Opinion ID: 1428164
Heading Depth: 2
Heading Rank: 2

Heading: CareFirst's Motion to Intervene

Text: CareFirst argues that the District Court abused its discretion in denying its motion to intervene and refusing to hear its objections to class certification. With respect to the court's denial of its motion to intervene, CareFirst contends that it is prevented from acting under contract to pursue overpayment of benefits on behalf of the self-funded plans that it administers because TPAs were specifically carved from the class, yet the plans they ensured and . . . administered were included. CareFirst also claims that the District Court's denial of its motion has the effect of improperly releasing its claims as an insurer in a parallel New Jersey action without compensation and results in prejudice because the Settlement Agreement distribut[es] proceeds directly to CareFirst's insured customers, thus bypassing CareFirst. With respect to the District Court's certification of the class, CareFirst contends that (i) the claims of the class do not raise questions common to all class members; (ii) the claims of the class are not typical of those of the class; and (iii) the class representatives do not adequately represent the interests of the class. We are not persuaded by CareFirst's contentions because CareFirst lacks the authority to opt out the claims of the Plans that it administers or object to the settlement on their behalf. Neither the certified class nor the Settlement Agreement includes TPAs such as CareFirst. Indeed, TPAs are expressly excluded from the class, which includes only Plans, and only the Plans' fiduciaries can opt out their Plans in accordance with the provisions of the Settlement Agreement: TPAs are excluded from the definition of the class except that to the extent a given TPA is a plan sponsor with respect to an employee benefit plan, the TPA shall be a member of the class solely in such capacity. As the District Court correctly observed, [t]he fiduciary duty is vested in the Plan sponsor or the designated fiduciary named in any particular [P]lan, and such statutory duty may not be evaded by delegation to an administrator. If anybody's rights were violated by [Medco], it was the rights of the Plan not the administrator with whom the Plan fiduciaries contracted. See 29 U.S.C. § 1104(a)(1)(A) (providing that a [plan's] fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and . . . for the exclusive purpose of . . . (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan). Because CareFirst is not a class member, it does not have an affected interest in the class Plaintiffs' claims against Medco so as to be able to assert its objections on behalf of its Plans. Nonparties to a settlement generally do not have standing to object to a settlement of a class action. 4 ALBA CONTE & HERBERT B. NEWBERG, NEWBERG ON CLASS ACTIONS § 13:69 (4th ed.2002); see also In re Drexel Burnham Lambert Group, Inc., 130 B.R. 910, 923 & n. 8 (S.D.N.Y.1991) (citing cases), aff'd, 960 F.2d 285 (2d Cir. 1992). CareFirst's argument that it could be prejudiced in a parallel action against Medco in New Jersey is unavailing for essentially the same reasons. TPAs are not members of the class, and as such, no actionable claim held by CareFirst in New Jersey is released by the terms of the Settlement Agreement. Stated simply, CareFirst would possess the same legal rights against Medco whether or not the Settlement Agreement were approved. If CareFirst believes that any Plan is obligated to opt out, it may exercise its discretion to make such a demand upon that Plan. In any event, because CareFirst's rights against Medco would not be impaired by the disposition of this action, its intervention would serve no purpose. Accordingly, we cannot say that the District Court abused its discretion in denying CareFirst's motion.