Kimberly Gordon v. Cigna Corporation
890 F.3d 463
4th Cir.2018Background
- Steven Gordon, a UCG subsidiary employee, enrolled in his employer’s group life plan and paid payroll-deducted premiums attempting to obtain $250,000 in supplemental coverage (total $300,000 with $50,000 basic). He died in January 2014.
- LINA (a Cigna subsidiary) paid the beneficiary, Kimberly Gordon, only $150,000: the $50,000 basic plus the $100,000 guaranteed-issue supplemental amount; LINA had no record of any evidence-of-insurability application needed for amounts above $100,000.
- Plan documents and the parties’ practices showed UCG self-administered enrollment, eligibility verification, premium calculation/collection (self-billing), and submission of only aggregate premiums to LINA; LINA was appointed claim fiduciary with responsibility to adjudicate claims and appeals but not to administer enrollment.
- UCG admitted errors in administering Gordon’s enrollment (including a mis-entered birthdate and failure to submit evidence-of-insurability), and offered to refund overpaid premiums; Kimberly sued UCG, LINA, and CIGNA alleging ERISA fiduciary breaches and, alternately, knowing participation in a breach.
- The district court granted summary judgment to the Cigna defendants (and found CIGNA improper party), denied pre-judgment discovery, and left UCG in the case long enough for UCG to settle; Kimberly appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether premiums paid to insurer were "plan assets" making insurer a fiduciary under 29 U.S.C. §1002(21)(A)(i) | Excess premiums received by LINA are plan assets and LINA exercised control over those funds, so LINA is a fiduciary | The plan is a guaranteed-benefit insurance contract; premiums are not plan assets under §1101(b)(2); insurer did not manage plan assets | The premiums were not plan assets because the policy is a guaranteed-benefit policy; no fiduciary status on that basis |
| Whether LINA/Cigna exercised discretionary authority/control or had discretionary responsibility in plan administration under §1002(21)(A)(i),(iii) | LINA materially administered the plan (provided summaries, handled underwriting forms) and thus had discretionary authority to solicit/notify | Plan documents and practice allocate day-to-day administration (eligibility, enrollment, premium calc., notifying applicants) to employer UCG; LINA’s role was limited to claims adjudication | No fiduciary duty for LINA/Cigna with respect to enrollment/solicitation/notification; responsibilities were with UCG |
| Whether LINA knowingly participated in a fiduciary breach (alternative count) | Facts (e.g., form-denial with wrong name) suggest LINA knew it was receiving excess premiums and thus knowingly participated | No evidence LINA knew of UCG’s enrollment errors prior to claim; isolated clerical errors do not show knowledge | Assuming such a cause exists, plaintiff failed to show knowing participation; summary judgment proper |
| Whether summary judgment was premature because plaintiff was denied discovery under Rule 56(d) | Plaintiff needed discovery on insurer knowledge, allocation of duties, and corporate structure to oppose summary judgment | Defendants offered substantial targeted discovery; plaintiff declined; record (including UCG admissions) would not yield facts creating a genuine dispute | District court did not abuse discretion in denying further discovery; plaintiff had reasonable opportunity and did not identify discovery that would create a material dispute |
Key Cases Cited
- John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510 U.S. 86 (1993) (examines when insurance contract components allocate investment risk to insurer for plan-asset analysis)
- Merrimon v. Unum Life Ins. Co., 758 F.3d 46 (1st Cir. 2014) (life insurance policy itself, not premiums or benefits, is plan asset under guaranteed-benefit exclusion)
- Faber v. Metro. Life Ins. Co., 648 F.3d 98 (2d Cir. 2011) (similar holding on guaranteed-benefit policy exclusion)
- Hi-Lex Controls, Inc. v. Blue Cross Blue Shield, 751 F.3d 740 (6th Cir. 2014) (self-funded plan administrator held fiduciary for holding plan funds—distinguished here as involving self-funded plan)
- Coleman v. Nationwide Life Ins. Co., 969 F.2d 54 (4th Cir. 1992) (look to plan documents and particular function to determine fiduciary status)
- McLemore v. Regions Bank, 682 F.3d 414 (6th Cir. 2012) (custody/possession alone insufficient to confer fiduciary status)
- Pegram v. Herdrich, 530 U.S. 211 (2000) (fiduciary status must be determined with respect to the specific action at issue)
- Hodgin v. UTC Fire & Sec. Ams. Corp., 885 F.3d 243 (4th Cir. 2018) (Rule 56(d) denial appropriate where plaintiff had reasonable opportunity for discovery and could not identify discovery creating a genuine dispute)