participant's lawyer and the third-party insurance company with which he settled for breach of fiduciary duty. The district court dismissed those claims and the plan appealed.
The Eight Circuit affirmed the decision. Relying on Chapman, the court refused to impose fiduciary liability on the lawyer given the "unacceptable conflicts of interest" such liability could create. Id. at 968 (quoting Chapman, 3 F.3d at 1511). The court also absolved the insurer saying: "a third-party insurance company with no pre-existing fiduciary relationship to the plan, was not a fiduciary merely because it possessed and controlled assets to which the plan asserted a claim." Id. at 969. As in Chapman, the crux of the Eighth Circuit's decision was the relationship between the alleged fiduciary and the plan, not the legal status of the disputed assets. See also Witt v. Allstate Ins. Co., 50 F.3d 536, 537 (8th Cir. 1995) ("Allstate had no pre-existing fiduciary relationship to the Funds, and we refuse to conclude that merely possessing or controlling assets to which the Fund asserted a claim created a fiduciary relationship.")
In the absence of any contrary authority, the Court concludes that the subrogation claims are Plan assets. By definition, an asset is anything of value to the Plan. The ability to recover benefits previously paid out is unquestionably valuable to the Plan.
According to Hess, HCC exercises substantial discretion over these Plan assets. (Hess Aff. P 4.) Thus, HCC is a fiduciary under ERISA and has standing to prosecute its claims under 29 U.S.C. § 1132(a)(3). See id. at §§ 1002(21) and 1132(e)(1).
Before reaching the substance of the summary judgment motions, the Court is compelled to address a serious problem revealed by HCC's complaint. The essence of this case is whether the Illinois common fund doctrine can be asserted against the Plan. Yet, neither the words "common fund doctrine" nor the facts that give rise to its assertion appears anywhere in HCC's complaint. In fact, HCC went to great lengths -- including violating Rule 11 -- to ensure that the issue was not mentioned.
In paragraph fifteen of the complaint, HCC alleges that "[Bichanich] has failed and refused to repay to the Plan any portion of the monies received in the aforesaid settlement." As HCC was well aware, however, that allegation was untrue. HCC now admits that Bichanich tendered to it a check for $ 14,215.63 before this suit was filed. (Pl.'s 12(m), P 15 and Pl.'s 12(n), P 8.) HCC refused to accept the payment because Bichanich's attorneys asserted a common fund claim against it. (Id.) But that does not mean that Bichanich "refused to repay" any portion of the settlement money, as HCC alleged.
Why HCC wanted to conceal the common fund issue is unclear. And, ultimately, it does not matter. What does matter is that HCC chose to further its own objectives rather than to comply with the Rule 11 obligations it owes to this Court. That was a bad choice and one that HCC should not repeat. If it does, the Court will not hesitate to impose sanctions.
The Summary Judgment Motions
Rule 56(c) permits summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." At this stage, the Court does not weigh evidence or determine the truth of the matters asserted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). All facts must be viewed and all reasonable inferences drawn in the light most favorable to the non-moving party. Karazanos v. Navistar Int'l Transp. Corp., 948 F.2d 332, 335 (7th Cir. 1991) (citing Lohorn v. Michal, 913 F.2d 327, 331 (7th Cir. 1990)). "Summary judgment is only appropriate when no reasonable jury could find for the non-moving party." Id. (citing Doe v. Allied Signal, Inc., 925 F.2d 1007, 1008 (7th Cir. 1991)).
Though not explicitly stated, HCC is seeking two declarations: (1) that it is entitled to recover from Bichanich the amount the Plan paid for her medical treatment (an ERISA claim); and (2) that it is not required to pay any amount to her attorneys under the Illinois common fund doctrine (a state law claim). The parties do not dispute that the Plan is entitled to recover the money it paid for Bichanich's medical benefits. Accordingly, the Court grants HCC summary judgment on its ERISA claim and orders Bichanich to pay $ 14,215.63 in restitution -- the undisputed amount of medical benefits the Plan provided to her.
Having disposed of the only federal claim in this suit, the Court declines to exercise its supplemental jurisdiction over HCC's common fund doctrine claim. See 28 U.S.C. § 1367. Because this claim arises solely from state law and is not preempted by ERISA, see Blackburn v. Sundstrand Corp., 933 F. Supp. 724, 1997 WL 290965 at *2 (7th Cir. 1997), it should be resolved by an Illinois state court. Accordingly, the common fund doctrine claim is dismissed without prejudice.
For the reasons set forth above, the Court grants HCC's motion for summary judgment on its ERISA claim and denies Bichanich's motion for summary judgment. The Court declines to exercise its supplemental jurisdiction over HCC's Illinois common fund doctrine claim and dismisses it without prejudice to refiling in state court.
Paul E. Plunkett
UNITED STATES DISTRICT JUDGE
DATED: June 30, 1997