Hope Center, Inc. v. Well America Group, Inc.

• Decision Date: 18 March 2002
• Docket Number: No. 01-815-CIV.,01-815-CIV.
• Citation: 196 F.Supp.2d 1243
• Parties: HOPE CENTER, INC., Plaintiff, v. WELL AMERICA GROUP, INC., Geoffrey A. Cole, Sr., John M. Kennedy, and Sponsored Marketing Insurance Administrators, Inc., Defendants.
• Court: U.S. District Court — Southern District of Florida

196 F.Supp.2d 1243

HOPE CENTER, INC., Plaintiff, v. WELL AMERICA GROUP, INC., Geoffrey A. Cole, Sr., John M. Kennedy, and Sponsored Marketing Insurance Administrators, Inc., Defendants.

No. 01-815-CIV.

United States District Court, S.D. Florida.

March 18, 2002.

Laura Keats Wendell, Donald John Hayden, Eric Saida, Baker & McKenzie, Miami, FL, for Plaintiff.

Steven J. Chackman, Bernstein & Chackman, P.A., Hollywood, FL, David Michael McDonald, John W. McLuskey, McLuskey, McDonald & Payne, Miami, FL, Russell Scott Buhite, Fowler, White, Gillen, Boggs, Villareal & Banker, Tampa, FL, Richard Joseph Suarez, Hardeman & Suarez, P.A., Miami, FL, for Defendant.

ORDER DENYING DEFENDANT SPONSORED MARKETING INSURANCE ADMINISTRATORS MOTION FOR SUMMARY JUDGMENT AND GRANTING PLAINTIFF'S CROSS-MOTION FOR SUMMARY JUDGMENT

UNGARO-BENAGES, District Judge.

THIS CAUSE is before the Court upon Defendant Sponsored Marketing Insurance Administrators Inc.'s Motion for Summary Judgment and Plaintiff's Cross- Motion for Summary Judgment, each filed February 11, 2002.

THE COURT has considered the motions, the pertinent portions of the record, and is otherwise fully advised in the premises.

Plaintiff filed its six count Amended Complaint on April 20, 2001, alleging misconduct relating to the provision of health insurance benefits to its employees. Counts I and II against Defendants Well American Group ("WAG") and Geoffrey A. Cole, Sr., respectively, previously have been disposed of by this Court. Count III charges Defendant Sponsored Marketing Insurance Administrators Inc. ("SMA") with breach of fiduciary duty, and self-dealing, pursuant to 29 U.S.C. § 1109. Counts IV through VI charge Defendant John M. Kennedy with negligence, negligent misrepresentation, and fraud in the inducement, respectively. The instant motions only address Count III.

For the following reasons the Court holds in favor of Plaintiff and against Defendant finding Defendant breached its fiduciary duty owed to the Plan. See 29 U.S.C. § 1109.

FACTS

On or about April 1, 1999 Plaintiff entered into a Plan Management Agreement (the "Plan" or "PMA") with Defendant WAG. See Plaintiff's Statement of Facts ("Plaintiff's Statement") ¶ 3; Defendant SMA's Statement of Facts ("Defendant's Statement") ¶ 5. Thereafter, WAG entered into an agreement with SMA to serve as a third-party administrator of the Plan. See Defendant's Statement ¶ 10. Under the terms of the Plan, Plaintiff is identified as the Plan Sponsor, WAG as the "Named Fiduciary" and "Plan Administrator," and SMA as the "Contract Administrator." See Defendant's Statement ¶ 7.

According to the agreement, "SMA received claims for medical services provided to Well America plan participants, determined whether the services billed were an eligible benefit, determined the amount payable under the fee schedule, less any co-payments or deductibles, and printed a check to pay the provider." Defendant's Statement ¶ 11; see also Plaintiff's Statement ¶ 7. Thus, pursuant to the Plan, Plaintiff made monthly payments to SMA, in satisfaction of its invoices, for medical services rendered to the Plan participants (e.g. Plaintiff's employees and their families). See Plaintiff's Statement ¶ 6; Defendant's Statement ¶ 9. SMA then deposited these monies in a premium trust account. See Plaintiff's Statement ¶ 14; Defendant's Statement ¶ 12. After deducting certain fees and expenses, SMA transferred the balance to WAG which would pay the claims. Plaintiff's Statement ¶ 15-16; Defendant's Statement ¶ 12.

In June or July of 1999, Plaintiff's employees discovered claimants were not being paid according to the Plan. See Plaintiff's Statement ¶ 8; Defendant's Statement ¶ 13. Moreover, as of February, 2000, SMA also acknowledged that WAG had failed to pay certain claims. Plaintiff's Statement ¶ 13; see also Burcher Dep., Ex. 5.

SMA additionally maintained a fiduciary claims account which it used to pay claims. See Plaintiff's Statement ¶ 18; Defendant's Statement ¶ 14. In April of 2000, two months after learning that WAG had failed to pay claims, SMA began transferring Plaintiff's contributions directly from the premium account to the claims account; effectively bypassing WAG. See Plaintiff's Statement ¶ 23; Defendant's Statement ¶ 14. This arrangement was maintained until expiration of the Plan in June of 2000. See Plaintiff's Statement ¶ 23; Defendant's Statement ¶ 14. However, while SMA withheld $13,054.23 from WAG between April and June, it nevertheless transferred $9,903.46 to WAG over the same period. See Plaintiff's Statement ¶ 23. SMA maintains these were the fees due WAG under the Plan electing to continue to allocate them for that purpose. See Defendant's Response at 2; Burcher Dep. at 50-52.

In June of 2000, Plaintiff learned from SMA that there were outstanding claims totaling $216,639.89. See Burcher Dep. at 74. Accordingly, Plaintiff now sues alleging SMA has breached its fiduciary duty to the Plan in violation of 29 U.S.C. § 1109.

LEGAL STANDARD

Summary judgment is authorized only when the moving party meets its burden of demonstrating that "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." Fed.R.Civ.P. 56. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). The Adickes Court explained that when assessing whether the movant has met this burden, the court should view the evidence and all factual inferences therefrom in the light most favorable to the party opposing the motion. See Adickes, 398 U.S. at 157, 90 S.Ct. 1598; Poole v. Country Club of Columbus, Inc., 129 F.3d 551, 553 (11th Cir.1997) (citing Adickes).

The party opposing the motion may not simply rest upon mere allegations or denials of the pleadings; after the moving party has met its burden of coming forward with proof of the absence of any genuine issue of material fact, the non-moving party must make a sufficient showing to establish the existence of an essential element to that party's case, and on which that party will bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Barfield v. Brierton, 883 F.2d 923, 933 (11th Cir.1989).

If the record presents factual issues, the Court must not decide them; it must deny the motion and proceed to trial. See Environmental Defense Fund v. Marsh, 651 F.2d 983, 991 (5th Cir.1981). Summary judgment may be inappropriate even where the parties agree on the basic facts, but disagree about the inferences that should be drawn from these facts. See Lighting Fixture & Elec. Supply Co. v. Continental Ins. Co., 420 F.2d 1211, 1213 (5th Cir.1969). If reasonable minds might differ on the inferences arising from undisputed facts then the Court should deny summary judgment. See Impossible Electronic Techniques, Inc. v. Wackenhut Protective Sys., Inc., 669 F.2d 1026, 1031 (5th Cir.1982). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ("[T]he dispute about a material fact is `genuine,' . . . if the evidence is such that a reasonable jury could return a verdict for the non-moving party.").

Moreover, the party opposing a motion for summary judgment need not respond to it with evidence unless and until the movant has properly supported the motion with sufficient evidence. See Adickes, 398 U.S. at 160, 90 S.Ct. 1598. The moving party must demonstrate that the facts underlying all the relevant legal questions raised by the pleadings or otherwise are not in dispute, or else summary judgment will be denied notwithstanding that the non-moving party has introduced no evidence whatsoever. See Brunswick Corp. v. Vineberg, 370 F.2d 605, 611-12 (5th Cir.1967). The Court must resolve all ambiguities and draw all justifiable inferences in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

LEGAL ANALYSIS

I. Plaintiff's Standing

The parties first dispute whether Plaintiff has standing to sue under ERISA. "The express grant of federal jurisdiction in ERISA is limited to suits brought by certain parties as to whom Congress presumably determined the right to enter federal court was necessary to further the statute's purpose." Gulf Life Insurance Co. v. Arnold, 809 F.2d 1520, 1523 (11th Cir.1987) (quoting Franchise Tax Board v. Constr. Laborers Vacation Trust, 463 U.S. 1, 21, 103 S.Ct. 2841, 2852, 77 L.Ed.2d 420 (1983)). These "certain parties" are delineated within the statute's standing provision, 29 U.S.C. § 1132(a). In particular, sections 1132(a)(2) and (a)(3) permit a fiduciary to sue for appropriate relief.¹ Id. In the instant case, Plaintiff asserts it has standing to bring this action as a fiduciary under the Plan. See Plaintiff's Motion at 8.

Under ERISA,

a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of assets, . . . or (iii) he has discretionary authority or discretionary responsibility in the administration of such plan.

29 U.S.C. § 1002(21)(A). Further, the statute "provides that an ERISA `fiduciary' may include not only the persons named as fiduciaries by a benefit plan, but also anyone else who exercises discretionary control or authority over the plan's management, administration, or assets." Hughes Supply, Inc. v. Robey-Barber Insurance Services, Inc., 2000 WL 782954 at *4 (M.D.Fla. June 5, 2000). See 29 U.S.C. §§ 1102(a), 1002(21)(A). See also Mertens v. Hewitt Assoc., 508 U.S. 248, 251, 113 S.Ct. 2063, 2066, 124 L.Ed.2d 161 (1993). Thus, a court must "look at a party's conduct to determine what particular...