Source: https://openjurist.org/178/f3d/523/no-98-3087
Timestamp: 2019-02-18 12:06:00
Document Index: 529723027

Matched Legal Cases: ['§ 1001', '§ 1132', '§ 1002', '§ 1002', '§ 1104', '§ 1002', '§ 1132', '§ 1002', '§ 1132', '§ 1132', '§ 1132', '§ 1109', '§ 1132', '§ 1132', '§ 1109', '§ 1132']

178 F3d 523 No 98-3087 | OpenJurist
178 F. 3d 523 - No 98-3087
178 F3d 523 No 98-3087
178 F.3d 523,
HAROLD IVES TRUCKING COMPANY and Harold Ives Trucking
Company Employee Medical and Dental Plan, Appellants,
SPRADLEY & COKER, INC., and HealthSource Arkansas, Inc., Appellees.
No. 98-3087.
This case is brought under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., by the sponsor of an ERISA plan to recover damages from the plan's third-party administrator for breach of fiduciary duty. The District Court, after trial, found that the defendant was a fiduciary, and that it had violated its duty. The Court entered judgment for the defendant, however, holding that the plaintiffs did not have standing to bring an ERISA action for damages under 29 U.S.C. § 1132(a)(2). We reverse.
As we have noted, the District Court held that Spradley & Coker, as third-party administrator of the plan, functioned as a fiduciary, and violated its duty "when it failed to advise [the plaintiffs] that Timber Ridge Ranch was not a 'covered facility' under the Plan." We agree. First, the definitions section of ERISA, 29 U.S.C. § 1002 (1994), provides that "a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets ...." 29 U.S.C. § 1002(21)(A). As Spradley & Coker argues, the administration contract provides expressly that it would have no discretionary authority as third-party administrator, and that it would provide only ministerial services. But the contract is controlling only to the extent that Spradley & Coker actually carried out its responsibilities in a manner consistent with its provisions. In other words, Spradley & Coker was not a fiduciary so long as it performed only ministerial duties. However, when a third-party administrator assumes discretionary authority, as occurred here when Spradley & Coker reversed its original decision that Mr. Elliott's hospitalization at Timber Ridge would not be covered by the plan, without consulting the plaintiffs, and in the face of Jefferson Pilot's "adamant" view that the charges would not be covered, it must be held to have acted as a fiduciary.
Second, ERISA requires that a fiduciary carry out its responsibilities "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims." 29 U.S.C. § 1104(a)(1)(B). Spradley & Coker knew that Mr. Elliott's expenses were approaching $50,000, and that Harold Ives would expect Jefferson Pilot to reimburse the plan for claims paid on Mr. Elliott's behalf in excess of that deductible. Had Spradley & Coker disclosed the information, Harold Ives, as the plan sponsor and named administrator, could have filed a declaratory judgment action to determine its rights under the Jefferson Pilot policy, or it could have made other arrangements for Mr. Elliott's medical care. Spradley & Coker had an obligation to disclose the information to Harold Ives, and it violated its duty when it failed to do so.
Because Harold Ives is vested with and exercises discretionary authority and control as the plan sponsor and named administrator, it is a fiduciary under 29 U.S.C. § 1002(21)(A) (a person is a fiduciary if he or she has or exercises any discretionary authority or control over the management of a plan). Section 1132(a) provides that "[a] civil action may be brought ... (2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title." Section 1109(a) provides that "[a]ny person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach ... and shall be subject to such other equitable or remedial relief as the court may deem appropriate ...." As a fiduciary, therefore, Harold Ives has standing under 29 U.S.C. § 1132(a)(2) to bring an action against Spradley & Coker for breach of fiduciary duty. In addition, the plan, as an "employee welfare benefit plan" as defined in § 1002(1), "may sue or be sued ... as an entity." 29 U.S.C. § 1132(d)(1). Accordingly, we hold that plaintiffs have standing to bring an action for damages under § 1132(a)(2).
Spradley & Coker argues that damages are not available in this action. Any relief, it says, must be limited to an equitable remedy. Defendants cite Cooper Tire & Rubber Co. v. St. Paul Fire & Marine Ins. Co., 48 F.3d 365 (8th Cir.1995), and Novak v. Andersen Corp. ., 962 F.2d 757 (8th Cir.1992). Both of those cases, however, were actions under § 1132(a)(3), not, like the present case, 1132(a)(2). We have held, in an action brought by the Secretary of Labor, that damages are available as relief in an action under § 1109(a), as applied through § 1132(a)(2). Martin v. Feilen, 965 F.2d 660 (8th Cir.1992). Here, the relief requested by Harold Ives and its plan falls squarely within the plain meaning § 1132(a)(2). An award of damages will compel Spradley & Coker "to make good to ... [the] plan any losses to the plan resulting from ... [defendant's] breach ...." 29 U.S.C. § 1109(a). Damages, in addition, are "remedial relief" other than "equitable."
The plaintiffs also seek an injunction under § 1132(a)(3) to prevent Spradley & Coker from pursuing recovery from Timber Ridge. As they suggest, there is evidence in the record that Spradley & Coker sought a refund from Timber Ridge on behalf of the plan. Jt.App. 515-16. Although the issue is not briefed fully by the parties, Spradley & Coker, so far as we can determine, has raised no claim against Timber Ridge on its own behalf. In any event, the District Court, on remand, will be in a better position to decide the potential merits of any such claim, should one be made. We therefore deny plaintiffs' request for an injunction at this stage of the case.