Heffner v. Blue Cross and Blue Shield of Alabama
| Citation | 443 F.3d 1330 |
| Decision Date | 29 March 2006 |
| Docket Number | No. 04-15477.,04-15477. |
| Parties | Robert P. HEFFNER, Jr., individually and on behalf of all those similarly situated, Plaintiff-Counter-Defendant-Appellee, v. BLUE CROSS AND BLUE SHIELD OF ALABAMA, INC., Defendant-Counter-Claimant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
Ed R. Haden, Gregory C. Cook, Leigh Anne Hodge, Cavender Crosby Kimble, Balch & Bingham, LLP, Birmingham, AL, Christopher S. Anulewicz, Balch & Bingham, LLP, Atlanta, GA, for Appellant.
M. Stephen Dampier, Law Office of M. Stephen Dampier, P.C., Fairhope, AL, Ellen Mary Doyle, Joel R. Hurt, Malakoff, Doyle & Finberg, P.C., Pittsburgh, PA, Joseph Michael Druhan, Jr., Johnston, Druhan, LLP, Mobile, AL, for Appellee.
Mary Ellen Signorille, AARP Foundation Lit., Washington, DC, for AARP, Amicus Curiae.
Appeal from the United States District Court for the Middle District of Alabama.
Before CARNES and PRYOR, Circuit Judges, and FORRESTER*, District Judge.
In this interlocutory appeal we must decide whether the district court abused its discretion in certifying, under Fed. R.Civ.P. 23(b)(2), a class consisting of as many as 240,000 participants and beneficiaries of hundreds of group health plans. The plaintiffs seek a refund of their calendar year deductibles from their common claims administrator, Blue Cross and Blue Shield of Alabama (Blue Cross). They claim that because the summary plan descriptions (SPDs) issued by Blue Cross in connection with their respective plans stated that there was no calendar year deductible, Blue Cross violated the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., by imposing the deductibles. The complaint asserts a claim to enforce the plaintiffs' rights under their plans; that claim arises under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). It also asserts breach of fiduciary duty claims arising under ERISA § 502(a)(2) and § 502(a)(3), 29 U.S.C. § 1132(a)(2), (a)(3).
We conclude that the district court abused its discretion in certifying under Rule 23(b)(2) the plaintiffs' ERISA § 502(a)(1)(B) and § 502(a)(3) claims because in order to prevail each plaintiff must prove reliance on the SPD, thereby making final injunctive or declaratory relief inappropriate for the class as a whole. We also conclude that the district court abused its discretion by failing to address separately the plaintiffs' breach of fiduciary duty claim under § 502(a)(2) seeking relief for their respective plans. Accordingly, we will vacate the district court's class certification order and remand the case for further proceedings.
In 1997 Robert Heffner began working as a division claims manager at Consolidated Insurance Management Corporation in Mobile, Alabama. Shortly thereafter, he and his family enrolled in a group health care plan sponsored by Funding Plus of America, Inc., made available through his employment with Consolidated. The Heffners' coverage under the Funding Plus Plan began April 1, 1997.
The Funding Plus Plan is an "employee welfare benefit plan" governed by ERISA, see 29 U.S.C. § 1002(1)(A), as well as a "group health plan," see id. § 1191b(a)(1). It also may be referred to as an "employee benefit plan" or as, simply, a "plan." See id. § 1002(3). All employee benefit plans must be established, maintained, and administered in accordance with the provisions of ERISA. See id. § 1003(a)(1). "ERISA has two central goals: (1) protection of the interests of employees and their beneficiaries in employee benefit plans . . .; and (2) uniformity in the administration of employee benefit plans . . . ." Horton v. Reliance Standard Life Ins. Co., 141 F.3d 1038, 1041 (11th Cir.1998) (citations omitted).
During all time periods relevant to this case, Blue Cross underwrote and administered the Funding Plus Plan in which the Heffners were enrolled. That plan gave Blue Cross "complete discretion to interpret and administer the provisions of the Plan" and provided that Blue Cross' "administrative functions include paying claims, determining medical necessity, etc." In addition to underwriting plans such as the Funding Plus Plan, Blue Cross serves as third-party administrator for self-funded plans in which the employer or plan sponsor is responsible for paying claims. As "the party that controls administration of the plan," Blue Cross is "[t]he proper party defendant in an action concerning ERISA benefits." See Garren v. John Hancock Mut. Life. Ins. Co., 114 F.3d 186, 187 (11th Cir.1997).
To the extent that it has discretionary authority or control over a plan, Blue Cross is a fiduciary under ERISA. See 29 U.S.C. § 1002(21)(A)(i), (iii); Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 113, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989); see Cotton v. Mass. Mut. Life. Ins. Co., 402 F.3d 1267, 1277 (11th Cir. 2005). As a fiduciary, Blue Cross must administer each plan "for the exclusive purpose of . . . providing benefits to participants and their beneficiaries" and "in accordance with the documents and instruments governing the plan . . . ." 29 U.S.C. § 1104(a)(1)(A)(i), (D).
Under ERISA, each plan participant or beneficiary must be provided a summary plan description (SPD) within 90 days of enrollment. 29 U.S.C. § 1024(b)(1)(A). SPDs must "be written in a manner calculated to be understood by the average plan participant" and "reasonably apprise such participants and beneficiaries of their rights and obligations under the plan." Id. § 1022(a). They must contain certain information about the administration of the plan and a participant's rights under it. Id. § 1022(b). Additionally, SPDs for group health care plans such as the Funding Plus Plan are required to include information concerning cost-sharing (e.g., premiums, deductibles, coinsurance, and copayment amounts), limitations on benefits, the plan's coverage, rules governing the plan network, and conditions or limitations on obtaining care or benefits under the plan. See 29 C.F.R. § 2520.102-3(j)(3).
Upon enrolling in the Funding Plus Plan, Heffner received a copy of the Funding Plus SPD, which was prepared by Blue Cross specifically for that plan in June 1995. Blue Cross used standardized templates to generate each plan's SPD, varying the language according to the specific requirements of the plan. Blue Cross issued new SPDs for the Funding Plus Plan in August 1998 and June 1999 to reflect amendments made to the plan.
Both the August 1998 and June 1999 SPDs also incorporated language that Blue Cross contends was a scrivener's error and which is the root of this lawsuit. Specifically, those SPDs indicated that no deductible was required for certain medical services obtained from a Participating Provider Organization (PPO). For example, the June 1999 SPD provided under the heading "PPO" in the Prescription Drugs section that coverage of brand name drugs was: "80% when purchased at a Participating Pharmacy, subject to the calendar year deductible." That provision was set out in the SPD in a table like this one:
---------------------------------------------------------------------------------------------------------------
| PRESCRIPTION DRUGS |
|---------------------------------------------------------------------------------------------------------------|
| Benefit | PPO | Non-PPO |
|----------------------------|-----------------------------------------|----------------------------------------|
| Point-of-Sale Drug Program | Generic: 100% when purchased at a | Generic: 100% of the allowed |
| | Participating Pharmacy, subject to the | amount, subject to the calendar year |
| | calendar year deductible | deductible |
| | | |
| | Brand Name: 80% when purchased | Brand Name: 80% of the allowed |
| | at a Participating Pharmacy, subject to | amount, subject to the calendar year |
| | the calendar year deductible | deductible |
| | | |
| | Note: No benefits are available for | Note: No benefits are available for |
| | prescription drugs purchased at a | prescription drugs purchased at a |
| | Non-Participating Pharmacy in | Non-Participating Pharmacy in |
| | Alabama | Alabama |
| | | |
| | Mental and Nervous drugs are | Mental and Nervous drugs are |
| | covered at 50%, subject to the | covered at 50%, subject to the |
| | calendar year deductible | calendar year deductible |
---------------------------------------------------------------------------------------------------------------
The June 1999 SPD, in the General Provisions section, also provided that the calendar year deductible1 for services obtained from a PPO was, in fact, "No deductible." That provision of the SPD was set out in table form like this:
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