Opinion ID: 2709494
Heading Depth: 4
Heading Rank: 2

Heading: Any money judgment under this subchapter

Text: against an employee benefit plan shall be enforceable only against the plan as an entity and shall not be enforceable against any other person unless liability against such person is established in his individual capacity under this subchapter. 29 U.S.C. § 1132(d). In Leister we observed that “[t]he first clause [of this subsection] just allows plans to sue or be sued, and the second clause just specifies consequences if the plan is sued; neither seems to be limiting the class of defendants who may be sued.” 546 F.3d at 879. The main point of § 1132(d) is to adjust certain common-law liability rules; it’s one example of the way in which ERISA departs from the common law of trusts. The Supreme Court has recognized that much of ERISA is modeled on trust law (its fiduciary rules in particular), and common-law trust principles guide its interpretation. See Firestone Tire, 489 U.S. at 110. But the Court has also cautioned that “[i]n some instances, trust law will offer only a starting point, after which courts must go on to ask whether, or to what extent, the language of the statute, its structure, or its purposes require departing from common-law trust requirements.” Varity Corp. v. Howe, 516 U.S. 489, 497 (1996). Section 16 No. 12-1256 1132(d) contains two important deviations from the common law of trusts. At common law a trust cannot sue or be sued because it “is not a juristic person.” See Lazenby v. Codman, 116 F.2d 607, 609 (2d Cir. 1940). ERISA departs from this rule by expressly providing in § 1132(d)(1) that “[a]n employee benefit plan may sue and be sued . . . as an entity.” Another common-law rule is that “a trustee is personally liable on any contract made by the trustee, even if the trustee acted properly.” R ESTATEMENT (T HIRD ) 4 OF T RUSTS ch. 21, intro. note (2007). The modern trend in trust law is to insulate trustees from personal liability except for specific kinds of improper acts, id., and ERISA adopts this modern view by providing that a money judgment against a plan “shall be enforceable only against the plan as an entity” and not against any other person “unless liability against such person is established in his individual capacity,” 29 U.S.C. § 1132(d)(2). By making the plan amenable to suit and limiting the personal liability of plan administrators, § 1132(d) overrides the common law of trusts and channels ERISA benefits claims into suits against the plan. But § 1132(d) does not categorically preclude suits against an insurance company or other obligor for benefits due. To the contrary, “[t]he ‘unless’ clause [in § 1132(d)(2)] neces- 4 At common law a faultless trustee could be indemnified from the trust estate, but he was still jointly liable in his individual capacity for any money judgments against the trust estate. R ESTATEMENT (T HIRD ) OF T RUSTS ch. 21, intro. note (2007). No. 12-1256 17 sarily indicates that parties other than plans can be sued for money damages under other provisions of ERISA, such as § 1132(a)(1)(B), as long as that party’s individual liability is established.” Cyr, 642 F.3d at 1207. We have on occasion allowed benefits claims to proceed against nonplan defendants based on uncertainties about the structure of the plan. In Leister, for example, we held that where “the plan has never been unambiguously identified as a distinct entity, . . . the plaintiff [may] name as defendant whatever entity or entities, individual or corporate, control the plan.” 546 F.3d at 879; see also Mein v. Carus Corp., 241 F.3d 581, 588 (7th Cir. 2001); Riordan v. Commonwealth Edison Co., 128 F.3d 549 (7th Cir. 1997). Uncertainty isn’t an issue here; the complaint clearly alleges that the insurers have both the discretion to decide eligibility and benefits questions and the obligation to pay claims. Of course a plaintiff may lack a valid legal theory to proceed against a nonplan defendant on a benefits claim. For example, we have affirmed the dismissal of a claim for benefits brought against an employee of the plan administrator. See Jass, 88 F.3d at 1490. Because the employee was sued in her individual capacity, we said she was “the wrong defendant,” explaining that § 1132(d)(2) blocked the suit against an agent of the plan administrator absent some basis for liability in her individual capacity. Id. There was none, so we held that the complaint against the employee was properly dismissed. Id. And in Feinberg we affirmed the dismissal of an ERISA benefits claim against the successor of the original plan 18 No. 12-1256 sponsor. 629 F.3d at 673-74. The successor company had purchased the assets of the plaintiff’s former employer, which had sponsored his retirement plan. But the successor company had not assumed its predecessor’s liabilities, including its retirement-plan obligations. The retiree (and other retirees in the same boat) sued the successor company but had no basis for holding the successor liable for the benefits, so we affirmed the dismissal of the claim—not because it was brought against the “wrong defendant,” see id. (noting that the plaintiff had “no practical alternative to suing” the successor), but because the successor had no obligation to pay the benefits, id. at 674-75. Before concluding on this point, we acknowledge that our decision in Mote, 502 F.3d at 610-11, appears to suggest a general rule against suing insurance companies under § 1132(a)(1)(B). A close reading of the case, however, clarifies that Mote cannot be read so broadly. There, the plaintiff sued her employer- based disability plan and the plan’s administrator, the Aetna Life Insurance Company. Id. at 605. The district court dismissed Aetna as an improper defendant and entered summary judgment in favor of the plan, rejecting the plaintiff’s claim on the merits. We affirmed the merits judgment, but we also said that the district court had correctly dismissed the insurer as an improper defendant, relying on the general rule that “in a suit for ERISA benefits, the plaintiff is ‘limited to a suit against the Plan.’ ” Id. at 610 (quoting Blickenstaff, 378 F.3d at 674). We saw no reason in Mote to depart from this general rule because the lines between the No. 12-1256 19 employer, the plan, and the insurer/administrator were not fuzzy: “Aetna was not Mote’s employer and the Plan’s policy distinguishes between the Plan, the employer, and Aetna.” Id. at 611. But we did not address whether the disputed benefits in Mote were obligations of the plan itself (paid out of plan assets) or obligations of the insurance company (paid out of its assets). And because we affirmed the entry of summary judgment for the plan on the merits, the dismissal of the insurer made no real difference to the bottom line. Mote should be understood as an uncontroversial application of the general rule that an ERISA claim for benefits normally should be brought against the plan; we do not read it as support for a rule against suing insurance companies under § 1132(a)(1)(B). To sum up, nothing in ERISA categorically precludes a suit against an insurance company for benefits due under § 1132(a)(1)(B). Although a claim for benefits ordinarily should be brought against the plan (because the plan normally owes the benefits), where the plaintiff alleges that she is a participant or beneficiary under an insurance-based ERISA plan and the insurance company decides all eligibility questions and owes the benefits, the insurer is a proper defendant in a suit for benefits due under § 1132(a)(1)(B). Our conclusion accords with that of the en banc Ninth Circuit, which has addressed this specific question, see Cyr, 642 F.3d at 1207, as well as the general approach adopted by other circuits in benefits claims against nonplan defendants, see Lifecare Mgmt. Servs. LLC v. Ins. Mgmt. Adm’rs Inc., 703 F.3d 835, 843-45 (5th Cir. 2013) (collecting cases). It is 20 No. 12-1256 also consistent with the Supreme Court’s conclusion in Harris Trust that nonplan defendants are subject to suit under § 1132(a)(3). See 530 U.S. at 254; see also Cyr, 642 F.3d at 1206 (“We see no reason to read a limitation into § 1132(a)(1)(B) that the Supreme Court did not perceive in § 1132(a)(3).”). B. Section 1132(a)(3) Claim for Breach of Fiduciary Duty The district court also dismissed the claim under § 1132(a)(3) for breach of fiduciary duty because the conduct alleged in the complaint—imposing copayment requirements for chiropractic services—is not fiduciary in nature. This ruling was sound. “In every case charging breach of ERISA fiduciary duty, . . . the threshold question is . . . whether [the defendant] was acting as a fiduciary (that is, was performing a fiduciary function) when taking the action subject to complaint.” Pegram, 530 U.S. at 226. ERISA carefully defines fiduciary status. “[N]ot only the persons named as fiduciaries by a benefit plan, see 29 U.S.C. § 1102(a), but also anyone else who exercises discretionary control or authority over the plan’s management, administration, or assets, see id. § 1002(21)(A), is an ERISA ‘fiduciary.’ ” Mertens v. Hewitt Assocs., 508 U.S. 248, 251 (1993). More specifically, “a person is a fiduciary with respect to a plan to the extent . . . 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). ERISA No. 12-1256 21 thus “defines ‘fiduciary’ not in terms of formal trusteeship, but in functional terms of control and authority over the plan, see id., thus expanding the universe of persons subject to fiduciary duties,” Mertens, 508 U.S. at 262. The Supreme Court has also explained that “a benefit determination is part and parcel of the ordinary fiduciary responsibilities connected to the administration of a plan.” Aetna Health Inc. v. Davila, 542 U.S. 200, 219 (2004). Therefore “the ultimate decisionmaker in a plan regarding an award of benefits” is a fiduciary and acts as a fiduciary “when determining a participant’s or beneficiary’s claim.” Id. at 220; see also CSA 401(K) Plan v. Pension Prof’ls, Inc., 195 F.3d 1135, 1140 (9th Cir. 1999) (fiduciary responsibilities include “the active interpretation of employee benefit plans, the management and disbursement of fund assets, the approval and rejection of claims, and the rendering of ultimate decisions regarding benefits eligibility”); Blue Cross & Blue Shield of Ala. v. Sanders, 138 F.3d 1347, 1352 n.4 (11th Cir. 1998) (“Claims administrators are fiduciaries if they have the authority to make ultimate decisions regarding benefits eligibility.”); Libbey-Owens-Ford Co. v. Blue Cross & Blue Shield Mut. of Ohio, 982 F.2d 1031, 1032 (6th Cir. 1993) (claims administrator was fiduciary because it “retained authority to resolve all disputes regarding coverage”). Applying these principles, we have held that an insurance company is a fiduciary under ERISA when it “agreed to exercise authority over the plan and was 22 No. 12-1256 granted the same discretionary authority as the original plan administrator.” Semien v. Life Ins. Co. of N. Am., 436 F.3d 805, 811-12 (7th Cir. 2006). When an insurer makes eligibility and benefits determinations under an ERISA plan, “it is plainly wearing its fiduciary hat, and the beneficiary may challenge the correctness of the decision according to the terms of the ERISA plan.” Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1291 (11th Cir. 2005). Here, the complaint alleges that each insurance company “administer[s] claims,” “ma[kes] all benefit and policy decisions,” and “pa[ys] all benefits” under the health plans sponsored by the plaintiffs’ employers. At the same time, however, ERISA’s functional definition of “fiduciary” also means that an ERISA fiduciary does not always “wear the fiduciary hat.” Pegram, 530 U.S. at 225. ERISA “does not describe fiduciaries simply as administrators of the plan, or managers or advisers. Instead it defines an administrator, for example, as a fiduciary only ‘to the extent’ that he acts in such a capacity in relation to a plan.” Id. at 225-26 (quoting 29 U.S.C. § 1002(21)(A)). Accordingly, the threshold inquiry in an ERISA claim for breach of fiduciary duty also requires the court to determine whether the defendant was “performing a fiduciary function[] when taking the action subject to complaint.” Id. at 226. The complaint’s key factual allegations on this claim are as follows: (1) “each [d]efendant . . . issued policies requiring illegal copayments for chiropractic services and never exercised its authority, control, or responsibility to eliminate these illegal copayments”; (2) “[d]efendants knew, No. 12-1256 23 or should have known, that . . . their failure to exercise their discretionary authority, control, and responsibility to eliminate illegal copayments for chiropractic care[] would reduce [p]laintiffs’ and Class members’ use of chiropractic care”; and (3) “[d]efendants also knew, or should have known, that . . . their failure to exercise their authority, control, or responsibility to eliminate copayments for chiropractic care[] would result in direct financial benefits to them at the expense of the [p]laintiffs and the Class.” (Emphases added.) Cutting through the surplusage, it’s clear that these allegations do not attack the discretionary aspects of claims administration as such; the plaintiffs are not challenging individual eligibility and benefits determinations. Instead, the complaint targets decisionmaking about policy terms. The alleged fiduciary breach is the issuance of policies that require “illegal copayments for chiropractic care” and the failure to “eliminate” the illegal policy provisions. In short, this is a challenge to the content of the insurance policies; “decisions about the content of a plan are not themselves fiduciary acts.” Pegram, 530 U.S. at 226. The fiduciary-duty claim fails at the threshold. C. Alternative Grounds for Affirmance Our conclusion that the insurance companies are proper defendants on the benefits claim brings up the insurers’ many alternative arguments to affirm, all of which were raised in the district court and are fully briefed here. See Bogie v. Rosenberg, 705 F.3d 603, 614 n.2 24 No. 12-1256 (7th Cir. 2013) (We may “affirm on any ground that the record supports and that appellee has not waived.” (internal quotation marks omitted)). We address only one because it is dispositive. Section 632.87(3)(a) does not prohibit chiropractic copayments. Recall that the state statute provides that no insurance “policy, plan or contract may exclude coverage for diagnosis and treatment of a condition or complaint by a licensed chiropractor . . . if the policy, plan or contract covers diagnosis and treatment of the condition or complaint by a licensed physician or osteopath.” W IS. S TAT. § 632.87(3)(a) (emphasis added). This language is clear. If an insurance policy covers treatment by a licensed physician or osteopath for a particular condition or complaint, then it cannot exclude treatment for the same condition or complaint by a licensed chiropractor acting within the scope of his license. The statute requires equal treatment of chiropractic services; it does not mandate a particular amount or level of coverage. More to the point, it does not expressly prohibit chiropractic copayments. The Wisconsin insurance code makes it clear that prohibitions do not arise by implication: “[W]hat chs. 600 to 655 do not prohibit is permitted unless contrary to other provisions of the law of this state.” Id. § 600.01(1)(a). The plaintiffs have not identified any other provision of Wisconsin law prohibiting copayment requirements on chiropractic coverage. The plaintiffs insist that chiropractic copayments are prohibited by negative implication from the language in section 632.87(3)(a) expressly stating that deductibles No. 12-1256 25 and coinsurance are not prohibited. See id. § 632.87(3)(a)1. (“This paragraph does not . . . [p]rohibit the application of deductibles or coinsurance provisions to chiropractic and physician charges on an equal basis.”). That is, the failure to mention copayments in this part of the statute means that copayments are prohibited by omission. This interpretation is foreclosed by the statutory rule against implied prohibitions: “[W]hat . . . [is] not prohibit[ed] is permitted . . . . ” Id. § 600.01(1)(a). The parties engage in extended debate about other evidence of statutory meaning. In particular, they disagree about the role of a separate statute regulating chiropractors, see id. § 446.02(10)(a) (permitting chiropractors to “waive all or a portion of an insured’s patient’s copayments, coinsurance, or deductibles”); an administrative rule, see W IS. A DMIN. C ODE INS. § 8.77 (permitting health plans sold to small employers to impose an $11 copayment for chiropractic services); and certain agency directives in the form of “Fact Sheets” issued by the Office of the Commissioner of Insurance. We do not need to enter this debate. The statutory language is not ambiguous. Nothing in section 632.87(3)(a) prohibits chiropractic copayments. In the alternative the plaintiffs argue that if the statute merely requires insurers to cover chiropractic treatments on equal terms as other healthcare services, then the complaint should be construed as stating a valid claim that the insurance companies are actually charging unequal copays for chiropractic care. This argument is new on appeal and is not supported by the al- 26 No. 12-1256 legations in the complaint, which are confined to the claim that Wisconsin law prohibits all chiropractic copayments. As we have explained, that claim fails as a legal matter. The alternative argument about unequal copays was raised for the first time on appeal and therefore comes too late. See LaBella Winnetka, Inc. v. Village of Winnetka, 628 F.3d 937, 943 (7th Cir. 2010) (arguments raised for the first time on appeal are waived); Fednav Int’l Ltd. v. Cont’l Ins. Co., 624 F.3d 834, 841 (7th Cir. 2010) (“A liberal reading of [the] complaint and argument in the district court yields no signs of the[] arguments [the plaintiff] is now presenting.”). A FFIRMED. 7-26-13