Opinion
Civil Action No. 02-D-840 (PAC)
May 27, 2003
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This is an action under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1101, et seq. Jurisdiction exists under 28 U.S.C. § 1331. All parties are represented by counsel. Plaintiff's common law claims and his requests for compensatory, extra contractual and consequential damages and for a jury trial were dismissed by the Court. See November 5, 2002 Recommendation of United States Magistrate Judge and December 3, 2002 Order Adopting and Affirming Magistrate Judge's Recommendation.
The matters now before the court are Defendants' Motion for Summary Judgment Pursuant to Fed.R.Civ.P. 56 ("Def. MSJ") [filed February 10, 2003] and plaintiff's Motion for Summary Judgement [sic] with Supporting Brief ("PI. MSJ") [filed February 11, 2003]. An Order of Reference under 28 U.S.C. § 636(b)(1)(A) and (B) referred this case to the undersigned magistrate judge on July 8, 2002 to conduct pretrial proceedings and to issue recommendations for rulings on dispositive motions. The motions are fully briefed and are ripe for disposition. The Court heard oral argument on May 16, 2003.
I. Background
Negley was hired as an assistant manager for Breads of the World ("Breads of the World" or "Panera") in Ohio and he worked at a Panera's in Colorado. See Dei. MSJ, Ex. 2, Wilson Depo. p. 53, 1.11-15. Plaintiff accepted Panera's offer of employment on June 27, 2001. See id., Ex. 1, Negley Depo. p. 18, 1.8-10.
Plaintiff was diagnosed as HIV positive in 1996. Negley was told he would be eligible for medical benefits under Panera's plan ("the Plan") after the first of the month following his date of hire. See PI. MSJ, Exs. 1, 4. The Plan states that "[f]or a newly Eligible Person enrolled after this Contract Date, coverage starts as of his date of eligibility, provided Medical Mutual has received such person's Application within thirty-one (days) of their [sic] date of eligibility." PI. MSJ, Ex. 6 at 6, § 3.3(b). Further, "if . . . [Panera] does not submit an Application and Medical History Questionnaire for an Eligible Person within thirty-one (31) days of that person becoming eligible, Medical Mutual (the Plan) may impose an eighteen (18) month preexisting condition waiting period. . .). Id., at 5. According to plaintiff's interpretation of the Plan, if he had enrolled in Panera's health benefits plan within 31 days of his employment date, he would have had full coverage. If he enrolled after that date, he was subject to the Plan's eighteen month pre-existing condition exclusion. See PI. MSJ, at 2-3, Ex. 6, at 5. If he had no more than 63 days' gap in coverage from his prior employer and Panera's insurer, (that is if he enrolled by October 2, 2001), plaintiff argues Panera's Plan would have credited his prior health insurance coverage against the eighteen month exclusion under the Health Insurance Portability and Accountability Act of 1996 ("HIPPA"). See PI. MSJ, at 2-3.
Defendant argues that the preexisting condition exclusion applied to any enrollment date. See Def. Reply, at 4-5; PI. MSJ, Ex. 7 at 30.
On June 5, 2001 Negley completed W-4 and other forms for Panera listing his residence as 1056 Bryden Road or 1056 Bryden Avenue in Columbus, Ohio. See Def. MSJ, Exs. D-1. Plaintiff moved to Colorado on approximately August 8th or 9th, 2001. Id. Ex. 1, Negley Depo. p. 44, I. 15-18. The last time Negley stayed at the Bryden address was in June of 2001. Id. p. 52, I. 15-18. During June of 2001, his residence was 4993 Windy Bluff Court, in Columbus Ohio, id., p. 49, I. 17-18, p. 52, I. 19-24, which Negley considered to be "primarily his mailing address," where he received "90%" of his mail. Id., p. 53, 1.21-23, p. 4, I. 4-8.
Melanie Wilson, the human resources director for Panera, first sent plaintiff a package of insurance materials on July 3, 2001 to the 1056 Bryden Road address, see PI. MSJ, Ex. 5, Wilson Depo. p. 54, 1.21-24. Plaintiff was, however, not notified then or at any time of any time frame in which to return the documents. See Def. Motion, Ex. 2, Wilson Depo. p. 56, I. 5-25, p. 66, I. 7-12. Wilson was aware of the HIPPA gap in coverage provision, which she understood to be "if the employee doesn't have a large gap in coverage between when their last coverage ended and their next coverage starts . . . how the pre-existing-condition dause in the new plan, the months in the new plan-how the old plan they were in counts against those." See Pl. MSJ, Ex. 5, Wilson Depo. p. 31, I. 23-25, p. 32, I. 9-18, Wilson knew about the relevant HIPPA provision before she began working for Panera. See id., p. 32, I. 24-25, p. 33, I. 1-3. Wilson also understood that the maximum amount of time there could be a gap in coverage for the HIPPA provision to apply was 63 days, which she learned in October or November of 2001. See id., p. 33, I.19-25; p. 34, I. 1-11, 21-24
The Health Insurance Portability and Accountability Act of 1996, Pub.L. 104-191, 110 Stat. 2087-2088, amended § 1162(2)(D)(i) of ERISA. See 29 U.S.C. § 1162.
Negley's date of hire with Panera was June 27, 2001. See Def. MSJ, Ex. 2, Wilson Depo. p. 36, 1. 11-14. On or about that day Wilson was told that Negley was gay; that he had a terminally ill partner; and that he was planning to relocate to Denver. See id., p. 39, I. 13-25, p. 40, I.1-21, p. 41, I. 24-25, p. 42, I. 1. It is undisputed that Negley's medical benefits eligibility date would have been July 1, 2001 if he had completed the enrollment form and Panera had submitted the form to the Plan within 31 days of Negley's date of hire, Id., p. 58,1. 19-22. Wilson was not aware of anyone from Breads of the World telling plaintiff that he had to return the completed enrollment form within 30 to 31 days of his eligibility date. See id., p. 66, I. 21-25, p. 67, I. 1-3.
Wilson stated that, on July 3, 2001, she probably sent Negley the "in-Ohio" benefits information for his use until he transferred to Colorado, when he would be transferred to the Plan in use in Colorado. See id., p. 58, I. 3-9. Wilson sent the materials to an address with a house number of 1056. See id., p. 59, I. 16-17.
On approximately August 21, 2001, Negley telephoned Wilson and told her that he had not received the insurance package. See Def. MSJ, Ex. 1, Negley Depo. p. 79, I.10-14, p. 80, I. 1-8; Ex. 2, Wilson Depo. p. 68, I. 5-14. Wilson said she would mail another package to 1245 Humboldt St., Negley's Denver address, which he provided during the telephone call. See id., Ex. 1, Negley Depo. p. 80, I. 15-17; Ex. 2, Wilson depo. p. 71, I. 18-22. Wilson told plaintiff she was sending another package and that he needed to get the enrollment forms back to her "ASAP," but she did not give a specific date. See Id., Ex. 2, Wilson Depo. p. 70, I. 17-25, p. 71, I.1-3. Wilson also spoke with Negley on September 6, 2001 when she was told he had not received the August package of materials. Id., p. 76, I. 11-20; Ex. 1, Negley Depo. p. 91, I.1-13. Wilson later discovered she had sent the August mailing to Negley's Ohio address. See id., Wilson Depo. p. 77, I.11-17.
On September 6, 2001, Wilson said she sent another insurance package to Negley at the Denver store address where Negley was working. Id., p. 79, I. 1-4, p. 85, I.13-15. Negley spoke with Wilson again on September 28, 2001, the day he received the package. See id., p. 90, I. 6-8, p. 91, I. 1-5. Wilson states that she told Negley to fill out the forms right away and fax them to her. Id., p. 91, I. 6-9.
It is undisputed that plaintiff's medical insurance benefits under his previous employer's health insurance plan terminated on July 31, 2001. Negley said that Mark Hall filled out the insurance application for Negley on or about October 8, 2001 after discussing the "shuffle of paperwork" with Ms. Wilson, as well as Wilson's alleged statement that Wilson was going to get Negley's insurance coverage "retroed back to 7-1." Def. MSJ, Ex. 1, Negley Depo. p. 115, I.12-17. Wilson agreed she told Negley she would ask the insurance company for a July 1 effective date. Id., Ex. 2, Wilson Depo. p. 91, I.10-15. The next contact between Negley and Wilson was on October 8, 2001 when Negley called Wilson and told her he had been in the hospital and she told him to fax the enrollment form to her right away. Id., p. 116, I. 4-7. The enrollment form was faxed to Wilson on October 8, 2001. Id., p. 120, I. 17-20.
Wilson said that she became aware of Negley's pre existing HIV condition on October 8, 2001 when she received his enrollment form; she then called Panera's insurance broker to try to make Negley's effective medical benefits coverage date July 1, 2001 so it would cover Negley's hospitalization. Id., p. 121, I. 10-18, p. 122, I. 17-25, p. 123, I. 1-6. The Plan made Negley's insurance coverage date November 1, 2001 because Negley's forms were late, not having been submitted within 31 days of his full time employment. Id., p. 129, I.1-14.
Under Panera's Plan, a "late enrollee's" "effective date" is the first day of the month following acceptance by the Plan. See PI. Reply, at 5, ¶ 6; PI. MSJ, Ex. 6, p. 6, § 3.3(c). According to plaintiff, with Negley's "late enrollee" enrollment date of November 1, 2001, the Plan excluded his preexisting condition from coverage from November 1, 2001 until February of 2003, see PI. Reply to Def. MSJ, at 4, n. 2, resulting in approximately $70,000 to $100,000 in unreimbursed medical expenses. See Pl. MSJ, Ex. 22. If Negley's enrollment application had been accepted by the Plan by September 28, 2001, Negley argues he would have received credit for his prior coverage. See PI. Reply at 5, ¶ 6. He also argues that If he had completed his enrollment form within 31 days of his employment, and if Panera had submitted it to the Plan at that time, there would not have been any preexisting condition exclusion.
II. Standard of Review
Defendants move for summary judgment on all of plaintiff's remaining claims which are under ERISA. The purpose of summary judgment is to determine whether trial is necessary. White v. York Int'l, Corp., 45 F.3d 357, 360 (10th Cir. 1995). Summary judgment is appropriate under Fed.R.Civ.P. 56(c) when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When applying this standard, the court reviews the pleadings and documentary evidence in the light most favorable to the non moving party. Gray v. Phillips Petroleum, 858 F.2d 610, 613 (10th Cir. 1988). To defeat a properly supported motion for summary judgment, "there must be evidence upon which the jury could reasonably find for the plaintiff." Panis v. Mission Hills Bank, N.A., 60 F.3d 1486, 1490 (10th Cir. 1995) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). Speculation, supposition and unsupported factual allegations will not establish an issue of material fact necessitating trial. Handy v. Price, 996 F.2d at 1064, 1068 (10th Cir. 1993).
III.
ERISA was enacted to: "protect . . . participants in employee benefit plans and their beneficiaries, by requiring the disclosure . . . of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts." 29 U.S.C. § 1001 (b). Section 502(a)(1) of ERISA, 29 U.S.C. § 1132(a)(1)(B), empowers a "participant" or "beneficiary" to bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." A "participant" is an employee or former employee of an employer, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer. 29 U.S.C. § 1002(7). A "beneficiary" is a person who, under the terms of an employee benefit plan, is or may become entitled to a benefit under the plan. 29 U.S.C. § 1002(8). An "employee welfare benefit plan" is: any plan, fund or program . . . established or maintained by an employer . . . for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise . . . benefits in the event of sickness, accident, [or] disability. . . ." 29 U.S.C. § 1002(1). The term "employee benefit plan" or "plan" is "an employee welfare benefit plan or an employee pension benefit plan or a plan which is both. . .". 29 U.S.C. § 1002(3). Here, the law of the case is that defendants' group health insurance plan is an employee benefit plan as defined by ERISA. See Order of December 3, 2002; 29 U.S.C. § 1002(1) and (3).A. Was Wilson an ERISA fiduciary?
As an alternative to seeking benefits due under a plan, a beneficiary may bring claims under ERISA for breach of fiduciary duty. See 29 U.S.C. § 1132(a)(3). Negley seeks a judgment in his favor that Wilson breached her fiduciary duties under ERISA in the alleged failure to enroll plaintiff him in the plan, send him enrollment forms and disclose crucial information. Defendants argue that plaintiff's claims should be dismissed because Wilson's actions in mailing the forms and giving Negley information were non-discretionary ministerial acts which are not considered to be fiduciary functions under ERISA.
Panera argues that Wilson only mailed insurance information and answered questions about the Plan, so that she was not a Plan fiduciary. Panera relies upon an ERISA regulation describing purely ministerial functions, such as mailing enrollment packages. See, e.g., 29 C.F.R. § 2509.75-8 (QA D-2); Andre v. Salem Technical Services, 797 F. Supp. 1416, 1425 (N.D. III. 1992) (employer not a fiduciary under ERISA when it performs the ministerial responsibility of doing the paperwork necessary to get the employee enrolled with its benefits provider).
Plaintiff responds that Panera admitted in its answer that it was the plan administrator and it is therefore a Plan fiduciary as a matter of law, see Answer ¶ 9; that the Plan expressly requires Panera "to inform and explain the [insurance] contract to all eligible persons . . .", see Pl. MSJ at 3-4, Ex. 6, p. 5; that Wilson has stated that she was the Panera employee responsible for providing benefit information and coordinating the enrollment of employees, see id., Ex. 5, Wilson Depo, p. 12, I. 12-17, p. 13; that Wilson admitted that, although she sent Negley information about the health insurance plan, she did not inform Negley of the Plan's 31 day enrollment period, or of the 18 month preexisting condition exclusion if he was considered as a late enrollee, id., p. 56, I.19-25, p. 57, p. 59, p. 66, I. 7-25, p. 67, I.1-3., p. 129, I. 1-14; and, that Panera employees were directed to Wilson for benefits inquiries. See PI. Resp. to Def. MSJ, Ex. 2, Nett Depo. p. 42, I. 8-16.
ERISA requires a "fiduciary" to "discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries . . . and for the exclusive purpose of providing benefits to participants and their beneficiaries . . ." ERISA § 404(a), 29 U.S.C. § 1104(1)(A)(i). Under ERISA, a "person is a fiduciary with respect to a plan," and therefore subject to ERISA fiduciary duties, "to the extent" that he or she "exercises any discretionary authority or discretionary control respecting management" of the plan, or "has any discretionary authority or discretionary responsibility in the administration of such a plan." ERISA, 29 U.S.C. § 1002(21)(A); and see Varity Corporation v. Howe, 516 U.S. 489, 498 (1996).
Varity held that an employer is an ERISA fiduciary exercising discretionary authority when it misrepresents benefits to employees. Id.
ERISA regulations provide that if an entity is the plan administrator, it is a fiduciary. See 29 C.F.R. § 2509.75-8, D-3Q (a plan administrator "must by the very nature of his position have discretionary authority or discretionary responsibility in the administration of the plan . . . Persons who hold such positions will therefore be fiduciaries."). Moreover, an employer who is the plan administrator "generally becomes its employees' agent for the purposes of obtaining group health insurance . . . [a]nd . . . must act with due diligence . . . or else face liability for breach of fiduciary duty." Andre, 797 F. Supp. at 1424.
Here, I agree with plaintiff that Panera through Wilson is a fiduciary under ERISA regulations because Panera admitted it was the plan administrator. See also 29 U.S.C. § 1002(21)(A)(iii). Further, Plan documents required Panera "during the enrollment process . . . to inform and explain the contract to all eligible persons of the Group." See PI. MSJ, Ex. 6, at 5. With that language, Panera maintained some responsibility over the administration of the plan, which was to explain the insurance benefits contained in the contract to all participants. Moreover, Wilson acknowledged that she was responsible for providing benefits information and coordinating enrollment in the Plan. See PI. MSJ, Ex. 5 Wilson Depo, p. 12, I. 12-17, p. 13. An employer/plan administrator acts as a fiduciary when he communicates with employees about Plan benefits. See Varity, 516 U.S. at 498-501.
Panera, the Plan administrator, retained responsibility for explaining the terms of the insurance contract to employees during the enrollment process. That obligation included explaining information about the Plan so that Negley and other employees could make decisions about participating in the Plan. Under Varity, a plan administrator acts as a fiduciary when he communicates with employees about plan benefits. See Varity, 489 U.S. at 502-503. Despite her responsibility to explain the Plan benefits to all employees, before October 2001, Wilson was "unaware" of the Plan provisions concerning the 31 day enrollment period and of the HIPPA provisions regarding the maximum 63 day gap in coverage. See Pl. MSJ, Ex. 5, Wilson Depo., p. 129, I. 9-18, p. 130, I. 2-7. Wilson's communications or lack thereof with Negley were actions affecting the most important purpose of the Plan which was to provide health benefits to participants. Accordingly, I recommend finding that Wilson was a fiduciary under ERISA because her actions were discretionary and therefore fiduciary functions as a matter of law.
According to plaintiff, he would have to have been enrolled in the Plan by September 28, 2001 in order to obtain credit for his prior health insurance coverage under HIPPA. See PI. MSJ Reply at 4-5.
B. Did Panera breach the fiduciary duty to inform under ERISA?
Negley maintains that ERISA fiduciaries have four distinct disclosure obligations: (1) a duty not to misinform employees through material misrepresentations and incomplete, inconsistent or contradictory disclosures; (2) an affirmative duty to speak "when the trustee knows the silence might be harmful"; (3) a duty to give complete and accurate information in response to a participant's questions; and (4) a duty to provide the summary plan description within ninety days. See PI. MSJ, at 15; PI. MSJ Reply at 7.
Negley argues that Panera breached those duties by failing to provide Negley and other new employees, as a matter of corporate policy, with enrollment information, including a brief statement of important deadlines; failing to explain the provisions of the group contract during the enrollment process, failing to provide information when it became obvious that Negley needed it for his protection; and, responding to his questions with incorrect, incomplete and misleading information. See PI. Reply at 2-3. Negley finally contends that Wilson breached her fiduciary duty to provide Negley with a copy of the summary plan description within 90 days of his date of hire. Id.
Defendants argue that Wilson was not acting in a fiduciary capacity, but only performed the ministerial functions of mailing enrollment forms and providing information about the Plan to enrollees. Panera maintains that, even if mailing enrollment forms could be considered a fiduciary function, Panera complied with its duty to send the forms by mailing them to Negley at the address he provided, and that Negley's own negligence caused the delay in coverage. See Def. MSJ, at 10-15.
Under ERISA, a fiduciary first has a duty of loyalty to discharge his duties respecting a plan "solely in the interest of the participants and beneficiaries . . ." 29 U.S.C. § 1104(a)(1); Varity, 489 U.S. at 506. Second, ERISA imposes a "prudent person" standard, which is codified in the requirement that a plan fiduciary exercise his duties "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims." 29 U.S.C. § 1104(a)(1)(B); see also Morgan, 975 F.2d 1467, at 1469. The prudent person standard, in combination with the duty of loyalty, "imposes an unwavering duty on an ERISA trustee to make decisions with single-minded devotion to a plan's participants and beneficiaries and, in so doing, to act as a prudent person would act in a similar situation." Morse v. Stanley, 732 F.2d 1139, 1145 (2d Cir. 1984). 1. ERISA prohibits knowing misrepresentations about a Plan
The Supreme Court has made it dear that an ERISA fiduciary's duty is not to make knowing misrepresentations about the plan. See Varity, 489 U.S. at 502-03 (knowing misrepresentations by an employer/plan administrator was a breach of fiduciary duty under ERISA). Other federal courts have agreed. See Maez v. Mountain States Tel Tel, Inc., 54 F.3d 1488, 1499 (10th Cir. 1995) (fiduciary cannot misrepresent or mislead a participant regarding his eligibility for or the extent of benefits to which he may be entitled); Drennan v. General Motors Corp., 977 F.2d 246, 250-251 (6th Cir. 1992) (internal citation omitted)("[m]isleading communications to plan participants `regarding plan administration (for example, eligibility under a plan, the extent of benefits under a plan)' will support a claim for breach of fiduciary duty.")
2. Does ERISA require plan fiduciaries to give participants general information absent a request for information?
Negley argues that Wilson had a duty to disclose the provisions of the group contract with respect to the possible denial of benefits for a pre existing condition, and a duty to advise Negley of his rights under the Plan if Wilson had knowledge that Negley had a preexisting condition. Panera responds only that if Wilson had a fiduciary duties, she performed them by mailing the insurance package to the address Negley gave her, and that any delay in coverage is Negley's fault. Panera also argues that Wilson had no knowledge of Negley's pre existing condition or his prior coverage.
In Varity, the Court specifically declined to address whether a fiduciary had a duty to disclose truthful information on his own initiative or in response to employee inquiries. See Verity, 489 U.S. at 506. Some federal courts have held that a fiduciary is or may be required to disclose all pertinent information necessary to a participant to protect his interests without any specific inquiry from the participant. See e.g., Jordan v. Federal Express Corp., 116 F.3d 1005, 1014 (3rd Cir. 1997)("fiduciaries have a duty to inform which `entails not only a negative duty not to misinform, but also an affirmative duty to inform when the trustee knows that silence might be harmful' . . . a fiduciary has a legal duty to disclose to the beneficiary only those material facts known to the fiduciary but unknown to the beneficiary, which the beneficiary must know for its own protection.") (internal citations omitted); see also Eddy v. Colonial Life Ins. Co. of America, 919 F.2d 747, 750 (D.D.C. 1990) (duty to disclose material information "is the core of a fiduciary's responsibility."); Anweiler v. American Elec. Power Service Corp., 3 F.3d 986, 991 (7th Cir. 1993) (fiduciary duty to communicate material facts affecting interests of beneficiaries "exists when a beneficiary asks fiduciaries for information, and even when he or she does not") (internal citation omitted).
Holding that an ERISA fiduciary who explains insurance benefits has a duty to convey complete and accurate information, the court in Bixler v. Central Penn. Teamsters Health Welfare Fund, 12 F.3d 1292 (3rd Cir. 1993), examined the duty in light of the Restatement of Trusts, which provides, in pertinent part,
d. Duty in the absence of a request by the beneficiary. Ordinarily the trustee is not under a duty to the beneficiary to furnish information to him in the absence of a request for such information. . . . In dealing with the beneficiary on the trustee's own account, however, he is under a duty to communicate to the beneficiary all material facts in connection with the transaction which the trustee knows or should know. . . . Even if the trustee is not dealing with the beneficiary on the trustee's own account, he is under a duty to communicate to the beneficiary material facts affecting the interest of the beneficiary which he knows the beneficiary does not know and which the beneficiary needs to know for his protection in dealing with a third person.
Restatement (Second) of Trusts § 173, comment d (1959) (as quoted in Bixler, 12 F.3d at 1300).
The Bixler court held that an ERISA fiduciary has a duty to speak out if it "knows that silence might be harmful," Bixler, 12 F.3d at 1300, and remanded the matter to the trial court because of material disputed fact issues about the scope of the administrator's duty to inform under the facts presented.
Here, I have recommended finding that Wilson was a fiduciary as a matter of law. There is no dispute that Negley did not ask about his benefits or the preexisting exclusion clause of the Panera Plan or about how HIPPA impacted his coverage; he did not ask anything about his benefits until he talked with Wilson on September 28, 2001 and asked some questions then about whether his coverage would be retroactive to July 1, 2001.
Here, I agree with plaintiff that the standard to be applied is a duty to disclose based on the information Wilson had. First, a factfinder could find that she had a duty to explain plan provisions to Negley upon his hire, as the Plan provides. A fiduciary is required to administer a plan according to its terms. ERISA § 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D); Morgan v. Ind. Drivers Assoc. Pen. Fund, 975 F.2d 1467, 1469 (10th Cir. 1992). The factfinder could further conclude that Wilson should have provided additional information to Negley later when it was clear he would not be enrolled in time for a July 1, 2001 eligibility date.
I recommend finding, however, that the scope of the duty Wilson owed depends upon a resolution of certain disputed material fact issues about what Wilson knew or should have known, which are: (1) what a prudent plan administrator would have generally conveyed to eligible employees about the Panera Plan; (2) who was responsible for the delays in Negley's receipt of the benefits package and the delay in completing the enrollment form; (3) what information Negley was or should have been given at various times after June 27, 2001; (4) what was asked and what information was conveyed on September 28, 2001; (5) whether Wilson knew of Negley's HIV positive pre existing condition at any time before October 8, 2001; (6) whether she knew that Negley had prior coverage that expired on July 31, 2001; (7) whether Wilson should have advised Negley of the consequences, if any, of the date of his enrollment; (8) what information was "material" at what time; (9) what Wilson knew about Negley at various times between June 27, 2001 and October 8, 2001; (10) whether the Plan imposes a preexisting condition exclusion on all participants irrespective of the date of enrollment; and, (11) what Wilson knew or should have known about the Plan as it applied to Negley's situation. Once those fact issues are resolved, the nature and extent of Wilson's fiduciary duties to inform and disclose to Negley can be ascertained. Accordingly, summary judgment should be denied for all parties on whether Wilson breached fiduciary duties to inform and disclose under ERISA. See Bixler, 12 F.3d at 1302-03. I further recommend that summary judgment be denied on defendants' claim that Negley was responsible for his late enrollment in the Plan due to the same disputed material fact issues.
The Panera Plan provides that if a participant enrolls after the 31 day period, an 18 month preexisting exclusion may apply, which the fact finder may construe as not imposing a preexisting condition exclusion if the employee enrolls in the Plan within thirty-one days of his date of hire. The Certificate of Coverage states, however, that "[i]f a preexisting condition existed at anytime during the six month period immediately preceding your Enrollment Date, MMO will provide benefits for the preexisting condition for Covered Services incurred only after nine months following your Enrollment Date." Compare PI. MSJ, Ex. 6, at 5 with Ex. 7, at 1.
3. Does ERISA mandate a fiduciary duty to inform upon employee request?
While it is unclear what information Wilson should have communicated to Negley between June 27, 2001 and September 27, 2001, Negley argues that Wilson certainly had an obligation to respond to Negley's September 28, 2001 questions about coverage.
Although the Tenth Circuit has not spoken on the issue, other courts have held that, once an ERISA beneficiary has requested information from an ERISA fiduciary who is aware of the beneficiary's status and situation, the fiduciary has an obligation to convey complete and accurate information material to the beneficiary's circumstance, even if the beneficiary has not specifically inquired. See Eddy, 919 F.2d 747 (upon participant's statement that coverage was ending, fiduciary had duty to advice of continuation and conversion options); Drennan, 977 F.2d at 251 ("[a] fiduciary must give complete and accurate information in response to participants' questions. . . ."); Krohn v. Huron Memorial Hospital, 173 F.3d 542, 548 (6th Cir. 1999) (administrator breached its fiduciary duty by failing to provide information about a beneficiary's entitlement to long term disability benefits when her husband requested general information about benefits); Shea v. Esensten, 107 F.3d 625, 628-29 (8th Cir.), cert. denied, 522 U.S. 914 (1997) (health maintenance organization had fiduciary duty to disclose financial incentive structure intended to reward primary care physicians who minimized referrals to specialists).
Here, it is undisputed that Negley first specifically inquired about his health insurance benefits on September 28, 2001 when he asked Wilson if his coverage would be retroactive to July 1, 2001. Again, however, there are material facts in dispute about what the scope of Wilson's duty was, what she knew or did not know about Negley's pre existing HIV positive condition, what she knew about his prior coverage, what she knew or should have known about the Plan and HIPPA, and what information she should have provided Negley on September 28, 2001. I therefore recommend that summary judgment on this point be denied for all parties.
4. Is there a fiduciary duty under ERISA to provide the summary plan description to a pre enrollee?
Finally, plaintiff argues that the duty to provide Negley with a copy of the summary plan description was breached. Negley claims he should have been given a copy of the summary plan description by September 28, 2001. Panera responds that the duty to provide the summary plan description is triggered by 29 U.S.C. § 1021 (a) which requires only that a participant who is covered under the plan is entitled to the summary plan description, and that Section 1024(b)(1) requires that the SPD be furnished within 90 days after an individual becomes a participant.
I agree with Panera that ERISA requires only that the summary plan description be given to a plan participant within 90 days of his enrollment. Panera did not have to give Negley a copy of the summary plan description until 90 days after November 1, 2001, his enrollment date. I recommend that, since Negley did not become covered under the Plan, and was thus not a Plan participant until November 1, 2001, he was not entitled to a copy of the summary plan description on or before September 28, 2001. Accordingly, plaintiff's motion on this ground should be denied.
C. Was Negley negligent or did he otherwise fail "to protect" himself?
Defendants next contend that the delay in enrollment in the Plan was caused by plaintiff's negligence or his assumption that he was covered. According to defendant, Negley knew and understood the employee handbook which required him to keep Panera advised of his correct address. See Def. MSJ, Ex. 1, Negley Depo., at p. 24, I.8-24, p. 25, I.1-3; Defs. Exs. B, C-1 at 10, D-1. Negley admitted that he never lived or stayed at 1056 Bryden Road after he became employed by Panera. See id., p. 58, I. 19-24; Mefford Depo. p. 7, I. 23-24, p. 81, I. 1-5. Further, Negley's former companion, Medford, was on vacation for most of July, August and the beginning of September 2001, so he was not available to receive the benefits package on Negley's behalf. See id., Mefford Depo. p. 10, I. 11-24, p. 11, I.1-2., p. 12, I. 1-8.
Here, Panera claims one benefits package was sent to Negley at the 1056 Bryden Road address on July 3, 2001. Panera blames Negley for the fact that the package was never received. A second package was sent incorrectly to plaintiff's Ohio address after he had moved to Denver. Wilson said the third package was sent to Negley's workplace address in Cherry Creek on September 6, 2001, but plaintiff did not receive it until September 28, 2001. See Def. MSJ, Ex. 2, Wilson Depo. p. 91, I.1-4.
Defendant argues that plaintiff did not receive the materials because he did not give Panera his current address. Plaintiff averred, however, that although he did not reside at that address, he was at the Bryden Road address three to five times a week before he moved to Denver in August of 2001. The failure to give a correct mailing address for the July package of materials, does not, however, mean that Negley was responsible for Wilson's failure to mail the second package to the correct address, or whether she did mail a third package on September 6, 2001, which Negley did not receive until September 28, 2001.
Because the parties factually dispute whether plaintiff was responsible for not receiving the insurance information packets, I recommend finding that there is a genuine issue of material fact about whether Panera or plaintiff was responsible for the delayed receipt of the benefits and enrollment materials.
Panera also argues that plaintiff failed to protect himself because he incorrectly assumed that he had coverage. Panera's "failure to protect theory" see Def. MSJ, at 14-15, has no support in the cases Panera cites. Adamson v. Arnco, Inc. 44 F.3d 650 (8th Cir,. 1995) concerned a statute of limitations and standing issue, of which neither has any application to the facts here. Saxlee v. Rexford Corp., 985 F.2d 927 (7th Cir 1993) involved another irrelevant standing issue, holding that an employee who voluntarily quit did not have standing under ERISA.
D. Was Negley required to exhaust administrative remedies under the Plan?
Finally, defendants argue that Negley's claims should be dismissed because he failed to exhaust his administrative remedies. Negley admits he failed to use the Plan's administrative appeal process. See Def. MSJ, Ex. 1, Negley Depo. p. 157, I. 2-24; Ex. T(1). Plaintiff responds that there is no obligation to exhaust administrative remedies when equitable relief is sought; and that an appeal would be useless here because the Plan's position imposing the pre existing condition exclusion is consistent with the Plan's language and with federal law. See PI. Resp. Def. MSJ, at 17. As such, there is nothing to appeal through the Plan's administrative procedure.
I agree with plaintiff. Both ERISA and the Code of Federal Regulations require the plan itself to provide a procedure by which a claimant has a reasonable opportunity to appeal. See 29 U.S.C. § 1133(2); 29 C.F.R. § 2560.503-1 (d). ERISA does not, however, contain an explicit exhaustion requirement, although the Tenth Circuit has observed that exhaustion of administrative remedies is an implicit prerequisite to seeking judicial relief. See Held v. Manufacturers Hanover Leasing Corp., 912 F.2d 1197, 1206 (10th Cir. 1990). Because ERISA does not specifically require the exhaustion of remedies available under an ERISA plan, courts have applied this requirement as a matter of judicial discretion. See McGraw v. Prudential Ins. Co. of America, 137 F.3d 1253, 1263 (10th Cir. 1998). District courts have not required exhaustion when resorting to administrative remedies would be futile or when the remedy provided is inadequate. Id.
Where, as here, plaintiff's complaint is what his employer/plan administrator failed to do when Negley was not provided the information he claims he is entitled to; his complaint does not involve concern asking the Plan to reconsider the decision to exclude coverage for Negley's preexisting condition. Because plaintiff seeks damages for breach of fiduciary duty under ERISA, he is not required to complete the Plan's administrative appeal procedure. See Unger v. U.S. West, 889 F. Supp. 419, 423 (D. Colo. 1995) (J. Babcock). Accordingly, Panera's motion for summary judgment also should be denied on this ground.
IV.
For the reasons set forth above, it is
RECOMMENDED that Defendants' Motion for Summary Judgment Pursuant to Fed.R.Civ.P. 56 [filed February 10, 2003] be denied in its entirety. It is further
RECOMMENDED that Plaintiff's Motion for Summary Judgement [sic] with Supporting Brief [filed February 11, 2002] be granted in part and denied in part. Defendants Breads of the World, through Wilson, should be found to be an ERISA fiduciary, and judgment should be granted in favor of plaintiff on that portion of his motion. The remainder of plaintiff's motion should be denied.
Within ten days after being served with a copy of the proposed findings and recommendation, any party may serve and file written objections to the proposed findings and recommendation with the Clerk of the United States District Court for the District of Colorado. The district judge shall make a de novo determination of those portions of the proposed findings or specified recommendation to which objection is made. The district judge may accept, reject, or modify, in whole or in part, the proposed findings or recommendations made by the magistrate judge. The judge may also receive further evidence or recommit the matter to the magistrate judge with instructions.
Failure to make timely objections to the magistrate judge's recommendation may result in a waiver of the right to appeal from a judgment of the district court based on the findings and recommendations of the magistrate judge.