United States District Court, N.D. Ohio, Eastern Division
OPINION AND ORDER
CHRISTOPHER A. BOYKO UNITED STATES DISTRICT JUDGE.
matter comes before the Court upon the Motion (ECF DKT #9) of
Defendant, HealthSmart Benefit Solutions, Inc.
(“HBS”), to Dismiss Counts II, IV, VI, VIII and
IX of the Complaint against it Without Prejudice. For the
following reasons, the Motion is granted.
Owner's Management Company (“OMC”) filed the
instant Complaint on April 25, 2017, against HBS and Arthur
J. Gallagher & Co. (“Gallagher”) for breach
of contract, breach of fiduciary duties, negligent
misrepresentation and for an accounting.
is an independent senior living and multi-family residences
property management company. Gallagher is an insurance
brokerage and risk management company. HBS is a healthcare
had a long-standing relationship with Gallagher and relied
upon Gallagher's expertise and advice for its employee
healthcare benefit needs. Gallagher recommended a self-funded
employee healthcare benefit plan from November 1, 2014
through October 31, 2015 that minimized Plaintiff's cost
and potential exposure. Gallagher also recommended that
Plaintiff utilize HBS as Claims Administrator. On November 1,
2014, Plaintiff, as Plan Sponsor, Administrator and
Fiduciary, entered into the HealthSmart Benefit Solutions,
Inc. Administrative Services Agreement with HBS. (ECF DKT
#1-2). Gallagher was not a party to the Agreement. According
to the Complaint, however, Gallagher and HBS modified how the
assets of the Plan would be managed and how the costs,
including the amount of approved benefit claims, were to be
paid, all without Plaintiff's knowledge or consent. As
the result of the alleged failures, mismanagement and
misconduct of Gallagher and HBS, the Plan was underfunded and
HealthSmart Benefit Solutions, Inc. Administrative Services
Agreement contains the following relevant provisions:
¶ 1.3: Scope of Undertaking. [OMC] has sole and
final authority to control and manage operation of the Plan.
HBS is and shall remain an independent contractor with
respect to the services being performed hereunder and shall
not for any purpose be deemed an employee of [OMC]. HBS and
[OMC] shall not be deemed partners, engaged in a joint
venture or governed by any legal relationship other than that
of independent contractors. HBS does not assume any
responsibility for the general design of the Plan, the
adequacy of funding required by the Plan, or any act or
omission or breach of duty by [OMC].
to ¶ 2.1, HBS's sole responsibilities to OMC were
limited to those described in the Agreement and any Exhibits
attached. HBS was to handle the claims process and care
management services for the Plan. These services involved
reviewing claims, substantiating benefits eligibility,
corresponding with enrollees and providers regarding claim
coverage, preparing plan documents, coordinating stop-loss
coverage and providing medical case management. (See OMC
Opposition Brief, ECF DKT #12 at 6-7).
to ¶ 2.4, HBS and OMC agreed that HBS's duties under
the Agreement were non-discretionary.
¶ 3.1, OMC would make all final determinations as to
entitlement to Plan benefits and would be responsible for the
Plan's compliance with all applicable federal and state
laws and regulations.
¶ 3.2: Final Authority. [OMC] shall have all
discretionary authority and control over the management and
disposition of Plan assets to the exclusion of HBS. HBS shall
not exercise any authority or control with respect to the
management or disposition of the assets of the Plan. HBS
shall have no responsibility or liability with respect to (i)
any funding of Plan Benefits ...
¶ 3.3: Banking Arrangements. [OMC] shall
provide sufficient funds to cover all of its obligations
under the Plan, and HBS has no duty or obligation, legal or
otherwise, to make such payments should [OMC] fail to provide
such funding. [OMC] specifically authorizes HBS to issue
claims payment via check, electronic transfer, and/or any
other valid form of payment on a bank account established and
maintained in the name of [OMC].
to ¶ 10.3, the Agreement, including any Exhibits,
constituted the entire agreement
between the parties with respect ...