McKinnon v. Blue Cross and Blue Shield of Alabama

• Decision Date: 12 July 1991
• Docket Number: No. 90-7181,90-7181
• Parties: , 13 Employee Benefits Ca 2611 Belinda Kay McKINNON, Plaintiff-Appellant, v. BLUE CROSS AND BLUE SHIELD OF ALABAMA, a corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1187

935 F.2d 1187

60 USLW 2092, 13 Employee Benefits Ca 2611

Belinda Kay McKINNON, Plaintiff-Appellant, v. BLUE CROSS AND BLUE SHIELD OF ALABAMA, a corporation,

Defendant-Appellee.

No. 90-7181.

United States Court of Appeals, Eleventh Circuit.

July 12, 1991.

Robert L. Wiggins, J. Scott Greene, Gordon, Silverman, Wiggins & Childs, Birmingham, Ala., for plaintiff-appellant.

Lawrence B. Clark, Timothy A. Palmer, Peyton Lacy, Jr., Lange, Simpson, Robinson & Somerville, Chris Mitchell, Carol Sue Nelson, Constangy, Brooks & Smith, Birmingham, Ala., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before HATCHETT and EDMONDSON, Circuit Judges, and PECKHAM, ^* Senior District Judge.

HATCHETT, Circuit Judge:

In this wrongful termination lawsuit brought under Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. Sec. 1001, et seq., anti-retaliation provision, we affirm the district court's grant of summary judgment for the employer.

FACTS

Prior to his death, Carl Hastings was a participant in an employee welfare benefit plan maintained by U.S. Steel which provided medical coverage. Blue Cross-Blue Shield of Alabama (Blue Cross) administered In 1984, Hastings sought to recover medical expenses resulting from lung surgery. Blue Cross and HMG denied his claims. Hastings then sued Blue Cross in the Circuit Court of Jefferson County, Alabama, alleging fraud and bad faith refusal to pay claims. The original complaint stated facts sufficient to state a claim under ERISA but did not specifically cite ERISA. The answer to the complaint pleaded that the claims related to ERISA and were thus preempted by section 1144(a) of that Act. ¹ HMG then filed a Petition for Removal on June 24, 1987, and stated that the action was removable because it fell within the exclusive federal remedies available to participants or beneficiaries of ERISA-regulated plans under section 502(a) of ERISA, 29 U.S.C. Sec. 1132(a). ² The federal district court accepted jurisdiction.

the plan. Health Maintenance Group of Birmingham (HMG), a wholly-owned subsidiary of Blue Cross, was the plan's insurer or provider.

While that action was pending, Hastings died and his daughter, Belinda McKinnon, was appointed executrix of his estate and substituted as plaintiff in the lawsuit against Blue Cross. On May 11, 1987, McKinnon gave a deposition in which she testified in support of the claims of fraud and bad faith. On July 2, 1987, the district court dismissed all of the state law claims because they were preempted by ERISA, but allowed McKinnon to file within fourteen days an amended complaint setting forth any possible ERISA claims.

McKinnon had been a long time employee of Blue Cross. On July 14, 1987, Blue Cross discharged McKinnon because she alleged Blue Cross willfully, intentionally, and fraudulently failed to pay her father's medical claims.

PROCEDURAL HISTORY

On March 23, 1988, McKinnon filed a complaint in Alabama state court alleging breach of contract and fraud in association with her discharge. Four months later, she amended the complaint to add claims concerning 29 U.S.C. Sec. 1140 (the ERISA anti-retaliation provision), the tort of outrage, and promissory estoppel. Blue Cross petitioned for removal, and the case was removed to the federal district court on July 25, 1989. Blue Cross then moved for summary judgment against all of McKinnon's claims. The district court granted summary judgment against McKinnon's ERISA claim, and remanded the remaining claims to the state court. On appeal, McKinnon challenges the district court's judgment in favor of Blue Cross concerning her claim arising under 29 U.S.C. Sec. 1140.

CONTENTIONS

McKinnon contends that she is a "participant or beneficiary" within the meaning of section 1140, and that Blue Cross should be estopped from contending otherwise. She also contends that "persons" protected under section 1140 may maintain a private right of action to enforce that section. ³

Blue Cross contends that McKinnon is neither a participant nor a beneficiary of her father's employee benefit plan. Blue Cross also contends that "persons" whose section 1140 rights are violated have no private cause of action to enforce that section.

ISSUES

The issues are: (1) whether McKinnon should be considered a "participant or beneficiary" within the meaning of 29 U.S.C. Sec. 1140, and (2) whether "persons" have a private cause of action under 29 U.S.C. Sec. 1132.

DISCUSSION

I. "Participant or Beneficiary"?

The first sentence of 29 U.S.C.A. Sec. 1140 states in relevant part:

It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan....

(West 1985).

McKinnon contends that under either the plain meaning of the language, res judicata, collateral estoppel, or judicial estoppel, she should be considered a participant or beneficiary within the meaning of section 1140.

A. Plain Meaning

ERISA's definitions of the terms are set out in section 1002(7), (8) of the statute:

(7) The term 'participant' means any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.

(8) The term 'beneficiary' means a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.

29 U.S.C.A. (West Supp.1990).

McKinnon was only named in the lawsuit filed by her father in her representative capacity as executrix of his estate, and her only claim to benefits arise from her status as executrix. The benefits at issue in McKinnon I were originally her father's and consisted of the payment of certain hospital and surgical costs on behalf of Hastings. These are not benefits to which McKinnon was personally entitled. See Maryland Cas. Co. v. Owens, 261 Ala. 446, 74 So.2d 608, 612 (1954) ("an executor occupies a position of trust with respect to those interested in the estate and is the representative of the decedent, of creditors and of the legatees and distributees"). The fact that she was procedurally substituted as a party to the lawsuit does not give her individual status as a participant or beneficiary. ⁴

Federal courts have allowed participants' spouses or representatives to go forward with claims under ERISA. See Sladek v. Bell Sys. Mgmt. Pension Plan, 880 F.2d 972, 976-79 (7th Cir.1989) (participant's spouse is a beneficiary, even though not explicitly designated as such, and may assert an ERISA claim for the survivor annuity provided by the plan); Vogel v. Independence Fed. Sav. Bank, 692 F.Supp. 587 (D.Md.1988) (estate and family members may assert ERISA claims of deceased participant); cf. Fitzgerald v. Codex Corp., 882 F.2d 586, 589 (1st Cir.1989) (participant husband, who was fired in retaliation for

his ex-wife seeking benefits under plan, may sue under section 1140). Such a relationship, however, does not necessarily confer participant or beneficiary status on an individual for purposes of that individual's personal pursuit of claims under section 1140. On the face of the statute's language, McKinnon, as an individual, is neither a participant nor a beneficiary in the plan.

B. Res Judicata

McKinnon next contends that Blue Cross is barred as a matter of res judicata from asserting that she is not a "participant or beneficiary" because the district court entered judgment in McKinnon I in favor of her as a "participant or beneficiary" under ERISA. McKinnon's reliance on the doctrine is misplaced. Res judicata is a doctrine of claim preclusion which operates to prevent litigation of matters that were raised or should have been raised in an earlier suit. Citibank, N.A. v. Data Lease Fin. Corp., 904 F.2d 1498, 1501 (11th Cir.1990). For res judicata to apply, the same cause of action must be involved in both cases (i.e., the cases must be based upon the same factual predicate). Citibank, 904 F.2d at 1501, 1503. The cause of action asserted in McKinnon I is clearly distinguishable from the cause of action asserted by McKinnon in the present case. McKinnon I involved allegations of fraud, bad faith, and eventually a claim for health and medical benefits under her father's employee benefit plan. The present action seeks damages for McKinnon's allegedly wrongful dismissal from employment with Blue Cross. These cases involve different causes of action and the doctrine of res judicata is inapplicable.

C. Collateral Estoppel

More appropriately, McKinnon contends that the doctrine of collateral estoppel should prevent Blue Cross from contesting McKinnon's status as a participant or beneficiary of her father's employee benefit plan. The doctrine of collateral estoppel, or issue preclusion, bars relitigation of an issue of fact or law that has been litigated and decided in a prior suit.

There are several prerequisites to the application of collateral estoppel: (1) the issue at stake must be identical to the one alleged in the prior litigation; (2) the issue must have been actually litigated in the prior litigation; and (3) the determination of the issue in the prior litigation must have been a critical and necessary part of the judgment in that earlier action.

Greenblatt v. Drexel Burnham Lambert, Inc., 763 F.2d 1352, 1361 (11th Cir.1985) (citation omitted). McKinnon fails to meet any of these prerequisites. In McKinnon I, the district court specifically stated that McKinnon, "in her...