Bixler v. Central Pennsylvania Teamsters Health & Welfare Fund

• Citation: 12 F.3d 1292
• Decision Date: 28 December 1993
• Docket Number: No. 93-7048,93-7048
• Parties: , 17 Employee Benefits Cas. 1934 Lucinda BIXLER, Administratrix of the Estate of Vaughn Archie Bixler, Deceased; Heather Bixler, a minor, by Lucinda Bixler, her guardian v. CENTRAL PENNSYLVANIA TEAMSTERS HEALTH & WELFARE FUND; James C. Burns, Chairman and Trustee ad litem; William Baum, Secretary and Trustee ad litem; Vincent Dagen, Trustee ad litem; Edward Watkins, Trustee ad litem; John R. Kleinfelter; Administrator; Drivers Inc.; Charles E. Welsh, Lucinda Bixler, Administratrix of the Estate of Vaughn Archie Bixler, Deceased; Lucinda Bixler, in her own right; Heather Bixler, a Minor, by Lucinda Bixler, her guardian, Appellants.
• Court: U.S. Court of Appeals — Third Circuit

Page 1292

12 F.3d 1292

62 USLW 2428, 17 Employee Benefits Cas. 1934

Lucinda BIXLER, Administratrix of the Estate of Vaughn

Archie Bixler, Deceased; Heather Bixler, a minor, by Lucinda Bixler, her guardian v. CENTRAL PENNSYLVANIA TEAMSTERS HEALTH & WELFARE FUND; James

C. Burns, Chairman and Trustee ad litem; William Baum,

Secretary and Trustee ad litem; Vincent Dagen, Trustee ad

litem; Edward Watkins, Trustee ad litem; John R.

Kleinfelter; Administrator; Drivers Inc.; Charles E. Welsh,

Lucinda Bixler, Administratrix of the Estate of Vaughn

Archie Bixler, Deceased; Lucinda Bixler, in her

own right; Heather Bixler, a Minor, by

Lucinda Bixler, her guardian,

Appellants.

No. 93-7048.

United States Court of Appeals, Third Circuit.

Argued Aug. 2, 1993.

Decided Dec. 28, 1993.

Pamela G. Shuman (argued), Angino & Rovner, Harrisburg, PA, for appellants.

J. Kitridge Fegley, Jack G. Mancuso (argued), Brumbach, Mancuso & Fegley P.C., Reading, PA, for appellees Central Pennsylvania Teamsters Health & Welfare Fund, James C. Burns, William Baum, Vincent Dagen, Edward Watkins, and John R. Kleinfelter.

Stephen D. Shawe, Frances Taylor (argued), Shawe & Rosenthal, Baltimore, MD, Michael A. Finio, Goldberg, Katzman & Shipman, Harrisburg, PA, for appellees Driver, Inc. and Charles E. Welsh.

Before STAPLETON, HUTCHINSON and ROTH, Circuit Judges.

OPINION OF THE COURT

ROTH, Circuit Judge:

Lucinda Bixler appeals from a district court order granting summary judgment in favor of the defendants Central Pennsylvania Teamsters Health and Welfare Fund (the "Fund") and Drivers, Inc. This case concerns the source and scope of an ERISA fiduciary's duty to one of its beneficiaries. We hold that a direct action for breach of fiduciary duty exists in the "other appropriate equitable relief" clause of ERISA Sec. 502(a)(3)(B), 29 U.S.C. Sec. 1132(a)(3)(B) (1988 & Supp.1991). ¹ Because the district court did not rule on Mrs. Bixler's breach of fiduciary duty claim against Drivers and the factual record is incomplete in that regard, we will affirm in part, reverse in part, and remand for further proceedings.

I.

In December, 1990, Lucinda Bixler's husband Vaughn died of a massive heart attack. During the previous fifteen years, Mr. Bixler worked for Drivers, a firm engaged in the service of supplying truck drivers to other companies, and was a member of Teamsters Local 776. For some time prior to his death, Mr. Bixler and his family received medical, disability, and life insurance through the Fund, as designated in the collective bargaining agreement negotiated between his union and his employer.

A. The Fund

The Fund is an employee welfare benefit plan within the meaning of Sec. 3(1) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1002(1). The Fund is a multiemployer benefit trust, jointly administered by employer and union trustees. It is designed to accept contributions from its employer members, on behalf of their employees, pursuant to their collective bargaining agreements. The Fund offers a number of plans, each with a different level of benefits and corresponding cost to the contributing employer. Drivers, and thus the Bixler family, belonged to what was designated as Plan No. 10.

Unfortunately for Mr. Bixler and his family, his illness and eventual death occurred during a period of bargaining impasse. The relevant collective bargaining agreement was set to expire on August 31, 1990. Under that agreement, the Fund could not raise the required rate of employer contribution. However, several months prior to the end of the agreement, the Fund notified Drivers that it intended to raise the monthly contribution from $165 to $277 per employee once the agreement expired. This increase applied to all employers obtaining coverage under Plan No. 10.

As the August 31 deadline approached, Drivers and the union attempted, but failed, to reach a new agreement. One reason for this failure was the union's desire to maintain benefit coverage through the Fund at the increased cost and the employer's refusal to do so. The parties negotiated a brief extension of the collective bargaining agreement until September 11. On August 30, 1990, the union notified the employees, including Mr. Bixler, of this extension and informed them that their benefits coverage would be extended until September 15. After that date, the union's letter explained, Drivers was to have no further obligation to pay into the Fund.

Despite the extension, the parties were unable to reach an agreement. After September 15, Drivers ceased being a contributing member employer of the Fund. During a further period of negotiations, however, Drivers tendered, and the Fund agreed to hold in escrow, a payment equivalent to the original--but now insufficient--contribution of $165 per employee. This payment purported to cover the benefit period from September 15 through October 15, although it was made at a non-conforming rate. ² The Fund agreed to temporarily hold the payment at the union's request, and the union, in turn, hoped to persuade the employer to satisfy the shortfall. If not, the Fund agreed that all 92 of Drivers' employees--as a group, but not individually--could remit the $112 shortfall through their employer in order to make a conforming contribution.

Neither possibility came to pass, and the September payment, along with an identical payment for October, was returned to Drivers. Drivers, in turn, forwarded the $165 monthly contributions to each employee. ³

The Fund allows individual employees to continue their coverage under certain circumstances, pursuant to the Consolidated Omnibus Budget Reconciliation Act ("COBRA") amendments to ERISA, 29 U.S.C. Secs. 1161-1168. Once the collective bargaining agreement expired and the employer ceased to contribute at the conforming rate, these provisions came into play. Thus, on October 5, 1990, the Fund mailed COBRA notices to all of Drivers' employees, advising them of their right to continue their benefits coverage individually, at their own cost. Specifically, the letter read:

Your employer has failed to remit payment to the Central Pennsylvania Teamsters Health & Welfare Fund for the month of Sept 1990. The Health & Welfare Fund cannot process any claims on your behalf until this payment is made.... Due to the recent continuation of coverage or COBRA amendment, you may be eligible to selfpay [sic] health & welfare coverage for a period of -36- months.... This coverage has a current premium of $272.30 per month.... You must inform the fund office of your decision to self pay [sic] by 12/05/90.

Appellants' Appendix ("Appellants' App.") at 26. It is undisputed that the Bixlers neither elected nor remitted payment for the COBRA coverage offered through the Fund.

B. Drivers

As negotiations continued to be unproductive, Drivers went forward with its intent to institute a new benefits plan for its employees. In response, the union called a strike beginning on November 7, in which the vast majority of employees, including Mr. Bixler, participated. Just as Drivers' withdrawal from the Fund had been a "qualifying event" under COBRA, triggering its provisions, so was the strike. Thus, once the new benefits program became effective on November 15, Drivers sent COBRA notices to its striking employees, offering them the opportunity to purchase continuation coverage through the new program. Like the Fund, Drivers provided a sixty day period during which employees could elect coverage. The letter bore the heading "NOTICE OF RIGHT TO GROUP HEALTH COVERAGE," and read as follows:

As you know, the company has implemented its proposed new health program. Under federal law (COBRA), you may elect to have your health coverage, at your expense.... If you decide that you want coverage, please indicate below and return this form to Drivers Inc.'s office within 60 days. IF THIS FORM IS NOT RECEIVED WITHIN THE 60 DAY PERIOD (JANUARY 26, 1991), YOU WILL NOT BE ELIGIBLE TO RECEIVE BENEFITS.

Appellants' App. at 519. Following a discussion of cost and payment options, the letter warned:

FAILURE TO PAY PREMIUMS WITHIN THE ABOVE DESCRIBED TIME CONSTRAINTS WILL RESULT IN A LOSS OF CONTINUATION COVERAGE. THERE IS NO REINSTATEMENT.

Id. at 520. Again, it is undisputed that the Bixlers neither elected nor remitted payment for the COBRA coverage offered through Drivers.

Mr. Bixler died on December 26, 1990, after the period for election of the Fund's COBRA coverage had closed, but only halfway through the election period for the coverage offered by Drivers. Both the Fund and Drivers disclaim liability for the payment of medical bills and death benefits.

C. Procedural History

Mrs. Bixler brought this suit, in her own right and as administratrix of Mr. Bixler's estate and guardian of their minor daughter, to recover her husband's medical expenses and death benefits. As defendants she named the Fund, its four trustees and administrator, as well as Drivers and its general manager, Charles Welsh.

In her complaint Mrs. Bixler alleges that both the employer and the Fund wrongfully denied her husband medical coverage and engaged in repeated misrepresentations that prevented her from electing to continue the family's medical coverage through COBRA. ⁴ After a period of discovery, both defendants made motions for summary judgment, which were granted by the district court.

The district court first held that because the Fund's plans fell within the scope of ERISA, all equitable estoppel and common law fiduciary duty claims were preempted under the plain language of the statute. ERISA Sec. 514, 29 U.S.C. Sec. 1144. In addition, as the Fund is self-insured, the court found that claims based on state insurance law were preempted under the rule of FMC Corp. v. Holliday, 498 U.S. 52, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990). ⁵

Addressing the claims surviving under ERISA, the court initially considered Sec. 409, the statute's fiduciary duty section. ⁶...