Opinion ID: 605535
Heading Depth: 2
Heading Rank: 1

Heading: Fact Allegations

Text: 2 For purposes of this appeal, the allegations in the amended and the proposed complaints are deemed to be true. 3 The Pratt & Whitney Company (P & W) established a health insurance plan (the Plan) for its employees and retirees, and contracted with Connecticut General Life Insurance Company (Connecticut General) to perform various administrative responsibilities for P & W in connection with the Plan. The proposed complaint describes the contract obligations of Connecticut General as follows: 4 Under the terms of that contract, [Connecticut General] exercised discretionary authority regarding the processing of claims, determining the amounts owed, providing participants with notices regarding claim denial, admission certification and authorization, and disbursement of benefit checks from a bank account funded by direct payments from [P & W]. 5 The Plan was thus self-funded, which means that P & W insured the participants, who received payment through Connecticut General from an account funded by P & W. The P & W health insurance Plan was an employee benefit plan within the meaning of ERISA, 29 U.S.C. § 1101(a) (1988). 6 Plaintiff Earl Lee was employed by P & W and its predecessor company since 1962. He suffered a heart attack in January 1989 and qualified for disability retirement later that year. Mr. Lee exercised his right under federal law to continue making premium payments for health insurance coverage under the Plan and he thereby continued his coverage. See Consolidated Omnibus Budget Reconciliation Act, 29 U.S.C. § 1161 et seq. (1988). 7 On March 17, 1991 Mr. Lee was admitted to the hospital suffering chest pain. Mr. Lee's wife obtained pre-admission certification and approval for the hospitalization from Connecticut General, which confirmed its certification by letter two days later. Mr. Lee's participation in the Plan was current: he had paid premium by check on March 6 and March 26, 1991. 8 On April 3, 1991, Connecticut General informed Mr. Lee that no health insurance benefits would be afforded under the Plan after February 28, 1991 by reason of P & W's bankruptcy under Chapter 7 of the Bankruptcy Act 1 . 9 Mr. Lee, who had earlier been hospitalized in January 1991, has incurred altogether $12,600 in medical bills that we must assume are covered by the Plan. Connecticut General has refused to pay these bills on the ground that the self-insured sponsor is now bankrupt and has ceased funding the Plan. 10 Plaintiff David Abramson, an employee of P & W and its predecessor company for 26 years, is in similar circumstances. Mr. Abramson was diagnosed with a serious illness in December 1990, obtained pre-approval and authorization from Connecticut General for surgery that was performed in January 1991, and has thereby incurred $47,500 in related medical expenses that Connecticut General has refused to pay. 11 ERISA mandates that each participant in a plan be furnished with a summary plan description that includes a statement as to the source of financing of the plan. 29 U.S.C. § 1022(b) (1988). To the best of their knowledge and belief, Mr. Lee and Mr. Abramson were never provided with summary plan descriptions as required by ERISA, 29 U.S.C. § 1021(a) (1988), and were never informed that the Company's Plan was 'self-funded.'  12 According to plaintiffs, they believed that Connecticut General was acting as an insurer and not solely as an Administrator of the Plan, and that their belief was reasonable (a) because Connecticut General had sent all written information about coverage, claim forms, benefit statements and denials, and claim checks; and (b) because neither [P & W] nor Connecticut General ever clearly and explicitly explained to the plaintiffs that their health benefits were self-funded rather than insured by [Connecticut General].The single Count in the proposed complaint recites that plaintiffs relied to their detriment on the representations set forth above, as well as on the pre-approvals and authorizations issued by Connecticut General; and that Connecticut General breached the fiduciary duties prescribed in ERISA Section 404, 29 U.S.C. § 1104 (1988), ERISA Section 101, 29 U.S.C. § 1021 (1988), and ERISA Section 104, 29 U.S.C. § 1024 (1988) by failing to apprise plaintiffs that Connecticut General's only financial obligation was as a mere conduit and that the funding was contingent on P & W and had been later terminated. Plaintiffs predicate their standing to seek damages for the alleged ERISA violations upon ERISA Sections 502(a)(1)(B) and 502(a)(3), 29 U.S.C. §§ 1132(a)(1)(B) and (a)(3) (1988).