Malan F. Johnston v. Paul Revere Life ( 2001 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 00-1611
___________
Malan F. Johnston, *
*
Appellant, *
*
v. * Appeal from the United States
* District Court for the
Paul Revere Life Insurance Company, * District of Nebraska
now known as Provident Insurance *
Company, *
*
Appellee. *
___________
Submitted: October 24, 2000
Filed: February 20, 2001
___________
Before McMILLIAN, LAY and ROSS, Circuit Judges.
___________
McMILLIAN, Circuit Judge.
Malan F. Johnston ("Johnston") appeals from a final judgment entered in the
United States District Court for the District of Nebraska in favor of Paul Revere Life
Insurance Company ("Paul Revere").1 See Johnston v. Paul Revere Life Insurance
Co., No. 8:96CV305 (D. Neb. Jan. 21, 2000) (Judgment). For reversal, Johnston
1
The Honorable Joseph F. Bataillon, United States District Judge for the District
of Nebraska.
argues that: (1) the district court erred in holding that his state law claim for equitable
relief pursuant to Neb. Rev. Stat. § 44-710.13 is preempted by the Employee
Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1144(a), and (2) the
district court erred in holding that, because it does not fall within the business of
insurance, the Nebraska statute is not "saved" from ERISA preemption, pursuant to
29 U.S.C. § 1144(b)(2)(A); (3) the district court erred in finding that the Paul Revere
was not a fiduciary within the meaning of ERISA, 29 U.S.C. § 1002(21), in regard to
the administration of a disability plan in which he was a participant and erred in finding
that Paul Revere did not breach the fiduciary duty imposed by ERISA, 29 U.S.C.
§ 1104(a). Johnston also argues that (4) the district court abused its discretion by
striking four witnesses from his pre-trial order.
The district court had jurisdiction pursuant to 28 U.S.C. § § 1331 and 1332. We
have jurisdiction pursuant to 28 U.S.C. § 1291. The notice of appeal was timely filed
pursuant to Fed. R. App. P. 4(a). For the reasons stated below, we affirm the decision
of the district court.
Background
The undisputed facts establish that Johnston was a professional pilot employed
by Western Pathology Consultants, P.C. ("Western Pathology"). In 1991, Western
Pathology decided to update its long term disability policy for its professional and
supervisory employees and contacted Richard Mead, an insurance agent for Paul
Revere, who had provided insurance services to Western Pathology for over twenty-
five years.
The updated plan was designed to provide "own occupation" coverage to assure
income during an employee's earning lifetime if the employee became disabled from
performing his or her professional occupation. It was determined that benefits for plan
participants would be provided through individual policies purchased by the employee
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and issued by Paul Revere.2 Eligible employees of Western Pathology met with Mead,
who explained plan benefits and completed the necessary enrollment forms provided
by Paul Revere. Employees were given the choice of paying the premiums themselves
or having Western Pathology make their payments. To facilitate payment, Western
Pathology was billed for monthly premiums, would pay the premiums in a lump sum,
and then add the amount of each employee's individual premium to the employee's W-2
form at the end of the tax year. Also, Mead delivered policy forms to Western
Pathology.
Prior to issuing a policy for Johnston, Paul Revere issued twelve policies for
employees of Western Pathology, all of which included "own occupation" coverage.
In 1991, Johnston met with Mead who explained the plan benefits and "own
occupation" coverage. Mead also completed for Johnson a Paul Revere disability
policy application, which Johnston signed. This application stated that "[a]cceptance
by the Proposed Insured/Owner of any policy issued on this Application will ratify any
changes listed under 'Corrections and Amendments (For Home Office Use Only).'"
Paul Revere then generated a computer model showing premium benefit amounts for
Johnson, with monthly premiums including "own occupation" coverage, billed at
$94.40 a month.
After the policy was issued, Mead received a message from a Paul Revere
representative stating that the policy was issued as submitted. However, on the policy
as issued, a handwritten note in the comments portion of the application stated "delete
2
The policies purchased through Paul Revere were actually "wrap around"
policies. Employees of Western Pathology could elect to participate in a short term
disability policy issued by another insurance company; this policy would provide
benefits during the first two years of disability. The long term disability policy
purchased through Paul Revere was designed to provide minimal benefit during the first
two years of disability, but would provide a larger benefit after that period until the
participant reached the age of sixty-five.
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own occ." Mead did not read the policy before delivering it to Western Pathology, nor
did he communicate to Johnston that there was a change in the policy. Mead did,
however, inform both Johnston and Western Pathology that the policy was issued as
"applied for." In 1993, Johnston became disabled and submitted a claim to Paul
Revere, which claim was honored, although own occupation coverage was denied. At
this time he first learned that the policy application had been changed to delete own
occupation coverage. 3
Procedural History
Johnston initially filed a claim in Nebraska state court seeking declaratory relief
and alleging that Paul Revere wrongfully altered his application for disability insurance
in violation of Neb. Rev. Stat. § 44-70.13.4 This statute prohibits the alteration of a
written application for any policy for sickness insurance without the written consent of
the applicant.5 In June 1996, Paul Revere filed an answer with affirmative defenses,
3
"Own occupation" coverage is desirable because, pursuant to such coverage,
if Johnston were to generate sufficient income from other employment, his monthly
benefit under the policy would not be reduced. Without such coverage, the benefit
would be reduced.
4
After losing his medical certificate pursuant to the report of a flight physician,
Johnston worked a variety of jobs. However, he did not generate sufficient income to
effect a reduction in his monthly benefit under the terms of the policy as issued. Under
these circumstances Johnson appropriately filed a complaint seeking declaratory
judgment. See 28 U.S.C. § 2201.
5
Neb. Rev. Stat. § 44-710.13 states :
No alteration of any written application for any policy of sickness and
accident insurance shall be made by any person other than the applicant
without his or her written consent, except that insertions may be made by
the insurer, for administrative purposes, only, in such a manner as to
indicate clearly that such are not to be ascribed to the applicant.
-4-
including the assertion that the matter was governed by ERISA, and, in May 1996, the
matter was removed to federal district court based on diversity jurisdiction, 28 U.S.C.
§ 1332. Discovery closed in March 1998, and a pre-trial order was entered in April
1998.
In May 1998, the district court ruled that the matter was preempted by ERISA
§ 514, 29 U.S.C. § 1144, and ordered Johnston either to re-plead his case or risk
dismissal. See Johnston v. Paul Revere Life Insurance Company, No. 8:96CV305 (D.
Neb. May 4, 1998) (Memorandum and Order).6 The district found that because the
state statute "relates to" Western Pathology's benefit plan, ERISA operates to preempt
Johnston's state law claim and that the state law claim was not precluded from
preemption by the "savings clause" of ERISA, 29 U.S.C. § 1144(b)(2)(A). See Id., slip
op. at 11, 13. Johnston filed an amended complaint alleging violations of ERISA, and,
despite the prior ruling of the district court, renewed his state law claim. Subsequently,
in July 1998, Johnston filed a motion to strike the pre-trial order and to re-open
discovery. In August 1998, Paul Revere filed a motion to dismiss, and, on August 25,
1998, a magistrate judge issued an order striking the pre-trial order, but reserving a
ruling on the motion to re-open discovery until after the court ruled on the motion to
dismiss. By order dated March 4, 1999, the district court reaffirmed the prior
preemption ruling, and on March 9, 1999, the magistrate judge denied Johnston's
request to re-open discovery.
Paul Revere filed an answer to the amended complaint, and Johnston filed a third
amended complaint, alleging a breach of fiduciary duty under ERISA § 409, 29 U.S.C.
§ 1109, and discrimination under ERISA § 510, 29 U.S.C. § 1140, and again renewing
the state law claim. On August 5, 1999, the district court granted Paul Revere's motion
6
The Honorable William G. Cambridge, Chief Judge, United States District
Court for the District of Nebraska.
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to dismiss as to Johnston's state law and ERISA discrimination claims, but denied the
motion as to the ERISA breach of fiduciary duty claim.7 See Johnston v. Paul Revere
Life Insurance Company, No. 8:96CV305 (D. Neb. Aug. 5, 1999) (Memorandum and
Order).8
On August 23, 1999, Johnston renewed his motion to re-open discovery. This
latter motion was denied, and the matter was set for a pre-trial conference, during
which the magistrate judge struck four of Johnston's non-expert witnesses because
their names had not been disclosed during discovery and also struck two of Johnston's
exhibits. Johnston sought review of this ruling to the district court. In November
1999, Paul Revere filed a motion for summary judgment on Johnston's only remaining
claim, a breach of fiduciary duty under ERISA, which motion the district court granted.
See Johnston v. Paul Revere Life Insurance Company, No. 8:96CV305 (D. Neb. Jan.
21, 2000) (Memorandum and Order). The district court held that neither the language
of the application or the policy required Paul Revere to notify Johnston directly that it
declined to provide own occupation coverage and that Paul Revere did not have a past
policy of communicating directly with applicants about decisions denying requested
coverage. The court further rejected Johnston's position that Paul Revere handled
"virtually every aspect of plan administration" and, therefore, became a de facto plan
administrator. The court concluded that Paul Revere and Mead performed traditional
roles of insurer and agent and that neither exercised the degree of discretion that would
make them ERISA fiduciaries. See id., slip op. at 9-10. The district court also denied
7
Although the district court had previously ruled that Johnston's state law claim
was preempted by ERISA, Johnston asserted that the decision of the United States
Supreme Court in UNUM Life Ins. Co. v. Ward, 526 U.S. 358 (1999) (UNUM),
required that the district court either vacate or amend its earlier ruling on preemption.
8
The Honorable Joseph F. Bataillon, United States District Judge for the District
of Nebraska.
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Johnston's appeal of the order striking experts and exhibits. See id. This appeal
followed.
Discussion
On appeal, Johnston first argues that the district court erred in dismissing his
state law claim as preempted by ERISA. "We review the district court's decision on
ERISA preemption de novo because it is a question of federal law involving statutory
interpretation." Wilson v. Zoellner, 114 F.3d 713, 715 (8th Cir. 1997) (Wilson).
ERISA seeks to comprehensively regulate certain employee welfare benefits and
pension plans and to protect the interests of participants in these plans by establishing
standards of conduct, responsibility, and obligations for fiduciaries, and contains a
preemption clause. See Wilson, 114 F.3d at 715; Kuhl v. Lincoln National Health Plan
of Kansas City, Inc., 999 F.2d 298, 301 (8th Cir. 1993). ERISA's preemption provision
states: "[e]xcept as provided in subsection (b) of this section, the provisions of this
subchapter shall supercede any and all State laws insofar as they may now or hereafter
relate to any employee benefit plan described in section 1003(a) of this title and not
exempt under section 1003(b)." ERISA § 514(a), 29 U.S.C. § 1144(a).
However, not all state law claims that somehow affect a plan as defined by
ERISA are preempted. (See discussion below regarding the definition of an ERISA
plan pursuant to 29 U.S.C. § 1002.) ERISA includes a savings clause, which exempts
from ERISA preemption coverage certain categories of state law that regulate
insurance. This "savings clause" states "[e]xcept as provided in subparagraph (B),
nothing in this subchapter shall be construed to exempt or relieve any person from any
law of any State which regulates insurance, banking, or securities." ERISA
§ 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A).
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ERISA Plan
As a preliminary matter, we must determine if the disability insurance policy at
issue was a "plan" within the meaning of ERISA because the existence of a "plan" is
a prerequisite to the jurisdiction of ERISA. See Bannister v. Sorenson, 103 F.3d 632,
636 (8th Cir. 1996) (Bannister); Harris v. Arkansas Book Co., 794 F.2d 358, 360 (8th
Cir. 1986) (Harris). ERISA defines a "plan" as "an employee welfare benefit plan." 29
U.S.C. § 1002(3). ERISA further defines an "employee welfare benefit plan," in
pertinent part, as "any plan, fund, or program . . . established or maintained by an
employer . . . for the purpose of providing . . . benefits in the event of sickness,
accident, disability, death or unemployment. " 29 U.S.C. § 1002(1). "In determining
whether a plan . . . (pursuant to a writing or not) is a reality a court must determine
whether from the surrounding circumstances a reasonable person could ascertain the
intended benefits, beneficiaries, source of financing, and procedures for receiving
benefits." Harris, 794 F.2d at 360, citing Donovan v. Dillingham, 688 F.2d 1367, 1373
(11th Cir. 1982). "[N]o single action in itself necessarily constitutes the establishment
of the plan." Id. at 360. However, an ERISA plan must embody a "set of
administrative practices." Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11-12
(1987).
Upon review of the undisputed facts in this matter, we hold that a reasonable
person could conclude that Western Pathology did establish a plan within the meaning
of ERISA that offered disability benefits to its employees. Also, a reasonable person
could further ascertain the intended benefits, beneficiaries, the source of financing, and
procedures for receiving benefits of the disability plan at issue. Because Western
Pathology engaged in the ongoing administration of the plan by assisting in the
application process, by maintaining the policy forms, by processing paperwork in
conjunction with Mead, and by facilitating the payment of premiums, the plan
embodied a set of administrative practices. We, therefore, hold, in agreement with the
district court, that "a reasonable person [could] conclude that Western Pathology did
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establish a plan that offered benefits to its employees, as evidenced by the offering of
retirement and disability insurance policies to employees" and "by the administrative
processing required of Western Pathology to provide such benefits." Memorandum and
Order of May 4, 1998, slip op. at 6. We, therefore, hold that the disability policy at
issue was part of a "plan" within the meaning of ERISA.
ERISA Preemption
We next consider whether Johnston's state law claim is preempted by ERISA.
Johnston's state claim is preempted if the Nebraska statute upon which Johnston relies
"relate[s] to" an employee benefit plan within the meaning of ERISA § 514(a), 29
U.S.C. § 1144(a). In California Division of Labor Standards Enforcement v.
Dillingham Construction, 519 U.S. 316, 324 (1997) (Dillingham), the Supreme Court
stated that it has long acknowledged that the scope of the ERISA preemption provision
is deliberately expansive. A state law may "relate to" an employee benefit plan and,
therefore, be preempted, even if the state law was not designed to affect benefit plans
and its effect on such plans is incidental. See Ingersoll-Rand Co. v. McClendon, 498
U.S. 133, 139 (1990). In Dillingham, 519 U.S. at 324, the Supreme Court devised a
two-part test to determine if a state law "relates to" an employee benefit plan covered
by ERISA. Pursuant to this inquiry, a state law relates to a covered employee benefit
plan for purposes of § 514(a) if the plan "(1) has a connection with or (2) reference to
such a plan." Id. (citations omitted). The Court directed courts to "look both to the
objectives of the ERISA statute as a guide to the scope of the state law that Congress
understood would survive, as well as to the nature of the effect of the state law on
ERISA plans." Id. at 325.
This court has held that a variety of tests are helpful when determining the effect
of state law on an ERISA plan. See Bannister, 103 F.3d at 635, citing Arkansas Blue
Cross & Blue Shield v. St. Mary's Hosp., Inc., 947 F.2d 1341, 1344-45 (8th Cir. 1992)
(Arkansas Blue Cross). Factors which are instructive in this regard include:
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(1) whether the state law negates a plan provision; (2) the effect on
primary ERISA entities and impact on plan structure; (3) the impact on
plan administration; (4) the economic impact on the plan; (5) whether
preemption is consistent with other provisions of ERISA; and (6) whether
the state law at issue is an exercise of traditional state power.
Id., citing Arkansas Blue Cross, 947 F.2d at 1345-50.
We hold that Johnston's claim against Paul Revere arose from the administration
of an ERISA plan, including the application for and subsequent issuance of a disability
policy. Thus, pursuant to the analysis in Bannister, the state law has an impact on plan
administration. We further find, in agreement with the district court, that Johnston's
state law claim has a connection with and relates to an employee benefit plan and that,
therefore, ERISA operates to preempt his state claim unless the ERISA savings clause
is applicable. See Memorandum and Order of May 4, 1998, slip op. at 10.
ERISA Savings Clause
We must now determine whether Johnston's claim pursuant to Neb. Rev. Stat.
§ 44-710.13 escapes preemption under the ERISA savings clause, 29 U.S.C.
§ 1144(b)(2)(A) because it regulates insurance. In Metropolitan Life Insurance Co. v.
Massachusetts, 471 U.S. 724, 743 (1985) (Metropolitan Life), the Supreme Court
provided a framework for determining whether a statute regulates insurance and
explained that a state law regulates insurance if it falls within the reference to the
business of insurance in the McCarran-Ferguson Act, 15 U.S.C. § § 1011et seq., which
gave states the authority to regulate the business of insurance. As more recently stated
in UNUM Life Ins. Co. v. Ward, 526 U.S. 358, 367 (1999) (UNUM), the Court first
applies a "common-sense view of the matter" and then "considers three factors to
determine whether the regulation fits within the 'business of insurance' as that phrase
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is used in the McCarran-Ferguson Act," including "first, whether the practice has the
effect of transferring or spreading a policyholder's risk; second, whether the practice
is an integral part of the policy relationship between the insurer and the insured; and
third, whether the practice is limited to entities within the insurance industry." Id.,citing Metropolitan Life, 471 U.S. at 743.
We first conclude that the Nebraska statute at issue does not clearly regulate
insurance as a matter of common sense. As the district court noted, and we agree,
UNUM holds that all three McCarran-Ferguson factors are "considerations to be
weighed" but "none is necessarily determinative in itself." Id. at 373 (citations
omitted). In further agreement with the district court, we hold that the Nebraska statute
does not meet the first McCarran-Ferguson factor because it did not have the effect of
transferring or spreading the policy holder's risk, but "instead solely regulates the actual
written application for the insurance policy." Memorandum and Order of May 4, 1998,
slip op. at 12-13. See Memorandum and Order of Aug. 5, 1999, slip op. at 5. As
explained further by the district court, the Nebraska statute does not spread risk, "as
would, for example, . . . a state law mandating coverage for a specific disease."
Memorandum and Order of May 4, 1998, slip op. at 12-13.
Considering the second and third McCarran-Ferguson factors, we further hold,
in agreement with the district court, that the "Nebraska statute does not dictate terms
that must be included in an insurance policy, nor does it add anything substantive to the
insurer-insured relationship or alter the bargain between them. Instead, the statute
merely prohibits conduct that predates formation of the insurer-insured relationship."
Memorandum and Order of Aug. 5, 1999, slip op. at 7. The Nebraska statute merely
establishes a pre-contract prohibition governing the application procedure and does not
govern or dictate the actual content of insurance policies.9 Because none of the
9
The California statutory provision at issue in UNUM, a "notice-prejudice rule,"
is distinguishable from Neb. Rev. Stat. § 44-710.13. The California provision required
that an insurer must show prejudice before it can void liability for an insurance claim
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McCarran-Ferguson factors are met, we hold, in agreement with the well-reasoned
analysis of the district court, that Johnston's claim is not saved from ERISA preemption
pursuant to 29 U.S.C. § 1144(b)(2)(A). We, therefore, conclude that the district court
correctly dismissed Johnston's state claim as preempted by ERISA.10
ERISA Fiduciary
We next consider Johnston's argument on appeal that, contrary to the conclusion
of the district court in its summary judgment, Paul Revere was acting as a fiduciary
within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21), and it breached the
duty of loyalty imposed on an ERISA fiduciary under ERISA § 404, 29 U.S.C. §
1104(a).11 See Memorandum and Order of Jan. 21, 2000. Section 3(21)(A) states that
a person is an ERISA fiduciary only to the extent that:
that is untimely. The Court held in UNUM that this provision served "as an integral
part of the insurance relationship because it changes the bargain between insurer and
insured; it effectively creates a mandatory contract term." UNUM, 526 U.S. at 360.
The Court also held that the third McCarran-Ferguson factor was met because the state
law was aimed at the insurance industry and did not merely impact it and that it need
not "determine whether [the California notice-prejudice rule] satisfied the first, 'risk
spreading,' McCarran-Ferguson factor, because the remaining factors . . . are securely
satisfied." Id.10
In the Memorandum and Order filed May 4, 1998, the district court did not
consider all three McCarran-Ferguson factors, but rather relied on its finding that the
Nebraska statute does not transfer or spread the risk. In the Memorandum and Order
filed August 5, 1999, the district court acknowledged that all three factors should be
considered pursuant to the Supreme Court's analysis in UNUM. See UNUM, 526 U.S.
at 367-68.
11
29 U.S.C. § 1109 states that "[a]ny person who is a fiduciary with respect to
a plan who breaches any of the responsibilities, obligations, or duties imposed upon
fiduciaries by this subchapter shall be personally liable to make good to such plan any
losses to the plan resulting from each such breach."
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i) he exercises any discretionary authority or discretionary control
respecting management of such plan or . . . disposition of its assets,
(ii) he renders investment advice for a fee or other compensation . . . or
(iii) he has any discretionary authority or discretionary responsibility in
the administration of such plan.
ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A).
"Discretion" is the "benchmark for fiduciary status under ERISA" pursuant to the
explicit wording of ERISA § 3(21)(A), 29 U.S.C. § 1002(21). Maniace v. Commerce
Bank of Kansas City, 40 F.3d 264, 267 (8th Cir. 1994). ERISA further defines who
is an ERISA fiduciary by setting forth the statutory responsibility of an ERISA
fiduciary as one who "discharge[s] his [or her] duties with respect to a plan solely in
the interest of the participants and beneficiaries and (A) for the exclusive purpose of
: (i) providing benefits to participants . . . and (ii) defraying reasonable expenses of
administering the plan." ERISA § 404, 29 U.S.C. § 1104(a)(1).
This court held in Kerns v. Benefit Life Insurance Co., 992 F.2d 214, 216 (8th
Cir. 1993) (Kerns), that an insurance company does not become an ERISA fiduciary
merely by handling claims under an employer's group policy and that insurers "have not
traditionally stood in a fiduciary relationship with claimants and beneficiaries." Id.Although an insurer has a contractual obligation to pay valid claims, an insurer does not
necessarily perform this function for "the exclusive purpose of providing benefits" as
described in ERISA § 404. See id. Fiduciary status under ERISA is not an "all or
nothing concept. . . . [A] court must ask whether a person is a fiduciary with respect
to the particular activity in question." Id. at 217, citing Coleman v. Nationwide Life
Ins. Co., 969 F.2d 54, 61 (4th Cir. 1992) ("[a] court must ask whether a person is a
fiduciary with respect to the particular activity in question"). See American Fed'n of
Unions Local 102 v. Equitable Life Assurance Society, 841 F.2d 658, 662 (5th Cir.
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1988) ("[a] person is a fiduciary only with respect to those portions of a plan over
which he [or she] exercises discretionary authority or control").
These principles, which guide the court in making a determination as to whether
an insurance company is an ERISA fiduciary, apply equally to an independent
insurance broker such as Mead. See Kerns, 992 F.2d at 217-18. In particular, a person
who provides professional services to the plan administrator, such as preparing
"employee communications material . . . within a framework of policies,
interpretations, rules, practices and procedures made by other persons is not a
fiduciary." Id. at 218, citing 29 C.F.R. § 2509.75-8 D-2. "Persons who provide
professional services to plan administrators 'are not ERISA fiduciaries unless they
"transcend the normal role" and exercise discretionary authority.'" Id. at 217-18(citations omitted).
Johnston relies on Olson v. E. F. Hutton & Co., 957 F.2d 622 (8th Cir. 1992)
(Olson), in support of his position that Mead, as an insurance agent, became a
fiduciary. However, Olson, in which trustees of a pension plan brought an action
against an account broker who rendered investment advice, is factually distinguishable
from the present case. The broker in Olson rendered investment advice to an employee
benefit plan. Olson held that the account broker was a fiduciary under ERISA because
he exercised discretionary authority over a pension plan; the broker and the trustees
"had an understanding that [the broker's] investment advice would serve as the primary
basis for investment decisions" for the plan. Id. at 627. Pursuant to the court's analysis
of ERISA § 3(21)(A), 29 U.S.C. § 1002(21), in Olson, we note that Mead neither
possessed nor exercised discretionary authority as did the broker in Olson. See id. at
626.
Under circumstances similar to those presented here, this court held in Molasky
v. Principal Mutual Life Insurance Co., 149 F.3d 881, 884-85 (8th Cir. 1998)
(Molasky), that an insurance company did not act in a fiduciary capacity where it
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unilaterally made changes to a policy application. Molasky held that insurers who are
not plan administrators have no duty to notify plan participants regarding changes
unless past practices or policy documents create such an obligation.12 Id. at 884, citing
Kerns, 922 F.2d at 217. Not only did Johnston's application for disability insurance
state that acceptance by the insured of the policy ratifies any changes listed under
corrections and amendments, but no language in the application nor the policy required
Paul Revere to notify Johnston that it declined "own occupation" coverage. Moreover,
pursuant to past practice, Mead merely delivered the policy to Western Pathology. In
agreement with the analysis of the district court, we hold that neither Paul Revere nor
Mead exercised the requisite discretion to be considered ERISA fiduciaries. They
conducted themselves as any other insurance company and broker issuing a policy of
insurance would: Mead received a routine application for a policy and passed it on to
Paul Revere through its normal underwriting process; Paul Revere then sent the policy
with its "policy issue information sheet" back to Mead, who in turn delivered the policy
to Western Pathology. Under these circumstances, we hold that neither Paul Revere
nor Mead were ERISA fiduciaries in regard to the routine processing of Johnston's
application, including participant and beneficiary notification, and, therefore, they could
not and did not breach such a duty by failing to inform Johnston of the deletion of own
occupation coverage. Because no genuine issues of material fact exist in this matter,
and because we agree with the legal conclusions reached by the district court, we, hold
12
Johnston suggests that Paul Revere "acted as the defacto plan administrator."
Reply Brief for Appellant at 3. ERISA provides that if an employer, such as Western
Pathology, has no plan document designating a plan administrator, the employer is the
plan administrator. See 29 U.S.C. § 1002(16)(A)(ii) and (B)(i). Additionally, as found
by the district court and as discussed above, Paul Revere and Mead performed the
traditional roles of insurer and agent throughout the application and issuing process and
were not involved in plan administration, managing the plan, or disposing of its assets.
See Johnston v. Paul Revere Life Insurance Co., No. 8:96CV305 (D. Neb. Jan. 21,
2000), slip op. at 10.
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that the district court did not err in granting summary judgment in favor of Paul Revere.
See McCormack v. Citibank, N.A., 100 F.3d. 532, 534 (8th Cir. 1996).
Conclusion
We affirm the decision of the district court holding that Johnston's state claim
is preempted by ERISA and that this claim is not saved from preemption by the
ERISA savings clause. Additionally, we affirm the decision of the district court
holding that Paul Revere and Mead were not ERISA fiduciaries and that they did not
breach the duties imposed by ERISA upon fiduciaries. Therefore, we need not decide
whether the district court abused its discretion by striking four of Johnston's witnesses
from his witness list. Accordingly, the judgment of the district court is affirmed.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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