The LHD/ERISA Advisor: District Court Holds that Plan Administrator Was ERISA Fiduciary

Hinshaw & Culbertson - The LHD/ERISA Advisor

Hinshaw & Culbertson - The LHD/ERISA Advisor

In Technibilt Grp. Ins. Plan & Technibilt, Ltd v. Blue Cross & Blue Shield of North Carolina (W.D. N.C., Feb. 3, 2020), a North Carolina district court held that a plan administrator was an ERISA fiduciary for the purpose of timely submitting claims to a stop loss carrier.

The case involved a group health benefit plan (the "Plan") offered by a shopping cart manufacturer for its employees and their dependents. The manufacturer had obtained an excess stop-loss policy as reinsurance for the plan.

The reinsurance policy only covered claims paid during the policy period and not those incurred during the policy period. An outside health insurer who provided claim processing services for the Plan failed to submit certain claims for payment within the applicable policy year, and the reinsurance policy refused to cover them.

The Plan brought an action under ERISA against the health insurer, alleging it had breached its fiduciary duties by failing to process and pay the medical expense claims before the end of the policy period. In response, the health insurer filed a motion to dismiss the complaint. The health insurer argued that the Plan lacked standing to bring an action for breach of fiduciary obligations under ERISA. It also maintained that the Plan did not fit into the enumerated categories which allowed for standing to bring an ERISA action.

The district court rejected this argument, finding that the claims asserted directly by the Plan were pursued in a fiduciary capacity as the Plan was necessarily seeking relief for the benefit of the Plan.

Next, the district court rejected the health insurer's claim that it was not, as a matter of law, an ERISA fiduciary that could breach any fiduciary duty by its failure to process and pay the patient's claims before the end of policy period. The district court found that the Plan had sufficiently alleged facts that the health insurer was a functional fiduciary because it alleged the health insurer exercised discretionary control over if and when claims were paid for Plan participants. Additionally, the district court was not persuaded by the health insurer's argument that even if it was a fiduciary, the Plan had not sufficiently alleged it had breached any fiduciary duty. The district court held this was not a proper matter to be determined as a matter of law on a motion to dismiss.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Hinshaw & Culbertson - The LHD/ERISA Advisor | Attorney Advertising

Written by:

Hinshaw & Culbertson - The LHD/ERISA Advisor

Hinshaw & Culbertson - The LHD/ERISA Advisor on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.