Jefferson-Pilot Life Insurance v. Krafka

The Supreme Court of Louisiana reached the same conclusion on similar facts in Copeland v. Slidell Memorial Hosp. (La. 1995) 657 So.2d 1292 , 1302. The employee benefit plan at issue was governed by ERISA. It contained a subrogation clause. The employer was an ERISA fiduciary. The employer intervened in a medical malpractice action. The employer sought reimbursement of medical expenses paid on the employee’s behalf. The employee’s husband signed a “ ‘subrogation recovery agreement’ ” providing that any money collected from a third party for the same medical expenses would be returned to the employer. (Id. at pp. 1294-1295.) The medical malpractice action was settled and the employee received $500,000 from the Louisiana Patient’s Compensation Fund (PCF). (Id. at p. 1294.) When reimbursement was not forthcoming, the employer filed suit seeking reimbursement from the PCF. (Id. at p. 1295.) With respect to the question of subject matter jurisdiction, the Louisiana Supreme Court, in an opinion authored by Justice Bemette J. Johnson, held the employer could not bring the action in state court. Justice Johnson concluded the federal courts had exclusive subject matter jurisdiction to determine whether the employer was entitled to reimbursement pursuant to the subrogation agreement. (Id. at p. 1302.)

A cause of action is available in federal court to an ERISA fiduciary seeking, as here, reimbursement for medical expenses paid. Section 1132(a)(3) provides a civil action may be brought: “[B]y a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan[.]” (Italics added.)

Plaintiff contends it cannot bring a cause of action under ERISA. Plaintiff reasons that it is not an ERISA fiduciary. “Fiduciary” is defined in section 1002(21)(A) as a person who: “(i) . . . exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of assets, (ii) . . . renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) . . . has any discretionary authority or discretionary responsibility in the administration of such plan.” The Ninth Circuit Court of Appeals has held: “An ERISA fiduciary includes anyone who exercises discretionary authority over the plan’s management, anyone who exercises authority over the management of its assets, and anyone having discretionary authority or responsibility in the plan’s administration. [Citation.]” (Credit Managers Ass’n v. Kennesaw Life & Acc. Ins. (9th Cir. 1987) 809 F.2d 617 , 625.) Also, the Ninth Circuit has noted that insurers can be ERISA fiduciaries if “they are given the discretion to manage plan assets or to determine claims made against the plan .... [A]n insurer will be found to be an ERISA fiduciary if it has the authority to grant, deny, or review denied claims.” (Kyle Railways v. Pacific Admin. Services (9th Cir. 1993) 990 F.2d 513 , 517-518, fn. omitted; Pacificare Inc. v. Martin, supra, 34 F.3d at p. 837.)

Plaintiff contends it is not an ERISA fiduciary in the present context for the following reasons. Plaintiff argues it had no discretion whether to enforce the reimbursement provision of the plan or the separate contract; enforcement of the reimbursement provision was mandated by the terms of the plan. Further, plaintiff reasons a review of the documents in the record shows the lack of discretion afforded it as to enforcement of the reimbursement provision. Therefore, plaintiff argues, it cannot be deemed an ERISA fiduciary.

Moreover, the undisputed evidence in the present case compels the conclusion plaintiff was an ERISA fiduciary. Defendant’s employer, Treptow Development Co., was the plan sponsor and administrator. Treptow Development Co. provided general administration of the plan and paid the premiums. Employee contributions were paid through payroll deductions. However, plaintiff had the authority to: create contracts for policies of group insurance; maintain claim files; determine whether claims would be paid or denied; review and reconsider denied claims when review was requested by an employee; terminate or renew policies; compute premiums and determine the status of insurance for each person insured; amend or change the policy by agreement with the policyholder; retain surplus earnings; change the rate basis for computation of premiums; coordinate benefits when coverage exists under more than one plan; pay benefits; determine the customary charges or the general level of charges for an unusual service; resolve disputes regarding premiums or claims; examine a person whose injury or sickness is the basis of a claim; and receive legal process in lawsuits about the plan. Given its broad discretionary authority over the plan’s management and administration including the discretion to grant or deny claims and to review denied benefits requests, plaintiff was an ERISA fiduciary. (Pacificare Inc. v. Martin, supra, 34 F.3d at pp. 837-838; Kyle Railways v. Pacific Admin. Services, supra, 990 F.2d at pp. 517-518; Credit Managers Ass’n v. Kennesaw Life & Acc. Ins., supra, 809 F.2d at p. 625.)

Plaintiff asserts a claim falling under section 1132(a)(3) is not removable to the federal district court, therefore the state courts have jurisdiction over it. That contention is without merit. The inability to remove this action to the federal district court, if that is the law, does not confer subject matter jurisdiction on the state courts. We note that the time in which to seek removal of this action to the federal district court has long since passed. Title 28 of the United States Code, section 1446(b) states: “The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not

The judgment is reversed. The trial court is directed to dismiss the complaint. Each side is to bear its own costs on appeal.

Grignon, J., and Godoy Perez, J., concurred.