United States District Court, S.D. Ohio, Western Division
Connie J. Duggan, Plaintiff,
Towne Properties Group Health Plan, et al., Defendants.
OPINION & ORDER
MICHAEL R. BARRETT, JUDGE UNITED STATES DISTRICT COURT
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
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. 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.
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.
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.
Fiduciary under ERISA
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
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). 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).
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.
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).
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).
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