Shelby County Health Care Corp. v. Southern Council of Industrial Workers Health and Welfare Trust Fund, 203 F.3d 926 (6^th Cir. 2000); 2000 FED App. 0055P (6th Cir.)-Shelby County Health Care Corporation ("Shelby") sued Southern Council of Industrial Workers Health and Welfare Trust Fund (the "Fund") for payment of hospital services rendered to Mason, a former participant in the Fund.  Mason suffered injuries in an auto accident. When Mason later filed a claim against the Fund, the plan administrator denied Shelby's claim for benefits on the basis of untimeliness of the claim.  The Fund reasoned that because Mason had failed to sign and return a subrogation agreement and questionnaire which the fund had sent him, he had not "filed" his claim within one year of the date on which he incurred the charges.

This court affirmed the district court's summary judgment determination that the Fund's denial for this reason was arbitrary and capricious. Although the Fund provided rational justifications for requiring claimants to submit a subrogation agreement within the one-year time requirement, it failed to established the reasonableness of this requirement based on the language of the Plan. (A plan administrator's interpretation of ambiguous provisions must be reasonable.)  The Plan did not state that a participant must submit all information necessary to process the claim in order to file the claim within the deadline.

The fact that the district court had sua sponte converted the Fund's motion to dismiss into a motion for summary judgment pursuant to Fed R. Civ. P. 12(b) was not an abuse of discretion.  Both the Fund and Shelby had sufficient notice and opportunity to address the issues presented in the Fund's motion. However, sua sponte summary judgment on the amount of benefits due was an abuse of discretion, because the parties were not on notice that this the court could decide this issue.  Neither party had yet addressed the amount of benefits.  In fact, the Court had given the Fund an extension to file dispositive motions. Finally, this court affirmed the district court's denial of attorneys' fees to the Fund on the basis that the Court found the Board of Trustees' interpretation of the Plan language to be unreasonable.