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Duggan v. Towne Properties Group Health Plan

United States District Court, S.D. Ohio, Western Division

March 28, 2018

Connie J. Duggan, Plaintiff,
v.
Towne Properties Group Health Plan, et al., Defendants.

          OPINION & ORDER

          MICHAEL R. BARRETT, JUDGE UNITED STATES DISTRICT COURT

         This matter is before the Court upon Plaintiff's Motion for Class Certification. (Doc. 47). Defendant Medical Benefits Administrators, Inc. (“MedBen”) has filed a Response in Opposition (Doc. 55) and Plaintiff filed a Reply (Doc. 59).

         Plaintiff filed a putative class action claiming Defendant Towne Properties Asset Management, Inc., plan administrator and an ERISA fiduciary, failed to provide the plan documents to participants as required by ERISA and its regulations; and Defendant MedBen, also an ERISA fiduciary, failed to provide ERISA-compliant notice of its adverse benefit determinations to participants of plans it administers.[1] Plaintiff seeks an order under Federal Rule Civil Procedure 23(b)(2) and 23(c) certifying two classes for equitable relief under ERISA §502(a)(3), 29 U.S.C. §1132(a)(3):

Injunction Class (MedBen Only): All current and past participants in any ERISA-governed employee welfare benefit plan for which MedBen serves as third-party administrator.
Equitable Remedy Class: All participants in any ERISA-governed employee welfare benefit plan for which Defendant Medical Benefits Administrators, Inc. (“MedBen”) acted to adjudicate claims for benefits and issued at least one notification of an “adverse benefit determination” during the class period, September 25, 2009 to present.

         Towne Properties does not oppose certification of the Equitable Remedy Class; and has agreed in the future to distribute plan documents to plan participants as required by ERISA.

         MedBen argues class certification is not proper because (1) MedBen is not a fiduciary under ERISA; and (2) Plaintiff has not met the requirements for class certification under Federal Rule of Civil Procedure 23.

         A. Fiduciary under ERISA

         MedBen argues no class exists because MedBen is not a fiduciary under ERISA. MedBen explains that because the Equitable Remedy Class definition requires separate merits determinations as to whether MedBen is a functional fiduciary with respect to each of the 248 plans MedBen serviced, the definition is not administratively feasible. The Court notes that the Sixth Circuit has denied certification on this basis. See Pipefitters Local 636 Ins. Fund v. Blue Cross Blue Shield, 654 F.3d 618, 631 (6th Cir. 2011) (certification denied because ERISA fiduciary status was a “‘crucial…threshold factual issue specific to'…every class member, ” requiring numerous individualized determinations as to proposed class members to determine ERISA fiduciary status). However, “[t]he threshold question in all cases charging breach of ERISA fiduciary duty is whether the defendant was ‘acting as a fiduciary (that is, was performing a fiduciary function) when taking the action subject to complaint.'” Cataldo v. U.S. Steel Corp., 676 F.3d 542, 552 (6th Cir. 2012) (quoting Pegram v. Herdrich, 530 U.S. 211, 226, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000)). Therefore, the Court will first determine whether MedBen was a fiduciary within the meaning of ERISA before addressing class certification.

         “For the purposes of ERISA, a ‘fiduciary' not only includes persons specifically named as fiduciaries by the benefit plan, but also anyone else who exercises discretionary control or authority over a plan's management, administration, or assets.” Moore v. Lafayette Life Ins. Co., 458 F.3d 416, 438 (6th Cir. 2006).[2] Therefore, ERISA defines a fiduciary in “functional terms of control and authority over the plan.” Mertens v. Hewitt Assocs., 508 U.S. 248, 262, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993).

         MedBen acts as a third-party administrator on behalf of employee welfare benefit plans. MedBen enters into a “Benefit Management Agreement” with each of its customers. (See, e.g., Doc. 40-2). The Agreement requires each MedBen customer to establish a plan bank account and to give MedBen check-writing authority over the assets in that account. (Doc. 40-2 PAGEID# 768). Healthcare providers send claims to MedBen for payment. (Doc. 40, Lori Kane Dep., PAGEID# 598). MedBen evaluates these claims, and decides whether each claim is payable. (Id., PAGEID# 599.) MedBen refers to this process as “adjudication.” (Id.) MedBen then summarizes the amounts to be disbursed in a “check-run, ” which MedBen sends to the customer. (Doc. 47-1). After the customer confirms deposit of funds needed to cover those amounts, MedBen writes and sends the checks in order to pay the claims.

         MedBen explains that where plan language is unclear or silent with regard to a benefit, MedBen contacts Towne Properties for an interpretation and proceeds in accordance with Towne Properties' instructions regarding the approval or denial of the claim. (Doc. 40, PAGEID# 599-601; Doc. 42, Caroline Fraker Dep., PAGEID# 1850-51).

         Plaintiff cites a number of ways in which MedBen functioned as a fiduciary, such as paying claims and making claims determinations. However, the proper inquiry is not whether MedBen was a fiduciary in general, but whether MedBen was “acting as a fiduciary (that is, performing a fiduciary function) when taking the action subject to complaint.” Pegram v. Herdrich, 530 U.S. 211, 226, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000). Here, Plaintiff's claim is based on the allegation that MedBen “fail[ed] to provide ERISA-compliant adverse benefit determination notices.” (Doc. 1, PAGEID# 10, ¶ 43).

         MedBen argues that sending the notice was a ministerial function that does not give rise to fiduciary liability. An interpretive bulletin issued by the Department of Labor (“DOL”) explains that a fiduciary is not “a person who performs purely ministerial functions for an employee benefit plan within a framework of policies, interpretations, rules, practices, and procedures made by other persons . . . [and] such [a] person does not have discretionary authority or discretionary control respecting management of the plan . . . .” 29 C.F.R. § 2509.75-8, Question D-2. Ministerial functions include ...


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