* This order and judgment is not binding precedent, except under the doctrines of

law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10 thCir. R. 36.3.

**Monti L. Belot, United States District Judge for the District of Kansas, sitting by designation. 

## F I L E D United States Court of Appeals Tenth Circuit 

### MAR 9 2001 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

___________________________

JOSEPH E. ALVES AND KRISTI ALVES,

Plaintiffs-Appellants,

v. SILVERADO FOODS, INC. AND SILVERADO FOODS WELFARE BENEFIT PLAN,

Defendants-Appellees. No. 00-5011 (D.C. No. 99-CV-48-K) (N.D. Okla.)

___________________________ ORDER AND JUDGMENT *

___________________________ Before SEYMOUR , Circuit Judge, McWILLIAMS , Senior Circuit Judge, and BELOT , District Judge. **

___________________________-2-

After examining the briefs and appellate record, th is panel has determined unanimously to honor the parties’ request for a dec ision on the briefs without oral argument. See Fed. R. App. P. 34(f). The case is therefore subm itted without oral argument.
INTRODUCTION Joseph and Kristi Alves appeal the district court’s final order and judgment granting in part and denying in part their motion f or summary judgment The Alves filed this ERISA enforcement action seeking d eclaratory and injunctive relief after their employee welfare benefit plan re fused to pay medical benefits. On cross-motions for summary judgment, the districtcourt found the plan’s refusal justified due to the Alves’ refusal to sign a reimbursement acknowledgment form. We exercise jurisdiction unde r 28 U.S.C. § 1291 and affirm.
BACKGROUND Through his employer, Silverado Foods, Inc., Joseph Alves participated in the Silverado Foods Welfare Benefit Plan (“the Plan ”), an “employee welfare benefit plan” governed by the Employee Retirement I ncome Security Act of 1974, 29 U.S.C. § 1001, et. seq. (“ERISA”). Alves’ wife and minor son, Kristi and Braden Alves, were beneficiaries of the Plan and we re thus “covered persons” under the terms of the Plan. Silverado Foods, Inc. is the Named Fiduciary of the1 ERISA requires an SPD to be “written in a manner calculated to be understood

by the average plan participant, and . . . be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.” 29 U.S.C. § 1022(a)(1); seealso29 C.F.R. § 2520.102-2(a) and (b). -3- Plan. Pursuant to 29 U.S.C. § 1021(a), the Plan distribut ed a Summary Plan Description (“SPD”) to its plan participants and be neficiaries. 1 Importantly, for purposes of this litigation, the SPD provided for t he Plan’s subrogation rights in instances of third-party recovery situations. The SPD stated:

RIGHT OF SUBROGATION AND REFUND When this provision applies. The Covered Person may incur medical or dental charges due to injuries which may be caused by the act or omission of a third party. In such circumst ances, the Covered Person may have a claim against that third party, o r insurer, for payment of the medical or dental charges. Acceptin g benefits under this Plan for those incurred medical or dental expe nses automatically assigns to the Plan any rights the Covered Person m ay have to recover payments from any third party or insurer. This subrogation right allows the Plan to pursue any claim which the Covered Person has against any third party, or insurer, whether ornot the Covered Person chooses to pursue that claim. The Plan may make a claim directly against the third party or insurer, but in any event, the Plan has a lien on any amount recovered by the Covered P erson whether or not designated as payment for medical expenses. This lien shall remain in effect until the Plan is repaid in full. The Covered Person:



### C automatically assigns to the Plan his or her rights against any third party or insurer when this provision appl ies; and-4- 

### C must repay to the Plan the benefits paid on his or her behalf out of the recovery made from the third party or insurer. Amount subject to subrogation or refund. The Covered Person agrees to recognize the Plan’s right to subrogation and reimbursement. These rights provide the Plan with a priority over any funds paid by a third party to a Covered Person re lative to the Injury or Sickness, including a priority over any c laim for nonmedical or dental charges, attorney fees, or other costs and expenses. Notwithstanding its priority to funds, the Plan’s s ubrogation and refund rights, as well as the rights assigned to it , are limited to the extent to which the Plan has made, or will make, payments for medical or dental charges as well as any costs and fees associated with the enforcement of its rights under the Plan. When a right or recovery exists, the Covered Person will execute and deliver all required instruments and papers as well as doing whatever else is needed to secure the Plan’s right of subrog ation as a condition to having the Plan make payments. In addition, the Covered Person will do nothing to prejudice the right of the Plan to subrogate.
Defined terms: “Recovery” means monies paid to the Covered Person by way of judgment, settlement, or otherwise to compensate for all losses caused by the Injuries or Sickness w hether or not said losses reflect medical or dental charges covered by the Plan. “Subrogation” means the Plan’s right to pursue the Covered Person’s claims for medical or dental charges against the ot her person. “Refund” means repayment to the Plan for medical ordental benefits that it has paid toward care and treatment of the I njury or Sickness. (Summary Plan Description at 34; Aplt. App., Tab 7 at 000194). On March 3, 1997, Kristi and Braden Alves were invo lved in a catastrophic motor vehicle accident in which Kristi Alves suffer ed a permanent and irreversible brain injury. As a result of the inj uries sustained from the accident,-5-

the Alves incurred medical expenses totaling $ 103, 514.24. The Alves filed suit in Texas against the tortfeasor who tendered the li mits of an available liability policy in the amount of $ 100,000. The Texas state court action has not been resolved, nor have the Alves accepted the $ 100,000 tendered. The Alves submitted their medical bills to the Plan for processing and payment. The Plan, however, required the Alves to sign a standard reimbursement acknowledgment form before it would p ay out any benefits. The acknowledgment form read:

In accordance with the Subrogation provision of the SILVERADO FOODS Employee Health Benefit Plan, the undersigned hereby agrees to reimburse and pay promptly to the SILVERA DO FOODS Employee Health Benefit Plan an amount not exceedin g the aggregate amount of benefits paid or to be paid to me or on my behalf under said Plan for charges incurred as a re sult of injury sustained or disease contracted on or about ______________ in _________ County, State of ________________ out of recovery by settlement or judgment or otherwise, from any perso n’s or organization’s insurance. The undersigned agrees to execute instruments and p apers, furnish information and assistance, and to take other neces sary and related actions that SILVERADO FOODS may require to facilit ate its right of reimbursement under the Employee Health Benefit Plan. The undersigned represents and warrants that no rel ease or discharge has been given with respect to his (their) rights o f recovery described herein and that the undersigned has done nothing to prejudice said rights. The Alves refused to sign the acknowledgment form, believing the form granted the Plan additional rights and that their signing t he form would waive their legal-6-

rights. The Plan then offered the Alves a second “supplemen tal” reimbursement acknowledgment form as an alternative to the first acknowledgment form. As with the first reimbursement acknowledgment form an d for the same reasons, the Alves refused to sign the supplemental acknowledgm ent form. Because the Alves refused to sign either of the reimbursement a cknowledgment forms, the Plan refused to pay their claims for medical expens es. The Alves filed this ERISA action against the Plan seeking declaratory and injunctive relief. The Alves asked the district co urt to require the Plan to process and pay the benefits due under the terms of the pla n. The Alves also asked the district court to clarify the impact of the subrogation language contained in the plan. The Alves further sought damages for the Pla n’s breach of its fiduciary duties. The Plan responded with a counterclaim fordeclaratory relief. The Plan asked the district court to determine that not only did it have the right to refuse to pay the Alves’ medical bills until after the Alves signed the reimbursement acknowledgment form, but that it would also have a priority over any recoveries the Alves would receive from third parties as reimb ursement for its payment of the Alves’ medical bills. In their motion for summary judgment, the Alves con tended the Plan would not have a priority over the expected settlement wi th the tortfeasor’s insurer-7-

because, as their actual medical expenses exceeded the expected recovery, they would not be made whole. The Alves further alleged the Plan breached its fiduciary duties to them in three ways: by refusing to process and pay the claims, by proposing the supplemental reimbursement agreeme nts, and by attempting to hire the Alves’ attorney to represent the Plan’s in terests in the case against the third-party tortfeasor. The Plan also moved for su mmary judgment, arguing the subrogation clause was not void as a matter of law, the SPD specifically provides the Plan with the right to require a reimbursement acknowledgment form prior to its paying benefits, and that the Alves’ refusal to sign such forms breached their duty under the terms of the SPD, justifying the Pla n’s refusal to pay medical benefits.
THE DISTRICT COURT OPINION After concluding that an “arbitrary and capricious” standard of review was applicable, the district court first determined the Plan’s subrogation rights would not vest until after the plan paid benefits. Becau se the Plan had, as of the time of the opinion, failed to pay benefits, the Plan had n o subrogation rights. However, the real question, the district court determined, was whether the Plan could require a signed subrogation form before paying ben efits. The district court answered that it was reasonable for the Plan to req uire a signed document securing the Plan’s right of subrogation (even befo re that right of subrogation-8-

exists) prior to paying benefits. The district court determined it was reasonable forthe Plan to require the Alves to sign the first offered subrogation form be cause the form was a reasonable restatement of the SPD’s subrogation pro vision. The district court found the second offered subrogation form to contai n several misrepresentations and unreasonable interpretations of the plan. Afte r noting that the Plan only required plaintiffs to sign one of the subrogation forms, the court found it not arbitrary and capricious to require signing of the first, but that it was arbitrary and capricious to require a signing of the second. Next, the district court discussed the application of the Make Whole doctrine. After discussing the circuit split and t he Tenth Circuit’s lack of opportunity thus far to decide the issue, the distr ict court found it did not need to determine whether ERISA plans are subject to the Ma ke Whole doctrine because the Plan’s subrogation provision was an explicit co ntractual rejection of the doctrine. The district court quoted the SPD as stating that the Plan’s subrogation and reimbursement rights

provide the Plan with a priority over anyfunds paid by a third party to a Covered Person relative to the Injury or Sickn ess, including a priority over any claim for non-medical or dental charges, attorney fees, or other costs and expenses. Notwithstanding its priority to funds, the Plan’s subrogation and refund rights . . . are limited to the extent to which the Plan has made, or will make, payments for medical or dental charges as well as any costs and fees associated with the enforcement of its rights under the Plan.-9-

Dist. Ct. Op. at 13 (quoting Summary Plan Description at 34) (emphasis added). To this the district court explained that the provi sion “explicitly adopt[ed] the Plan Priority rule, the opposite of [M]ake [W]hole, whereby the Plan must be completely reimbursed before [the Alves] can keep a ny of the money recovered from the third-party tortfeasor.” Dist. Ct. Op. at 13. As for the Alves’ claims that the Plan breached its fiduciary duty, the district court first determined the plan did not as to its (1) refusal to pay benefits; and (2) requiring the signing of the first subrogat ion agreement before paying benefits because the court had previously determine d neither action was based on an unreasonable reading the plan. The district cou rt found the Plan properly interpreted the Plan’s provision regarding subrogat ion, and thus, it did not breach its ERISA-imposed fiduciary duty. Although the district court acknowledged the second offered subrogation form was contrary to the SPD’s language, the court found the error harmless because the Alves could have signed the first subro gation agreement offered to them. As for the breach of fiduciary duty claim ba sed on the Plan’s attempt to hire the Alves’ attorney, the district court pointe d out that the “offer” of hiring the Alves’ attorney came from Johnson Brokers and A dministrators, not the Plan. Johnson Brokers was hired by the Plan to administerclaims submitted to the Plan. The Alves did not present any evidence attributing the offer from the Plan itself.-10-

The Alves now appeal the district court’s holdings that the Plan’s subrogation and refund rights are not subject to th e Make Whole rule and that the Plan did not breach its fiduciary duties to the Alv es. STANDARD OF REVIEW Review of a grant of summary judgment is de novo , applying the same legal standard used by the district court. See Charter Canyon Treatment Ctr. v. Pool
Co. , 153 F.3d 1132, 1135 (10 thCir. 1998). A district court’s review of a beneficiary’s challenge to a denial of benefits und er 29 U.S.C. § 1132(a)(1)(B) applies an “arbitrary and capricious” standard to aplan administrator’s actions if the plan grants the administrator discretionary aut hority to determine eligibility for benefits or to construe the plan’s terms. See Kimber v. Thiokol Corp. , 196 F.3d 1092, 1097 (10 thCir. 1999) (citing Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed. 2d 80 (1989)). In this case, the district court determined the Plan’s SPD did gr ant the administrator such discretionary authority and applied the arbitrary a nd capricious standard. On appeal, the Alves do not challenge this determinati on. When reviewing under the arbitrary and capricious s tandard, “[t]he Administrator[’s] decision need not be the only log ical one nor even the best one. It need only be sufficiently supported by facts wit hin [its] knowledge to counter a claim that it was arbitrary and capricious. . . . The decision will be upheld unless2There is some authority that state subrogation laws, such as a state’s Make

Whole rule, would not be preempted in cases involving insured ERISA plans, rather than self-funded plans. SeeBlue Cross & Blue Shield of Alabama v. Fondren , 966 F.Supp. 1093, 1097 (M.D.Ala. 1997). -11- it is not grounded on anyreasonable basis. The reviewing court need only a ssure that the administrator’s decision fall[s] somewhere on a continuum of reasonableness–even if on the low end.” Id . at 1098 (internal citations and quotations omitted).
THE MAKE WHOLE DOCTRINE ERISA itself is silent with respect to subrogation and reimbursement, neither requiring a welfare plan to contain a subro gation clause, nor baring such a clause or otherwise regulating its content. See Member Servs. Life Ins. Co. v. American Nat. Bank and Trust Co. of Sapula , 130 F.3d 950, 958 (10 thCir. 1997) (citing Ryan v. Federal Express Corp. , 78 F.3d 123, 127 (3d Cir. 1996)). ERISA, of course, preempts state law dealing with the inte rpretation of an ERISAgoverned plan unless the plan involves the purchase of an insurance policy as the method of providing plan benefits. See FMC Corp. v. Holliday , 498 U.S. 52, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990) (holding a state subrogation rule preempted). 2 In the absence of such statutory guidance, federal courts may create federal common law for the use in ERISA cases. See Pilot Life Ins. Co. v. Dedeaux , 481 U.S. 41, 56, 107 S.Ct. 1549, 1557-58, 95 L.Ed.2d 39 (1987); see also Cutting v.-12-

Jerome Foods, Inc. , 993 F.2d 1293, 1297 (7 thCir. 1993) (“[Federal] courts have to adopt some interpretive principles, even if only implicit one s, in order to construe ERISA plans, since ERISA sets forth no principles o f interpretation of its own. And those principles that the judges devise or adop t to guide their interpretations are therefore common law, that is judge made, princ iples.”). In adopting a rule of interpretation as federal common law, this court ha s previously stated that it is “guided by the Supreme Court’s admonition that ‘ERI SA was enacted to promote the interests of employees and their beneficiaries in employee benefit plans, and to protect contractually defined benefits.’” MemberServs. , 130 F.3d at 954 (quoting Firestone Tire , 489 U.S. at 113, 109 S.Ct. at 956 (internal quotations and citations omitted)). However, this court has also cautioned that “‘the power [of federal courts] to develop common law pursuant to E RISA does not give carte blanche power to rewrite the legislation to satisfy [the court’s] proclivities.’ Instead, the courts must continue to implement the policies of ERISA.” Resolution Trust Corp. v. Financial Insts. Retireme nt Fund , 71 F.3d 1553, 1556 (10 thCir. 1995); see also Sunbeam-Oster Co. Group Benefits Plan v. Whitehurs t , 102 F.3d 1368, 1374 (5 thCir. 1996) (“[E]ven though we may borrow from analogous state law when it is not inconsistent wit h congressional policy concerns, our formulation of federal common law in the instant situation must remain guided foremost by the congressional policie s expressed or implicit in3The district court in Cagle v. Bruner , 921 F.Supp. 726 (M.D.Fla. 1995), aff’d

and remanded , 112 F.3d 1510 (11 thCir. 1997) concluded an ERISA plan abused its discretion by conditioning the payment on benefits on the signing of a supplemental subrogation form because the supplemental form expanded the plan’s ability to recover beyond what was described in the SPD. Seeid . at 740. The Eleventh Circuit, however, reversed this specific ruling on the basis the SPD stated that “[the participant or beneficiary] may be asked to execute documents or take such other action as is necessary to assure the rights of the Fund.” Cagle v. Bruner , 112 F.3d 1510, 1520 (11 thCir. 1997). The court reasoned “[t]hat language can be read to require execution of the subrogation agreement before payment as easily as it can be read to require execution of the agreement after payment. Thus, the Fund’s interpretation is not unreasonable, given the language of the plan.” Id . The Eleventh Circuit did not discuss whether the supplemental subrogation agreement broadened the rights of the ERISA plan over those rights granted to it in the SPD. -13- ERISA.”). In this case, the Alves urge the court to adopt the Make Whole doctrine under federal common law for the interpretation of ERISA plans. Because the expected total recovery from the third-party tortfe asor (the $ 100,000.00 offer from the tortfeasors insurer) would not “make whole ” their actual damages ($ 103,514.24), the Plan would have no right to reimbu rsement of any benefits paid. Thus, the proposed reimbursement acknowlegment form s expanded the Plans rights to reimbursement and the Plan’s refusal to p ay benefits until the Alves signed either reimbursement acknowledgment form con stituted a wrongful denial of benefits and breach of the Plan’s fiduciary duti es. 3 The Make Whole doctrine is a creature of equitable insurance law and is generally stated as:-14- in the absence of contrary statutory law or valid c ontractual obligations to the contrary, the general rule underthe doctrine of equitable subrogation is that where an insured is e ntitled to receive recovery for the same loss from more than one sourc e, e.g., the insurer and the tortfeasor, it is only after the in sured has been fully compensated for all of the loss that the insurer ac quires a right to subrogation, or is entitled to its subrogation righ ts. The rule applies as well to instances in which the insured has reco vered from the third party and the insurer attempts to exercise it s subrogation right by way of reimbursement against the insured’s recov ery. 16 Couch on Insurance 3d § 223:134 at 147-150 (2000) (footnotes omitted) . As the Fifth Circuit explained in Sunbeam-Oster Co. , the Make Whole doctrine is one of three alternative rules a court could apply in establishing a ranking or priority between the Plan and the beneficiary in a partial recovery situation. See Sunbeam-Oster Co. , 102 F.3d at 1373-74. The other two include a “Pl an Priority” rule, under which priority is given to the ERISA pl an for full recovery “off the top.” Id . The other is a “Pro Rata” system, under which th e plan and the beneficiary share ratably in the beneficiary’s reco very from third parties. See id

. at 1374. The Tenth Circuit has not yet had the opportunity t o determine which priority ranking plan is to be adopted for purposes of ERISA plan interpretation. Several of our sister circuits have adopted the Mak e Whole rule into federal common law as a default rule. See, e.g. , Copeland Oaks v. Haupt , 209 F.3d 811, 813-14 (6 thCir. 2000); Cagle v. Bruner , 112 F.3d 1510, 1521-22 (11 thCir. 1997); Barnes v. Indep. Auto. Dealers Ass’n of Cal. , 64 F.3d 1389,1394-95 (9 thCir.-15-

1995). Other circuit courts have declined to do so . See, e.g. , Harris v. Harvard Pilgrim Health Care, Inc. , 208 F.3d 274, 280-81 (1 stCir. 2000) (declining adoption of Make Whole rule because rule conflicts with policy objectives of ERISA); Waller v. Hormel Foods Corp. , 120 F.3d 138, 140 (8 thCir. 1997) (finding standard subrogation language in SPD provi ded plan with priority subrogation rights and rejecting Make Whole rule be cause reasons for adoption under insurance law do not transport easily into employee benefit plans); Sunbeam-Oster Co. , 102 F.3d at 1378 (stating, in dicta , that even in absence of standard subrogation language in the SPD, it doubte d it would adopt Make Whole doctrine as a default rule). The Alves urge the court to adopt the Make Whole do ctrine as federal common law for the interpretation of ERISA plans. The Plan, on the other hand, takes the position that even if the court were to a dopt the Make Whole doctrine, the doctrine is only a default rule and that it spe cifically rejected the doctrine in its SPD by its provision of a plan priority rule. Furthermore, the Plan argues that the real question is whether it abused its discreti on in interpreting the SPD language as providing for a plan priority reimburse ment. The district court agreed with the Plan’s argument and we now affirm. Although this circuit has not yet had the opportuni ty to decide which priority rule to apply to ERISA plans, we do have g uidance from a previous-16-

diversity case in which we were asked to explore t he Make Whole doctrine under Oklahoma law. See Fields v. Farmers Ins. Co., Inc. , 18 F.3d 831 (10 thCir. 1994). Similar to the facts in this case, the plaintiff in Fields , a beneficiary under a private insurance policy, sought a declaratory judg ment that, because his total injuries exceeded the amount he recovered from thir d-parties, the insurance company could not be reimbursed from monies receive d from the third-parties.
See id . at 834. After determining that no directly on-po int Oklahoma authority existed on the issue, this court determined that ev en if Oklahoma were to adopt the Make Whole doctrine, the parties sufficiently c ontracted out of what is considered a default rule by the standard subrogati on language contained in the insurance policy. See id . at 834-36. Specifically, the policy provided:

SUBROGATION Subrogation means the Plan’s right to recover any o f its payments (1) made because of any injury to you or y our dependent caused by a third party and (2) which you or your dependent later recover from the third party or the third party’s insurer.
SUBROGATION RIGHTS If you or your dependent sustain an injury caused b y a third party, the Plan will pay for the injury, subject to (1) the Plan being subrogated to any recovery or any right of re covery you or your dependent has against that third party, inc luding the right to bring suit in your name; (2) your not taki ng any action which would prejudice the Plan’s subrogation right; and (3) your cooperating in doing what is reasonably necess ary to assist the Plan in any recovery. The Plan will be subrogated-17- only to the extent of Plan benefits paid because of the injury. Id . at 834-35. Although the Oklahoma Supreme Court h ad applied the Make Whole doctrine in a case of equitable subrogation, see id . at 835 (citing Gentry (L.A.), d/b/a/ Gentry Enters., Inc. v. American Mot orist Ins. Co. , 867 P.2d 468 (Okla 1994)), this court refused to expand that hol ding to a case involving an insurance policy containing a subrogation clause. This court noted that those jurisdictions which have adopted the Make Whole doc trine have done so as a mere default rule and allow the rule to be overridd en by a provision in an insurance contract. See id . The above quoted subrogation language, this court found, was such an overriding provision:

Here, the clear language of the insurance cont ract provides that [the insurance company] shall be subrogated to any recovery that plaintiff receives from the negligent third party o r its insurer. Plaintiff has not identified, nor have we discerned , public policies that would compel the Oklahoma court to disregard t he clear and unambiguous subrogation provisions of this insuranc e contract. Id . at 836. Those circuits which have adopted the Make Whole do ctrine for the interpretation of ERISA plans have only done so to the extent the doctrine represents a default rule. In this case, there is no need for us to determine the default rule because, like the insurance policy in Fields , the Plan’s SPD specifically provided for reimbursement from third- party recovery. If we were to find the standard subrogation language in Fields sufficient to override a possible-18-

default Make Whole rule, certainly we should find t he specific priority language found in the Plan’s SPD to be more than adequate. The Plan’s SPD language went beyond the language contained in the Fields insurance contract. The language provided that the Plan’s subrogation and r eimbursement rights “provide the Plan with a priority over anyfunds paid by a third party. . . .” (Summary Plan Description at 34) (emphasis added). Even the Elev enth Circuit would find such language sufficient to override the Make Whole doct rine and provide the Plan with a priority over third-party recovery. See Cagle v. Bruner , 112 F.3d 1510, 1521-22 (11 thCir. 1997) (holding standard subrogation language insufficient to overcome the Make Whole doctrine, even in cases app lying an arbitrary and capricious standard of review). The Plan’s use of the word priority in its subrogation clause “specifically allowed the Plan t he right of first reimbursement out of any recovery [the Alves were] able to obtain even if [the Alves] were not made whole.” Barnes v. Indep. Auto. Dealers of Cal

. , 64 F.3d 1389, 1395 (9 th Cir. 1995) (quoted in Cagle , 112 F.3d at 1522). Cf. Sanders v. Scheideler , 816 F.Supp. 1338, 1347 (W.D.Wis. 1993) (adopting Make W hole rule, but only as “a default rule to be applied only when a plan fails t o designate priority rules or provide its fiduciaries with the discretion necessa ry to construe the plan accordingly.”).
BREACH OF FIDUCIARY DUTY-19-

ERISA’s section 404(a) provides that “a fiduciary s hall discharge his duties with respect to a plan solely in the interest of th e participants and beneficiaries and . . . in accordance with the documents and inst ruments governing the plan insofar as such documents and instruments are consi stent with the provisions of [ERISA].” 29 U.S.C. § 1104; see also Varity Corp. v. Howe , 516 U.S. 489, 505, 116 S.Ct. 1065, 1074, 134 L.Ed.2d 130 (1996) (stati ng that a fiduciary’s knowing and significant participation in the deception of aplan’s beneficiary “in order to save the employer money at the beneficiaries’ expen se” constitutes a breach of fiduciary duty under ERISA). The Alves contend th e Plan breached its duty to them by (1) refusing to pay the medical bills; (2) requiring the Alves to sign either of the two offered reimbursement acknowledgm ent forms; and (3) soliciting the Alves’ attorney to represent the Plan’s interes ts in the case against the thirdparty tortfeasor. We address each claim in turn. First, the Alves claim the Plan breached its fiduci ary duty to them by not paying and processing their claims. The Alves focu s on the district court’s finding that the Plan’s right of subrogation does n ot vest until after the Plan pays benefits and they argue that “[i]nstead of first paying the medical benefits due under the terms of the plan in a timely manner, the Plan instead focused on its claimed right of subrogation and refund.” Appellan ts’ Brief at 14. The Alves, however, confuse the Plan’s right of subrogation an d its right to require the Alves-20-

to sign a document recognizing its right to later s ubrogation and reimbursement. The Plan’s SPD provides that: When a right of recovery exists, the Covered Person will execute and deliver all required instruments and papers as well as doing whatever else is needed to secure the Plan’s right of subrog ation as a condition to having the Plan make payments. (Summary Plan Description at 34) (emphasis added). Although the right of subrogation did not technically exist, the Plan did not act arbitrarily and capriciously in requiring the Alves to sign a reimb ursement acknowledgment form prior its paying medical benefits based on the abov e cited language of its SPD. In Cagle v. Bruner , 112 F.3d 1510 (11 thCir. 1997), the Eleventh Circuit, faced with a similar argument, came to the same conclusion:

On the “reasonable interpretation” factor, the district court determined that the Fund unreasonably interpreted t he plan to allow it to require a signed subrogation agreement prior to paying benefits. According to Bruner, the district court correctly f ound the Fund’s position to be unreasonable, because the Fund has n o right of subrogation until benefits are paid. We believe th at Bruner is confusing the issues. It is true that because the Fund has no right of subrogation until the plan pays benefits, it cannotenforce the subrogation agreement until it pays benefits. Neve rtheless, nothing in the plan forbids the Fund from requiring the agr eement to be signed before it pays any claims. The SPD states t hat “[the participant or beneficiary] may be asked to execute documents or take such other action as is necessary to assure th e rights of the Fund.” That language can be read to require execut ion of the subrogation agreement before payment as easily as i t can be read to require execution of the agreement after payment. Thus, the Fund’s interpretation is not unreasonable, given the langu age of the plan. When we consider the practical reasons for req uiring the-21- subrogation agreement to be signed before paying any benefits, the reasonableness of that policy becomes abundantly cl ear. The Fund uses the subrogation agreements in negotiations wit h at-fault third parties. Once benefits are paid, participants and beneficiaries have little incentive (other than the fear of a lawsuit) to sign a subrogation agreement. If the Fund cannot require the agreemen t beforehand, it often will have to resort to lawsuits or at least t he threat of lawsuits to obtain the agreements. Lawsuits cost money, som etimes a lot of it. In addition, delay becomes inevitable, and whi le the Fund is attempting to obtain the agreements from participan ts and beneficiaries, the Fund is hampered in its negotiat ions with at-fault third parties. In short, having the agreement in h and before paying benefits provides significant protection to trust a ssets. Cost concerns weigh in favor of the Fund’s policy. Id . at 1520. Next, the Alves contend the Plan breached its fiduc iary duty by requiring them to sign a reimbursement agreement which “imper missibly broadened the Plan’s rights beyond those contained in the Plan do cument.” Appellants’ Brief at 15. The district court found the first offered rei mbursement acknowledgment form did not broaden the Plan’s rights from those i n the SPD. As explained above, the Plan had a right to a priority reimburse ment from any recovery from a third-party. The district court did find the secon d offered supplemental reimbursement acknowledgment form to provide the Pl an with rights not provided to it under the terms of the plan. However, as the district court explained, the Alves were not harmed by such a discrepancy because the Plan would have paid the claims had the Alves signed the first offered r eimbursement agreement. Last, we affirm the district court’s finding that t he Plan did not breach its-22-

fiduciary duty to the Alves by attempting to hire t heir attorney. As with their motion for summary judgment before the district cou rt, the Alves, in their brief, again rely on a letter from the third party adminis trator, Johnson Brokers and Administrators, to their attorney. To the extent t he solicitation could be deemed inappropriate, the Alves once again fail to make an y argument in favor of attributing the letter to the Plan. Thus, the Plan could not have breached its fiduciary duty to the Alves based on the third-party administrator’s conduct.
CONCLUSION For the above reasons, we AFFIRM the decision of th e district court.

Entered for the Court,

Monti L. Belot District Judge