MEMORANDUM OPINION AND ORDER
Harris Trust and Savings Bank and Martin Den Hartog, co-guardians of the estate of Sandra Den Hartog ("the estate"), sue Provident Life and Accident Insurance Co. ("Provident") and Campbell Soup Co. ("Campbell") (collectively "the defendants"). The estate sues for a declaration that it is entitled to be reimbursed for medical expenses under an employee benefit plan. The estate also seeks to recover expenses it claims are owed under the plan. The benefit plan, which is funded by Campbell and administered by Provident, is governed by the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001, et seq. ("ERISA").
Campbell counterclaims for reimbursement of medical expenses it advanced to the estate under the plan. The parties file cross-motions for summary judgment.
In September 1985, Sandra Den Hartog was involved in an automobile accident at a railroad crossing, and was rendered a quadriplegic. See Estate 12(m) Stmt. P 11. Since the accident, Sandra has been totally disabled and dependant on supportive care; she will be dependant for life. See Campbell 12(m) Stmt. P 5. The annual cost for Sandra's treatment is about $ 50,000. See Campbell 12(m) Stmt. P 76.
After the accident, Sandra's father, Martin Den Hartog, opened a probate estate on Sandra's behalf and, as her guardian, filed a personal injury suit against the responsible parties.
See Estate 12(m) Stmt. P 14. On January 27, 1989, the suit was settled for $ 7 million. See Campbell 12(m) Stmt. P 32. The settlement generates sufficient annual income to cover Sandra's treatment expenses. Id. P 77.
At the time of Sandra's accident, Martin Den Hartog was employed by Specialty Brands, Inc. ("Specialty Brands") and worked at Specialty Brand's Thornton, Illinois plant. See Estate 12(m) Stmt. P 8. Martin Den Hartog was a participant in Specialty Brand's employee benefits plan, which was underwritten and administered by Lincoln National Life Insurance Co. ("the Lincoln plan"). Id. PP 9-10. As Martin Den Hartog's dependant, Sandra received medical benefits under the Lincoln plan. Id. P 12. Lincoln paid the medical expenses relating to Sandra's disability (hereinafter Sandra's "expenses")
until March 31, 1989. See Campbell 12(m) Stmt. PP 6, 28.
On March 24, 1988, Campbell acquired the Thornton plant from Specialty Brands. See Estate 12(m) Stmt. P 32. Consequently, Martin Den Hartog became an employee of Campbell -- for whom he continues to work. Upon Campbell's acquisition of the Thornton plant, Martin Den Hartog became a participant in Campbell's group benefit plan, which is sponsored and fully-funded by Campbell and is administered by Provident ("the Provident plan"). See Provident 12(m) Stmt. PP 9-17, 28.
The Provident plan, which has covered the Martin Den Hartog family from the day that Campbell acquired the Thornton plant, provides Thornton employees and their families with substantially the same benefits that were available to them under the Lincoln plan. See Campbell 12(m) Stmt. PP 14, 16; see also Estate Exs. 4 and 5. Between March 1988 and June 1989, when Campbell published a new summary of benefits for Thornton employees, Martin Den Hartog was advised to rely on the terms of the Lincoln plan in determining his family's benefits coverage. See Campbell 12(m) Stmt. PP 16-17.
Sandra continued to have her expenses paid through the Lincoln plan until March 31, 1989, a year after she first became covered under the Provident plan. See Estate 12(m) Stmt. PP 35-36. Sandra received extended benefits pursuant to the Lincoln plan's twelve-month post-termination coverage extension for disabled eligible dependents. Id. P 33.
As part of the settlement of the lawsuit, the estate repaid more than $ 400,000 for the expenses that had been covered by the Lincoln plan in light of the Plan's third-party limitations provision. See Campbell 12(m) PP 35-36; Campbell Ex. 9.
In April 1989, when the Lincoln plan's coverage extension expired, Martin Den Hartog submitted claims to the Provident plan for reimbursement of Sandra's expenses. See Campbell 12(m) Stmt. P 52. Campbell directed Provident to pay Sandra's expenses under the plan. See Estate 12(m) Stmt. P 46. Between April 1, 1989 and June 15, 1991, Campbell paid the estate $ 290,241.53 through the Provident plan for Sandra's expenses. See Campbell 12(m) Stmt. P 63. In July 1989, Provident sent Martin Den Hartog two repayment acknowledgement forms seeking information about the settlement and asserting a right to be repaid for Sandra's expenses. Id. PP 53-54. Martin Den Hartog did not sign the repayment agreements nor did he return them to Provident; instead he forwarded the forms to the estate's attorney. See Campbell 12(m) Stmt. PP 58-59.
In June 1991, Campbell instructed Provident to stop paying Sandra's benefits under the plan. See Provident 12(m) Stmt. P 36. Campbell decided to discontinue payments because of its understanding that Sandra's expenses were not covered in light of the plan's third-party exclusion. Id. PP 100-07. Because Sandra's disability was caused by third parties and because she had been awarded a cash settlement to compensate her for her disability, Campbell concluded that Sandra was not entitled to recover expenses under the plan. Id.
The estate sues for a declaration that Sandra's expenses are covered under the Provident plan. The estate also seeks to recover Sandra's expenses for claims it has presented to the Provident plan since June 15, 1991. Campbell counterclaims for reimbursement of the money it paid Sandra between April 1989 and June 1991. Campbell maintains that the payments were "advances" in expectation of future repayment.
The parties file cross-motions for summary judgment. Summary judgment must be granted when the moving papers and affidavits show that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Unterreiner v. Volkswagen of America, Inc., 8 F.3d 1206, 1209 (7th Cir. 1993). A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Stewart v. McGinnis, 5 F.3d 1031, 1033 (7th Cir. 1993), cert. denied, 127 L. Ed. 2d 393, 114 S. Ct. 1075 (1994).
In this case, the cross-motions raise three distinct issues: First, Provident contends that it is not a proper party to this suit because it is not a "fiduciary" of the Provident plan (as that term is defined by ERISA). Second, the estate asserts that the plain terms of the Provident plan demonstrate that Campbell is liable for Sandra's expenses (while the defendants respond that the Provident plan unambiguously establishes that they are not liable for Sandra's expenses). Finally, Campbell claims that it must be reimbursed for the money it "advanced" to Sandra before it ordered Provident to stop payments in June 1991.
1. Fiduciary Under ERISA
In moving for summary judgment, Provident contends that, as a matter of law, it cannot be liable to the estate. Provident asserts that under ERISA, it is not a "fiduciary" of the Provident plan, and thus is not a proper party in this suit challenging Sandra's right to recover expenses under the plan. Provident's contention is convincing.
A suit regarding a benefits claim may not be maintained against an entity that is not a fiduciary of the benefits plan. Under ERISA, a participant in a benefits plan may sue "any person who is a fiduciary with respect to [the] plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries" by ERISA. See 29 U.S.C. §§ 1109(a); 1132(a)(1). Thus, the estate may only sue parties who are deemed to be fiduciaries of the plan. Id.; see also Pappas v. Buck Consultants, Inc., 923 F.2d 531, 535 (7th Cir. 1991).
Provident bases its argument on ERISA's definition of fiduciary. ERISA defines a plan fiduciary as follows:
[A] person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he 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) he has any discretionary authority or discretionary responsibility in the administration of such plan.
29 U.S.C. § 1001(21)(A). Provident asserts that because it does not exercise discretionary authority or perform discretionary functions in administering the Provident plan, it is not a fiduciary of the plan.
The undisputed evidence demonstrates that Provident's duties with respect to the plan are ministerial and non-discretionary. The Provident plan is wholly-funded by Campbell. Provident agreed to process benefit claims on Campbell's behalf pursuant to Campbell's contractually-regulated directions. Provident administers the plan for Campbell under an administrative services agreement in which Provident is required to "follow the claims administration procedures and practices desired by [Campbell]." See Provident Ex. 2, Attach. A, P 2(c). Provident also must make all benefits eligibility decisions "in accordance with the Benefit Program and claims administration procedures and practices" created by Campbell. Id. P 2(f). In addition, pursuant to the agreement, all disputed and non-routine claims are to be decided by Campbell; all problems in administering the program are to be reported to Campbell; and Provident must make a monthly accounting of all payments that it processes. Id. PP 2(i),(k),(l). Provident processes claims on Campbell's behalf subject to Campbell's direction and control. Thus, Provident does not exercise discretionary authority in administering the plan.
Indeed, the undisputed evidence demonstrates that Provident exercises no discretionary functions with respect to Sandra's claims. Provident processed Sandra's request for reimbursement pursuant to the terms of the plan: Campbell, not Provident, approved the payment of Sandra's claims in 1989; Campbell, not Provident, ordered the discontinuation of benefits payments in 1991. See Provident 12(m) Stmt, PP 31-34, 35-36.
Provident administered Sandra's benefits under Campbell's direction and control.
In a number of decisions, courts have held that benefit plan administrators with duties analogous to Provident's are not ERISA fiduciaries. In Pohl v. National Benefits Consultants, Inc., 956 F.2d 126, 129 (7th Cir. 1992), the Seventh Circuit noted that "the existence of discretion is the sine qua non of fiduciary duty." Accordingly, the Seventh Circuit ruled that a plan administrator whose duties were "clerical, mechanical, ministerial, [but] not discretionary," and who "performed [a] list of ministerial functions," was not an ERISA fiduciary. Id. Similarly, in Gelardi v. Pertec Computer Co., 761 F.2d 1323, 1325 (9th Cir. 1985), the Ninth Circuit held that a plan administrator that "performs only administrative functions [such as] processing claims within a framework of policies, rules, and procedures established by others," is not a fiduciary of the plan.
Finally, in Harris v. Provident Life & Accident Ins. Co., 776 F. Supp. 1450 (D. Or. 1991), the court found that Provident was not a fiduciary of a plan regulated by an administrative services agreement nearly identical to the one at issue in this case. The Harris court wrote:
A person who performs purely ministerial functions is not a fiduciary. Ministerial functions include applying rules which determine the eligibility of a participant for benefits, calculating benefits, orienting new participants and advising participants of their rights under the plan. . . .
Harris, 776 F. Supp. at 1453. The Harris court found that Provident was not a fiduciary under the agreement because it had no discretionary authority or control with respect to the plan.
Based on the undisputed evidence, it is clear that Provident has no discretionary authority with respect to the Provident plan or with regard to Sandra's claims. Provident is not a fiduciary of the Provident plan. Accordingly, Provident is not properly named as a defendant in this suit.
2. Discontinuation Of
Between April 1989 and June 1991, Campbell directed the Provident plan to pay Sandra's expenses. On June 15, 1991, Campbell discontinued payments. The estate contends that under the terms of the Provident plan, Campbell must pay Sandra's expenses. Campbell responds that the plan excludes Sandra from coverage for expenses relating to her preexisting disability. The parties rely on their interpretations of the plan and seek a determination by the court of the legal effect of the plan's language.
Pursuant to ERISA, every benefit plan must be "established and maintained pursuant to a written agreement." 29 U.S.C. § 1102(a)(1). In addition, plan fiduciaries must act "in accordance with the documents and instruments governing the Plan." 29 U.S.C. § 1104(a)(1)(D). Finally, plan participants must be given a summary description of the plan that is "sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the Plan." 29 U.S.C. § 1022.
Immediately after Sandra's accident, the Lincoln plan paid Sandra's expenses. The Provident plan took effect three years later. The court must determine when the Provident plan went into effect, whether Sandra's expenses are covered under the plan, and whether the Provident plan reasonably apprised Martin Den Hartog of Sandra's coverage. In construing the plan, the court uses federal common law of contract interpretation. See Reiherzer v. Shannon, 581 F.2d 1266, 1272 (7th Cir. 1978). However, in fashioning federal common law, the court looks to the contract law of Illinois, the forum state. See Fox Valley & Vicinity Construction Workers Pension Fund v. Brown, 897 F.2d 275, 281 (7th Cir.) (en banc), cert. denied, 498 U.S. 820, 112 L. Ed. 2d 41, 111 S. Ct. 67 (1990).
a. The Provident plan
At the time of Sandra's accident, through March 1988, the Martin Den Hartog family was covered by the Lincoln plan. When Campbell acquired the Thornton plant, it instituted the Provident plan. At the time that the Provident plan went into effect, no written plan summary was distributed to Thornton employees. Instead, employees were told: (1) their benefits would remain the same as under the Lincoln plan; and (2) to continue to refer to the Lincoln plan summary for coverage questions. Campbell distributed a revised plan summary for the Provident plan in June 1989. Thus, the Provident plan was in effect with terms identical to those of the Lincoln plan between March 1988 and June 1989. See James v. National Business Systems, Inc., 924 F.2d 718, 720 (7th Cir. 1991) ("the plan need not be in writing, provided it is a 'reality'"). Since June 1989, the Provident plan has been governed by terms of the written plan summary.
b. Acts of third parties
Campbell contends that it is not required to pay Sandra's benefits in light of the Provident plan's "Acts of Third Parties" exclusion. The estate asserts that the exclusion does not apply to Sandra's situation. Both sides insist that the provision unambiguously supports their position.
The Provident plan's third-party exclusion provides as follows:
Medical care benefits are not payable to or for a person covered under this Plan when the Injury of Illness to the covered person occurs through the act or omission of another person. However, the Provident may elect to advance payment for medical care expenses incurred for an Injury or Illness in which a third party may be liable. For this to happen, the covered person must sign an agreement with the Provident to pay the Provident in full any sums advanced to cover such medical expenses from the judgment or settlement he or she receives.