In Humana Health Plan, Incorporated v. Nguyen, No. 14-20358 (5th Cir. 2015), the defendant, Patrick Nguyen (“Nguyen”), was appealing from the district court’s order granting summary judgment in favor of the plaintiff, Humana Health Plan, Inc. (“Humana”).
In this case, Nguyen was a participant in the API Enterprises Employee Benefits Plan (the “Plan”), an ERISA-governed employee welfare plan established by API Enterprises, Inc. (“API”). API had entered into a Plan Management Agreement (“PMA”) with Humana, through which Humana had agreed to serve as “Plan Manager” and to provide various administrative services to the Plan. Two of Humana’s tasks for the Plan were subrogation and recovery services. One issue arising in the case: is Humana an ERISA fiduciary with respect to the Plan under section 3(21) of ERISA(if not, it can’t sue Nguyen under ERISA section 502(a)(3))? The Fifth Circuit Court of Appeals (the “Court”) determined that Humana is not an ERISA fiduciary. Why?
In analyzing the case, the Court focused on the specific role that Humana undertook regarding subrogation and recovery services for the Plan, and whether API provided a framework of policies and procedures to guide Humana, and supervised Humana as it executed its task. First, the relevant language of the PMA pertaining to these services merely defines the range of potential disputes covered by the contract; it says nothing about who has the right to finally decide whether to investigate or pursue a claim. This language does not show that Humana had discretion over the Plan or its assets. As such, the subrogation and recovery language in the PMA does not show that Humana is an ERISA fiduciary of the Plan. Second, even if the Court interpreted the PMA to give Humana broad power, there is no explanation as to why Humana is not a ministerial agent, and thus not a fiduciary, or why it how Humana exercised discretion as described in section 3(21)(A)(i) and (iii).