Harold Ives Trucking Company v. Spradley & Coker, Inc., 1999 U.S. App. LEXIS 9529 (8th Cir. May 18, 1999)-Before RICHARD S. ARNOLD and HANSEN, Circuit Judges, and STROM, District Judge. Ives sponsored a medical plan that Jefferson Pilot insured. Spradley was the third party administrator of the plan. The plan had a $50,000 deductible. Once a participant incurred expenses exceeding $50,000 Jefferson Pilot would pay the medical expenses.
Mr. Elliot, a former employee of Ives was involved in an automobile accident in which he suffered serious head injuries. Concurrent with Mr. Elliot's bills approaching the $50,000 limit, Mr. Elliot's doctor recommended that Mr. Elliot receive treatment at a different facility. Jefferson Pilot informed Spradley that it would not pay the costs at the new facility. Spradley never informed Ives or the Ives plan of Jefferson Pilot's decision. Instead, Spradley denied the claim.
Mr. Elliot's attorney appealed the denial and Spradley, again without informing Ives or the Ives plan of Jefferson Pilot's refusal, elected to pay the claim. Mr. Elliot incurred almost $73,000 in bills. Jefferson Pilot refused to pay. Ives and the Ives plan sued Spradley and Jefferson Pilot. The district court held that Jefferson Pilot was responsible for approximately $33,000 in charges no matter where Mr. Elliot incurred the charge. Jefferson Pilot did not appeal this decision.
The District Court ruled that Ives had standing to sue Spradley for breach of fiduciary duty under 29 U.S.C. § 1132(a)(2). However, the district Court ruled that Ives could not recover damages under 29 U.S.C. § 1132(a)(2). The appeal followed.
The Eighth Circuit determined that Spradley was a fiduciary even though the contract between Ives and Spradley called for Spradley to perform only ministerial tasks. However, the Eight Circuit held that Spradley was a fiduciary because it failed to follow the contract. By reversing its earlier decision to deny the claims and instead pay the claims exercised discretionary authority over plan assets. This made it a fiduciary.
The Eight Circuit also held that Spradley violated its fiduciary duty by not notifying Ives.
The Eight Circuit reversed the district court's decision and held that Ives could collect damages since this was an action under 29 U.S.C. § 1132(a)(2) not 29 U.S.C. § 1132(a)(3).
