Pierce v. Mo-Kan Sheet Metal Workers Welfare Fund, WD 83234

• Court: Court of Appeal of Missouri (US)
• Writing for the Court: Lisa White Hardwick, Judge
• Citation: 616 S.W.3d 409
• Parties: Mary PIERCE, Respondent-Appellant, v. MO-KAN SHEET METAL WORKERS WELFARE FUND, Appellant-Respondent.
• Docket Number: WD 83234,C/w WD 83259
• Decision Date: 10 November 2020

616 S.W.3d 409

Mary PIERCE, Respondent-Appellant,
v.
MO-KAN SHEET METAL WORKERS WELFARE FUND, Appellant-Respondent.

WD 83234
C/w WD 83259

Missouri Court of Appeals, Western District.

Filed: November 10, 2020
Motion for Rehearing and/or Transfer to Supreme Court Denied December 22, 2020
Application for Transfer Denied March 2, 2021

Daniel O. Herrington, Garrett W. Hunkins, Marsha R. Woodward and Brian H. Dunn, KCMO for Appellant-Respondent.

Stephen G. Sanders, KCMO for respondent-appellant.

Before Division Two: Lisa White Hardwick, Presiding Judge, Thomas H. Newton and Karen King Mitchell, Judges

Lisa White Hardwick, Judge

Mo-Kan, an ERISA benefit plan administrator, appeals from the circuit court's judgment declaring that Mo-Kan has no right to reimbursement from the civil judgment of a beneficiary, Mary Pierce. Mo-Kan contends that the court erroneously applied the law by declaring that Mo-Kan's Summary Plan Description was not an enforceable Plan Document and that Missouri law applied over federal law. Pierce cross-appeals, contending that the court abused its discretion in declining to impose civil penalties and attorney's fees against Mo-Kan under 29 U.S.C. § 1132(c)(1) and (g)(1), and 29 C.F.R. § 2575.502c-1. For reasons explained herein, we reverse and remand, in part, and affirm, in part.

FACTUAL AND PROCEDURAL HISTORY

Pierce was involved in an automobile accident on March 13, 2016. A passenger in the other vehicle died as a result of the accident. On September 13, 2017, the parents of the deceased initiated a wrongful death suit against Pierce and the Missouri Highways and Transportation Commission ("MHTC"). Pierce filed a crossclaim against the MHTC for personal injuries sustained in the accident.

Pierce is a beneficiary of Mo-Kan's ERISA benefit plan. Since the automobile accident, Mo-Kan has paid approximately $105,000 in medical benefits on Pierce's behalf. On March 19, 2018, Pierce sent a letter to Mo-Kan requesting various plan administration documents. She asked again on November 29, 2018. The parties corresponded, but Mo-Kan declined to produce any documents.

On January 23, 2019, Pierce filed a motion for an order to show cause with the circuit court. In her motion, she sought an order declaring that Mo-Kan would have no right to reimbursement from any judgment in Pierce's favor on her crossclaim against the MHTC. Pierce also sought an order for Mo-Kan to produce the documents requested and to impose civil penalties and attorney's fees under 29 U.S.C. § 1132(c)(1), § 1132(g)(1), and 29 C.F.R. § 2575.502c-1. The court granted the show cause order and set the case for hearing.

The court heard arguments on April 23, June 3, and September 16, 2019. On November 12, 2019, the court issued an order declaring that Mo-Kan had no subrogation claim. It further ordered Mo-Kan to produce some, but not all, of the documents requested. The court did not require Mo-Kan to pay penalties or attorney's fees. Mo-Kan filed this appeal, and Pierce subsequently cross-appealed.

616 S.W.3d 413

STANDARD OF REVIEW

"The judgment of the trial court in a court-tried civil case will be sustained ‘unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Swallow Tail, LLC v. Mo. Dep't of Conservation , 522 S.W.3d 309, 314 (Mo. App. 2017) (quoting Murphy v. Carron , 536 S.W.2d 30, 32 (Mo. banc 1976) ). "A claim that the judgment erroneously declares or applies the law ... involves review of the propriety of the trial court's construction and application of the law." Pearson v. Koster , 367 S.W.3d 36, 43 (Mo. banc 2012). "This Court applies de novo review to questions of law decided in court-tried cases." Id.

ANALYSIS

In its sole point, Mo-Kan contends that the court erred in finding that it had no subrogation claim. The court based its decision on two grounds: (1) the subrogation provision in the Summary Plan Description was not an enforceable term in a Plan Document, and (2) Missouri law applied to bar any subrogation claim. In addition to the two grounds upon which the court's decision was based, Pierce argues that the Summary Plan Description does not meet the statutory requirements for a Plan Document under 29 U.S.C. § 1102(b). Pierce also contends that subrogation would violate the plan's anti-inurement provision and would breach Mo-Kan's fiduciary duty to her.

Typically, an ERISA benefit plan consists of both a Plan Document, which contains the enforceable terms of the plan, and a Summary Plan Description, which explains the plan's terms. See Cigna Corp. v. Amara , 563 U.S. 421, 438, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011). Terms in a Summary Plan Description, but not a Plan Document, are normally unenforceable. Id. The dispute before us arises from language contained in a document labeled as the Summary Plan Description. This language allows Mo-Kan to seek reimbursement, by way of subrogating to the rights of a judgment holder, for prior medical expenses paid:

SECTION 20. RIGHT OF RECOVERY 20-1. WHEN THE FUND HAS A RIGHT OF RECOVERY

The following rule applies to any situation in which the Fund makes full or partial payment to or on behalf of You or Your Eligible Dependent(s) ("Covered Person") who subsequently recovers from any other source additional payments or Benefits in any way related to the Accident, Illness, or treatment for which the Fund made full or partial payment. Upon any such subsequent recovery by or on behalf of a Covered Person from any person, party, insurance company, firm, corporation, or government agency, by suit, judgment, settlement, compromise, or otherwise, the Fund, with or without the signing of a subrogation agreement, shall be entitled to immediate reimbursement to the full extent of Benefits paid to or behalf of the Covered Person. The Fund, by payment of any Benefits, is granted a lien on the proceeds of any such recovery. The Fund shall first be reimbursed fully by or on behalf of such Covered Person to the extent of Benefits paid from the monies paid by any person, party, insurance company, firm, corporation, or government agency and the balance of monies, if any, then remaining from such subsequent recovery shall be retained by or on behalf of the covered person.

20-2. OBLIGATION OF COOPERATION

616 S.W.3d 414

All Covered Persons are obligated to cooperate with the Fund in its efforts to enforce its subrogation rights and to refrain from any action which interferes with those efforts. This duty of cooperation includes (but is not limited to) the obligation to sign a subrogation agreement in the form prescribed by the Fund. No Covered Person shall make any settlement which specifically excludes or attempts to exclude any Benefits paid by the Fund. The Fund shall have the right to take all appropriate actions necessary to enforce its subrogation rights in the event that a Covered Person refuses to sign a subrogation agreement, refuses to reimburse the Fund in accordance with the Fund's rights, or takes any other action inconsistent with the Fund's subrogation rights. In such situations, the Fund's options shall include, without limitation, the right in appropriate cases to deny Benefits to a Covered Person who refuses to sign a subrogation agreement; to institute legal actions to recover sums wrongfully withheld or to obtain other relief; and to

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