Guyan International, Inc. v. Professional Benefits Administrators, Inc.
689 F.3d 793
| 6th Cir. | 2012Background
- Permco, Pritchard, HAPCA, and Precision Gear established ERISA plans funded by employer contributions and employee payroll deductions.
- Each Plaintiff contracted with Professional Benefits Administrator (PBA) to administer and pay medical claims for the respective Plan.
- PBA was obligated to keep segregated accounts for each Plan and to pay claims from those funds only.
- PBA commingled Plan funds with its own and used funds for its own purposes, leaving many claims unpaid.
- District court held PBA fiduciary under ERISA, breached fiduciary duties, and awarded Plan damages; ERISA preemption of related state-law claims.
- PBA appealed arguing lack of fiduciary status, lack of damages, and preemption; the court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was PBA an ERISA fiduciary regarding Plan assets? | PBA exercised control over plan funds (check-writing, deposits). | PBA argued no fiduciary status due to contract terms limiting duties. | Yes; PBA was a fiduciary with respect to plan assets. |
| Did Plaintiffs have damages recoverable under ERISA for fiduciary breach to be paid to the Plans? | Damages should be recovered on behalf of each Plan. | Damages alleged personally to Plaintiffs, not Plan-based damages. | Damages recoverable on behalf of the Plans; relief to Plans. |
| Are Plaintiffs' breach-of-contract claims preempted by ERISA? | State-law contract claims provide an independent remedy. | Because PBA is a fiduciary, ERISA preempts state-law claims. | Yes; breach-of-contract claims preempted where they duplicate ERISA remedies. |
Key Cases Cited
- Briscoe v. Fine, 444 F.3d 478 (6th Cir. 2006) (fiduciary status tied to control over plan assets)
- Aetna Health, Inc. v. Davila, 542 U.S. 200 (Supreme Ct. 2004) (ERISA preemption broader than exact duplicate actions)
- Russell v. United States, 473 U.S. 134 (Supreme Ct. 1985) (standards for representative fiduciary action under ERISA)
- Tullis v. UMB Bank, 515 F.3d 673 (6th Cir. 2008) (recovery on behalf of plan under §1109(a))
- Penny/Ohlmann/Nieman, Inc. v. Miami Calley Pension Corp., 399 F.3d 692 (6th Cir. 2005) (ERISA preemption framework for state-law claims)