Opinion ID: 603902
Heading Depth: 2
Heading Rank: 2

Heading: kyle's claims against guarantee and national

Text: 15 The district court granted partial summary judgment for Guarantee and National regarding Kyle's fiduciary misconduct claims. Kyle appeals only the grant of partial summary judgment in favor of Guarantee. In addition, the district court dismissed Kyle's nonfiduciary misconduct claims against Guarantee and National. We review de novo grants of partial summary judgment and motions to dismiss. See T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 629 (9th Cir.1987); Oscar, 965 F.2d at 785. 16 A. The District Court did not Err by Determining that Guarantee was not Liable to Kyle as a Fiduciary Under ERISA. 17 Kyle asserts that Guarantee was in fact a fiduciary under ERISA because Guarantee had discretionary authority to make final claims decision[s], and did in fact exercise control over Plan assets. Again, an ERISA fiduciary is anyone who exercises discretionary authority or control respecting the management or administration of an employee benefit plan. 29 U.S.C. § 1002(21)(A). Kyle's bald conclusion that Guarantee is an ERISA fiduciary is unsupported by the law and the facts. 18 The majority of courts that have considered the status of benefit plan insurers have found insurance companies not to be ERISA fiduciaries unless they are given the discretion to manage plan assets or to determine claims made against the plan. 3 We agree, but we do not narrowly interpret the phrase discretion ... to determine claims to apply only to the initial decision to grant or deny benefits. Where the plan provides the insurer with the discretionary responsibility of making final claims decisions, the insurer is a fiduciary under the Act. McLaughlin v. Connecticut Gen. Life Ins. Co., 565 F.Supp. 434, 442 n. 4 (N.D.Cal.1983). While the mere provision of contractual benefits does not make an insurance company a fiduciary under ERISA, see id., Austin v. General Am. Life Ins. Co., 498 F.Supp. 844, 846 (N.D.Ala.1980); 29 C.F.R. § 2560.503-1(g)(2), an insurer will be found to be an ERISA fiduciary if it has the authority to grant, deny, or review denied claims. 19 Guarantee did not exercise sufficient discretion over claim payments or the Plan's assets to be considered an ERISA fiduciary. Guarantee, through National, audited the payments Pacific and Kyle made under the Plan for the sole purpose of determining whether the terms of the excess loss insurance policy had been met. Guarantee never processed, evaluated, or paid claims to participants of the Plan. Nor did it review denied claims. Instead, Guarantee's duties under the insurance policy were strictly limited to reimbursing Kyle for benefits in excess of the policy deductible, according to the terms of the insurance policy. Accordingly, we affirm the district court's grant of partial summary judgment in favor of Guarantee regarding Kyle's fiduciary misconduct claims against Guarantee. 20 B. The District Court did not Err by Concluding that Guarantee and National were not Liable to Kyle as Nonfiduciaries Under ERISA. 21 In order to withstand dismissal, Kyle had to allege that Guarantee and National were parties in interest and that they were engaged in a prohibited transaction under ERISA § 406(a). See § I.B., supra; Call, 881 F.2d at 635; Nieto, 845 F.2d at 874. Kyle's assertion that Guarantee and National were engaged in the prohibited transaction of improperly transferring assets from the Plan to a party in interest is incorrect. Section 406(a)(1)(D) prohibits a specific form of self dealing, not the mere denial of a claim under an excess loss insurance policy. See Amato v. Western Union Int'l, Inc., 596 F.Supp. 963, 968-69 (S.D.N.Y.1984) (finding no § 406 prohibited transaction where no funds were transferred from the plan), aff'd in part, rev'd in part, 773 F.2d 1402 (2d Cir.1985), cert. dismissed, 474 U.S. 1113, 106 S.Ct. 1167, 89 L.Ed.2d 288 (1986). Accordingly, we affirm the district court's dismissal of Kyle's nonfiduciary duty claims against Guarantee and National.