Bollman Hat Co. v. Root

• Citation: 112 F.3d 113
• Decision Date: 15 May 1997
• Docket Number: No. 96-1191,96-1191
• Parties: 21 Employee Benefits Cas. 1005 BOLLMAN HAT COMPANY v. Kevin T. ROOT; Dale E. Anstine, P.C. Bollman Hat Company, as sponsor of the Bollman Hat Company Health and Welfare Benefits Plan, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 113

112 F.3d 113

21 Employee Benefits Cas. 1005

BOLLMAN HAT COMPANY v. Kevin T. ROOT; Dale E. Anstine, P.C.

Bollman Hat Company, as sponsor of the Bollman Hat Company

Health and Welfare Benefits Plan, Appellant.

No. 96-1191.

United States Court of Appeals, Third Circuit.

Argued Jan. 14, 1997.

Decided April 18, 1997.

Sur Petition for Rehearing May 15, 1997.

J. Freedley Hunsicker, Jr. (Argued), Susan M. Roche, Drinker, Biddle & Reath, Philadelphia, Pennsylvania, for Appellant.

Thomas P. Lang (Argued), Law Offices of Dale E. Anstine, P.C., York, Pennsylvania, Wayne C. Parsil, Law Offices of Dale E. Anstine, P.C., Lancaster, Pennsylvania, for Appellees Kevin T. Root and Dale E. Anstine, P.C.

Joseph M. Melillo, Angino & Rovner, Harrisburg, Pennsylvania, for Amicus Curiae Appellee, Pennsylvania Trial Lawyers Association.

Before SLOVITER, Chief Judge, GREENBERG and SCIRICA, Circuit Judges.

OPINION OF THE COURT

SCIRICA, Circuit Judge.

This appeal involves an ERISA plan's subrogation rights, specifically whether a plan must contribute to the legal expenses of a plan participant's recovery against a third party. We addressed this issue in Ryan by Capria-Ryan v. Fed. Express Corp., 78 F.3d 123 (3d Cir.1996), decided after the district court here rendered judgment. In this appeal we are asked to distinguish Ryan or in the alternative to reconsider our holding in Ryan.

I.

Bollman Hat Company sponsors a self-insured, ERISA regulated employee benefit plan. After a Bollman employee, Kevin Root, was injured in a motorcycle accident, the Plan paid him $100,197.92 for his medical expenses. Thereafter, Root sued the third party responsible for his personal injuries and obtained a $215,000.00 settlement.

Bollman sought full reimbursement from Root in accordance with § 10.8 of the Plan, which provides:

In the event of any payment under the Plan to any covered person, the Plan shall, to the extent of such payment, be subrogated, unless otherwise prohibited by law, to all the rights of recovery of the covered person arising out of any claim or cause of action which may accrue because of alleged negligent conduct of a third party. Any such covered person hereby agrees to reimburse the Plan for any payments so made hereunder out of any monies recovered from such third party as the result of judgment, settlement, or otherwise....

(emphasis added). Root complied with Bollman's request for reimbursement in part, but withheld $30,507.13 to pay a portion of the Bollman contends the terms of the Plan require full reimbursement and do not allow Root to withhold money for attorney's fees. Bollman also maintains Root expressly agreed to full reimbursement when he signed a Reimbursement Agreement before receiving the $100,197.92 from the Plan. The Reimbursement Agreement provides:

attorney's fees and costs incurred in obtaining the third party settlement.

I, Kevin T. Root, understand and acknowledge that my medical plan has a reimbursement provision which provides that medical benefits paid under the plan are to be reimbursed up to the amount of such benefits paid from any payments, awards or settlements which may be paid by any third party.

(emphasis added).

As sponsor of the Plan, Bollman brought suit against Root in district court for $30,507.13. ¹ Following stipulations of fact and cross-motions for summary judgment, the district court granted summary judgment to Root. Finding Root's personal injury litigation substantially benefited Bollman, the district court held Bollman would be unjustly enriched if Root bore the full burden of litigation costs. Bollman appeals, citing our intervening decision in Ryan by Capria-Ryan v. Fed. Express Corp., 78 F.3d 123 (3d Cir.1996).

II.

Bollman states in its complaint that jurisdiction arises under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461. A case may arise under ERISA where the suit is filed by a plan sponsor who is also a fiduciary. See Northeast Dep't ILGWU Health and Welfare Fund v. Teamsters Local Union No. 229 Welfare Fund, 764 F.2d 147, 153 (3d Cir.1985) (we must "narrowly and literally" interpret ERISA's civil enforcement provision, 29 U.S.C. § 1132, which allows only a participant, a beneficiary, or a fiduciary to sue). A plan sponsor is a fiduciary only "to the extent" it acts in a fiduciary capacity. 29 U.S.C. § 1002(21)(A) (definition of "fiduciary"). See also Malia v. General Elec. Co., 23 F.3d 828, 833 (3d Cir.), cert. denied, 513 U.S. 956, 115 S.Ct. 377, 130 L.Ed.2d 328 (1994).

Bollman has limited the "extent" to which it is a fiduciary by delegating some of its fiduciary duties. At least one circuit has held a suit brought by a plan sponsor as a fiduciary does not arise under ERISA unless the action is related to the fiduciary duties retained by the plan sponsor. See Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1465 (4th Cir.1996). Cf. Northeast Dep't, 764 F.2d at 154 ("[O]ne's status as fiduciary under ERISA is dependant upon one's relationship to a particular plan.") It is unclear whether Bollman retained fiduciary duties which are in any way relevant to this lawsuit. But we do not need to resolve this issue here. Even if our jurisdiction does not arise under the statute itself, we nonetheless have jurisdiction arising under the federal common law developed pursuant to ERISA. See Airco Indus. Gases, Inc. Div. of the BOC Group, Inc. v. Teamsters Health and Welfare Pension Fund of Philadelphia and Vicinity, 850 F.2d 1028, 1033-34 (3d Cir.1988) (ERISA case may arise under federal common law where it does not arise directly under the statute).

Federal question jurisdiction will support claims arising under federal common law as well as those of a statutory origin. See Illinois v. City of Milwaukee, Wis., 406 U.S. 91, 100, 92 S.Ct. 1385, 1391, 31 L.Ed.2d 712 (1972). A case arises under federal common law if the issue presented is one "of central concern" to ERISA. Airco, 850 F.2d at 1033 (quoting Franchise Tax Bd. of the State of Cal. v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1, 26-27, 103 S.Ct. 2841, 2855, 77 L.Ed.2d 420 (1983)). This is such a case. See, e.g., Provident Life & Accident Ins. Co. v. Waller, 906 F.2d 985, 991 (4th Cir.) (holding the issue of "whether federal courts should impart unjust enrichment principles into the gaps left by ERISA" is one of central concern to the statute), cert.

denied, 498 U.S. 982, 111 S.Ct. 512, 112 L.Ed.2d 524 (1990); Northeast Dep't, 764 F.2d 147 (we have federal question jurisdiction to determine a question that implicates ERISA).

We have jurisdiction under 28 U.S.C. § 1291. Our review of the district court's grant of summary judgment is plenary. See Ryan by Capria-Ryan v. Fed. Express Corp., 78 F.3d 123, 125 (3d Cir.1996).

III.

Shortly after the district court granted Root summary judgment, we held in Ryan by Capria-Ryan v. Fed. Express Corp., 78 F.3d 123 (3d Cir.1996), that an ERISA plan participant whose third party recovery is subrogated to the plan may not withhold attorney's fees where the plan unambiguously requires full reimbursement. See id. at 127. Bollman contends this case is indistinguishable from Ryan.

A.

The Ryans were employees of Federal Express and participants in its ERISA plan. After Mrs. Ryan gave birth to a daughter with cerebral palsy and severe brain damage, the Federal Express plan paid medical expenses. Meanwhile, the Ryans brought suit for medical malpractice. After the suit was settled, the Federal Express plan demanded full reimbursement. The Ryans refused, insisting on withholding a portion of counsel fees incurred in pursuing their medical malpractice claim.

The Federal Express plan's subrogation provision provided, "[I]f benefits are paid on account of an illness resulting from the intentional actions or from the negligence of a third party, the Plan shall have the right to recover, against any source which makes payments or to be reimbursed by the Covered Participant who receives such benefits, 100% of the amount of covered benefits paid." Ryan, 78 F.3d at 124.

The Ryans sued Federal Express. The district court granted the Ryans summary judgment based on the common law doctrine of unjust enrichment. On appeal, we reviewed the reach of federal courts to apply common law doctrines in ERISA actions and reversed, holding that common law may not "override a subrogation provision in an ERISA-regulated plan on the ground that the plan would be unjustly enriched if it were to be enforced as written." Id. We stated:

The language of the subrogation provision at issue here unambiguously requires the Ryans to pay back all the money they received from the Plan. Since the Ryans have failed to establish that the Plan 'conflict[s] with the statutory policies of ERISA' and have similarly failed to show that the common law right at issue 'is necessary to ... effectuate a statutory policy,' we must reject the Ryans' attempt to establish the common law right they would have us recognize.

Id. at 127 (citations omitted). We also held that "[e]nrichment is not 'unjust' where it is allowed by the express terms of the ... plan." Id. (quoting Cummings by Techmeier v. Briggs & Stratton Retirement Plan, 797 F.2d 383, 390 (7th Cir.), cert. denied, 479 U.S. 1008, 107 S.Ct. 648, 93 L.Ed.2d 703 (1986)).

B.

Root argues Ryan is distinguishable because the subrogation provision in the Bollman plan is ambiguous and does not require full reimbursement. Whether an ERISA plan is ambiguous is a question of law. See In re Unisys Corp. Long-Term Disability Plan ERISA Litig., 97 F.3d 710, 715 (3d Cir.1996).

We will look to the words of the Plan to make this determination. See id. ("[T]he parties remain bound by the appropriate objective definition of the words they use to express their intent.") (quoting Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d 1001, 1013 (3d Cir.1980)); Ryan, 78 F.3d at 126. The Bollman plan requires reimbursement of "any...