(3).” Wilkins v. Baptist

Healthcare System Inc., 150 F.3d 609, 619 (6th Cir. 1998). Furthermore, only equitable remedies

are available for breach of fiduciary duty. See Marks, 342 F.3d at 454 (citing Varity Corp. v. Howe,

516 U.S. 489, 512 (1996)); Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993) (holding that the

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only relief available under § 1132(a)(3)(B) is that “typically available in equity (such as injunction,

mandamus, and restitution, but not compensatory damages).”) 

Plaintiff’s breach of fiduciary duty claim should be dismissed for two reasons. First, Plaintiff

is clearly seeking to remedy the denial of benefits through his breach of fiduciary duty claim. See

First Amended Compl. at ¶ 49 (“If the Plan’s denial of the claim stands, this constitutes a breach of

Manzo’s and/or BIS’s fiduciary duty.”) (emphasis added). Second, Plaintiff is seeking legal relief,

not equitable relief. In his First Amended Complaint, Plaintiff specifically asked the Court to

remedy the alleged breach of fiduciary duty with a monetary award. See First Amended Compl. at

Count IV (requesting “an amount equal to his claims,” and “interest on the amount of the

judgment.”). Accordingly, because Plaintiff is seeking a monetary award by repackaging his denial

of benefits claim as a breach of fiduciary duty claim, the Court finds that Defendants are entitled to

judgment on the administrative record with respect to Count IV. 

C. Attorneys Fees

Plaintiff also argues that an award of attorney fees is appropriate in this case. Under ERISA

§ 502(g)(1), “the court in its discretion may allow a reasonable attorney’s fee and costs of the action

to either party.” See 29 U.S.C. § 1132(g)(1). A decision to award attorney fees is based on the

following factors: 

(1) the degree of the opposing party's culpability or bad faith; (2) the

opposing party's ability to satisfy an award of attorney's fees; (3) the

deterrent effect of an award on other persons under similar

circumstances; (4) whether the party requesting fees sought to confer

a common benefit on all participants and beneficiaries of an ERISA

plan or resolve significant legal questions regarding ERISA; and (5)

the relative merits of the parties' positions. 

McMurty v. Paul Revere Life Ins. Co., 2000 WL 799342, *6 (6th Cir. June 12, 2000) (quoting

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Secretary of Dept. of Labor v. King, 775 F.2d 666, 669 (6th Cir. 1985)). 

When the Court remanded this matter for a full and fair review of Plaintiff’s claims, it

declined to address Plaintiff Trominski’s request for attorneys fees. The Court specifically noted

that “Plaintiffs’ attorney has not offered evidence of the hours reasonably spent working on

Plaintiffs’ case. Such evidence is required for an award of attorney fees under 29 U.S.C. §

1132(g)(1).” Trominski I, at 16 (emphasis added) (quoting McMurty, 2000 WL 799342, *7 (“This

circuit requires a district court to apply the ‘lodestar’ method in calculating the appropriate fee

award.”)). In Plaintiff’s post-remand motion for judgment on the administrative record, Plaintiff

asserts that his attorney spent 102 hours on this matter at an hourly rate of $200.00 per hour. He also

asserts that his attorney’s associate spent 43.5 hours on this matter at an hourly rate of $150.00 per

hour. He does not, however, provide any evidence, such as billing sheets, to demonstrate the manner

in which the hours were spent. Plaintiff’s counsel also failed to supply an affidavit, though

Plaintiff’s motion indicates that an affidavit would be filed within one week. Defendants also point

out that Plaintiff failed to address the five King factors quoted above. 

The “lodestar” is the “‘number of hours reasonably expended on the litigation multiplied by

a reasonable hourly rate.’” Bldg. Serv. Local 47 Cleaning Contractors Pension Plan v. Grandview

Raceway, 46 F.3d 1392, 1401 (6th Cir. 1995)(quoting Hensley v. Eckerhart, 461 U.S. 424, 433

(1983)). A reasonable hourly rate is determined by looking to the “prevailing market rate in the

relevant community.” Blum v. Stenson, 465 U.S. 886, 895 (1984). With respect to the number of

hours expended, the party requesting attorney fees “has the burden of providing for the court’s

perusal a particularized billing record.” Perotti v. Seiter, 935 F.2d 761, 764 (6th Cir. 1991). In other

words, the moving party must provide “‘evidence supporting the hours worked and rates claimed.’”

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9

 This would presumably include both an affidavit, billing records, and information

regarding the prevailing rate for similarly situated attorneys in this particular market. 

34

Granada Invs., Inc. v. DWG Corp., 962 F.2d 1203, 1208 (6th Cir. 1992) (quoting Hensley, 461 U.S.

at 433)). While there is a strong presumption that the lodestar figure represents a reasonable fee,

it does not end the inquiry. See Bldg. Serv. Local 47 Cleaning Contractors Pension Plan, 46 F.3d

at1401 (citations omitted). “‘There remain other considerations that may lead the district court to

adjust the fee upward or downward . . . .’” Id. at 1402 (quoting Hensley, 461 U.S. at 434). 

Despite this Court’s previous Opinion and Order in Trominski I, which set forth both the

relevant factors to be discussed in determining attorneys’ fees under ERISA and the requirement that

Plaintiffs submit evidence of the hours expended and rates claimed, Plaintiff has failed to address

any of the relevant factors or provide any evidence of the hours claimed. Ordinarily, the Court

would simply deny the fee request. However, Plaintiff’s counsel agreed to handle Plaintiff’s case

based on a 1/3 contingency fee arrangement. Thus, if Plaintiff is not awarded attorney fees, one

third of the amount that would otherwise go toward paying off his medical bills will instead go to

Plaintiff’s attorney. While Plaintiff may or may not be entitled to attorneys’ fees under the factors

set forth in King, denying attorneys’ fees altogether based on Plaintiff’s counsel’s failure to comply

the modest requirement of providing the court with an affidavit and billing records would not further

the interests of justice. Accordingly, the Court will allow Plaintiff one final opportunity to supply

the Court with enough evidence to make a reasoned “lodestar” estimate.9

 The Court will also allow

Plaintiff to address the five factors set forth in King. Plaintiff must supply the required information

within 15 days of receiving this Opinion and Order. 

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V. CONCLUSION

Accordingly, for the reasons set forth above, Plaintiffs’ Motion to Overturn Administrative

Decision [dkt # 28] is hereby GRANTED IN PART; Plaintiffs’ motion is granted with respect to

Count VI (Claim for Benefits on Behalf of U of M and HVSH) only. Defendants’ Motion for

Judgment on the Administrative Record [dkt # 27] is hereby GRANTED IN PART; Defendants’

motion is granted with respect to Count 1 (Claim for Benefits) and Count II (Violation of COBRA)

to the extent both counts contemplate a monetary award to Plaintiff Trominski personally, and Count

V (Breach of Fiduciary Duty) only. The remaining counts were resolved in this Court’s previous

Opinion and Order dated December 5, 2003. In addition, Plaintiffs are hereby ORDERED to submit

evidence, if any, in support of their request for attorneys’ fees within 15 days of service of this

Opinion and Order. Defendants may respond and Plaintiffs may reply within the time periods set

forth in the Court’s local rules. See E.D. Mich. LR 7.1. 

IT IS SO ORDERED.

s/Lawrence P. Zatkoff 

LAWRENCE P. ZATKOFF

UNITED STATES DISTRICT JUDGE

Dated: June 24, 2005

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CERTIFICATE OF SERVICE

The undersigned certifies that a copy of this Order was served upon the attorneys of record

by electronic or U.S. mail on June 24, 2005.

s/Marie E. Verlinde 

Case Manager

(810) 984-3290

 

 

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