Opinion ID: 158710
Heading Depth: 2
Heading Rank: 1

Heading: Did IPSC Properly Amend Its Benefits Plan?

Text: Appellants insist that IPSC violated corporate procedures when Mr. Chapman amended its benefits plan in 1991 because Mr. Chapman did not have the authority to amend the plan and IPSC’s Board of Directors never approved the amendments. To determine whether appellants’ claim is accurate, we must engage in “a fact-intensive inquiry, under applicable corporate law principles, into what persons or committees within [IPSC] possessed plan amendment authority, either by express delegation or impliedly, and whether those persons or committees actually approved the new plan provision . . . .” Curtiss-Wright Corp. v. Schoonejongen , 514 U.S. 73, 85 (1995). Because IPSC is a nonprofit corporation, Curtiss-Wright directs us to look to Utah nonprofit corporation law. Utah Code Ann. § 16-6-40 permits a nonprofit corporation to delegate management of its affairs to its officers and agents through its articles of incorporation or bylaws. Accordingly, IPSC’s bylaws authorize IPSC’s officers to “manage the activities of [IPSC] and its employees within the guidelines provided by the Board [of Directors].” IPSC Bylaws art. II, -5- § 2.1.1 (May 11, 1989). Furthermore, the bylaws state that IPSC’s officers include “a President and Chief Operations Officer.” Id. art. 5, § 5.1. Pursuant to Utah law and through its bylaws, IPSC had authorized Mr. Chapman, president and COO of IPSC, to manage IPSC’s activities and its employees. Therefore, we hold that Mr. Chapman possessed the authority under Utah law to amend IPSC’s medical and dental benefits plan. IPSC properly amended its benefits plan, and IPSC is entitled to summary judgment on this issue. II. Did IPSC Breach Its Fiduciary Duty to the Andersons? Appellants claim that IPSC breached its fiduciary duty to them because (1) it interpreted the language in § 4.06(b) of the Wraparound Document to require premium payments by the first of the month and (2) it canceled their insurance after accepting partial payments in advance. Specifically, appellants insist that § 4.06(b) merely requires payment by the tenth day of each month and that partial payment of a premium entitles the payee to a prorated amount of insurance which, in turn, extends the grace period. Section 4.06(b) states, “Payments shall be made in advance at the beginning of the month for which coverage applies; however, there is a thirty day grace period. If full payment is not received by the end of the grace period, participation in this Plan shall end . . . .” Using our common sense, we read -6- § 4.06(b) to mean that payments were due on the first day of each month. In addition, IPSC informed Mr. Anderson on multiple occasions that his premium payments were due on the first of each month. Therefore, appellants’ strained interpretation of § 4.06 is without merit. Moreover, § 4.06(b) makes it clear that premiums must be paid-in-full each month. There is no provision in the plan for beneficiaries to receive prorated insurance in return for partial payments. Thus, IPSC is entitled to summary judgment on appellants’ breach of fiduciary duty claims. III. Was the Andersons’ Breach of IPSC’s Benefits Plan Material? Appellants argue that their breach of IPSC’s benefits plan was not material because they made a partial premium payment before the grace period expired and their failure to pay the entire premium did not impact the financial well-being of IPSC. As discussed above, the plan documents do not provide for partial payments. Therefore, any such payments are irrelevant to the question of whether the Andersons’ breach was material, and IPSC is entitled to summary judgment on this issue. IV. Did IPSC Promise Mr. Anderson He Could Never Lose His Benefits? Appellants claim that through oral promises and written documents, IPSC promised Mr. Anderson he could never lose his benefits. “ERISA requires all modifications to an employee benefit plan to be written and to conform to the -7- formal amendment procedures.” Miller v. Coastal Corp. , 978 F.2d 622, 624 (10th Cir. 1992) (internal citations omitted). Moreover, an employer’s “promise to provide vested benefits ‘must be incorporated, in some fashion, into the formal written ERISA plan.’” Chiles v. Ceridian Corp. , 95 F.3d 1505, 1511 (10th Cir. 1996) (quoting Jensen v SIPCO , 38 F.3d 945, 949 (8th Cir. 1994)). In addition, an employer’s intent to vest benefits “‘must be stated in clear and express language.’” Id. at 1513 (quoting Wise v. El Paso Natural Gas Co. , 986 F.2d 929, 937 (5th Cir. 1993)). In the instant case, there are no plan documents which state in any way that IPSC intended to vest Mr. Anderson’s benefits. Accordingly, IPSC is entitled to summary judgment on this issue.