Appeal from the United States District Court for the Southern District of Illinois, East St. Louis Division, No. 85 C 3205 -- James L. Foreman, Chief Judge.
Flaum and Ripple, Circuit Judges, and Eschbach, Senior Circuit Judges.
This case presents the question of whether United Food and Commercial Worker's International Union, AFL-CIO and CLC (Union) is a fiduciary under the Employee Retirement Income Security Act of 1974 (ERISA), § 3(21), 29 U.S.C. § 1002(21). The appellants, Leonard Forys and Janet Forys, alleged in their amended complaint that the Union violated its discretionary responsibilities in representing the appellants' interests in recovering benefits from their employer's, Swift Independent Packing Company (Swift), health plan. The district court granted the Union's motion to dismiss. It held that the Union was not a fiduciary under ERISA. For the reasons set forth below, we affirm the judgment of the district court.
Because we are reviewing a motion to dismiss, we must accept as true the well-pleaded facts in the complaint. The appellants, at the time this cause of action arose, were employees of Swift and beneficiaries of Swift's health insurance plan. The plan is an "employee welfare benefit plan" within the meaning of ERISA § 3(1), 29 U.S.C. § 1002(1). The appellants, husband and wife, were the parents of Lynn Ann Forys. Lynn Ann Forys was hospitalized in an intensive care unit from September 6, 1982 until June 14, 1983, and from August 27, 1983 until her death on January 26, 1984. As a result of this hospitalization, the appellants incurred medical bills totaling $591,083.26. The health care plan provided that it would pay the full rate for time in the intensive care unit without any maximum limitation. The plan provided benefits to the appellants in the amount of $551,211.24, but denied reimbursement for the remaining $39,872.02 of the medical expenses.
The appellants originally filed this action to collect the unpaid benefits. The appellants further sought relief in the form of attorneys' fees, damages for emotional distress, and punitive damages. Amended Complain and Jury Demand; R.16. The appellants later effected a settlement with the other parties who were originally named as defendants in this action.*fn1 The settlement agreement essentially provided that the medical creditors, St. Louis Children's Hospital and Washington University School of Medicine, would release from liability the appellants and all of the defendants (except for the Union) for the medical treatment of Lynn Ann Forys. As part of the settlement agreement, the defendants also paid $4,000 toward the appellants' attorneys' fees. Settlement Agreement, R.42, Ex. B; R.60.*fn2
Section 11 of of Swift's health insurance plan provides that paragraph 42 of the collective bargaining agreement between Swift and the Union governs the handling of claims for benefits under the health insurance plan. Paragraph 42 of the collective bargaining agreement provides, in pertinent part:
The Company will designate a representative or representatives at each plant who will be available for consultation with beneficiaries or a Local Union representative or representatives with respect to the disposition of claims.
In the event the beneficiary or the Local Union representative is not satisfied with the outcome of this consultation, the Local Union representative may refer the matter to the International Union for discussion with the Director of the Industrial Relations Department of the Company or his or her designated representative.
In the event no decision is reached in the above step, the International Union may submit the matter to the Arbitrator, whose decision shall be final and binding on all parties above. In making said decision, the Arbitrator shall be governed by the provisions of this contract and restricted to its application to the facts presented to him involved in the matter.
R.16, Ex. A at 1-2 (emphasis supplied).
The Union in this case followed the procedures mandated by the collective bargaining agreement by conferring with Swift's Director of Industrial Relations. However, the Union chose not to refer the case to an arbitrator. Consequently, the denial of benefits became final under the plan. The appellants argue that ...