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    This document summarizes a court case regarding an employee's claim for medical benefits under an ERISA plan. The key points are: 1) An employee was seriously injured in a motorcycle accident and sought medical benefits under his employer's ERISA plan. However, the plan had not been formally amended in writing to exclude motorcycle accidents from coverage as the employer had announced. 2) The court found that the oral and written announcements did not constitute a valid amendment to the plan under ERISA, and therefore the plan covered the employee's claim. 3) The court also found the employer breached its fiduciary duty by backdating an amendment to wrongfully deny coverage after the accident occurred.

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    United States Court of Appeals, Third Circuit

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    Scribd Government Docs
    35 views5 pages
    This document summarizes a court case regarding an employee's claim for medical benefits under an ERISA plan. The key points are: 1) An employee was seriously injured in a motorcycle accident and sought medical benefits under his employer's ERISA plan. However, the plan had not been formally amended in writing to exclude motorcycle accidents from coverage as the employer had announced. 2) The court found that the oral and written announcements did not constitute a valid amendment to the plan under ERISA, and therefore the plan covered the employee's claim. 3) The court also found the employer breached its fiduciary duty by backdating an amendment to wrongfully deny coverage after the accident occurred.

    Original Description:

    Filed: 1991-12-19 Precedential Status: Precedential Citations: 952 F.2d 41 Docket: 91-3246

    Original Title

    Ricky Confer and Holly Confer, and Erie Indemnity Company v. Custom Engineering Company, Theodore E. Flower and Peter Traphagen Custom Engineering Co. Employee Benefit Plan, A/K/A Custom Engineering Co. Employee Health Benefit Program, Custom Engineering Company, Trustee v. Self-Funded Plans, Inc., and Manufacturers Life Insurance Company, Third-Party Custom Engineering Company Employee Health and Benefit Plan A/K/A Custom Engineering Company Employee Health and Benefit Program and Custom Engineering Company, 952 F.2d 41, 3rd Cir. (1991)

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    This document summarizes a court case regarding an employee's claim for medical benefits under an ERISA plan. The key points are: 1) An employee was seriously injured in a motorcycle accident and sought medical benefits under his employer's ERISA plan. However, the plan had not been formally amended in writing to exclude motorcycle accidents from coverage as the employer had announced. 2) The court found that the oral and written announcements did not constitute a valid amendment to the plan under ERISA, and therefore the plan covered the employee's claim. 3) The court also found the employer breached its fiduciary duty by backdating an amendment to wrongfully deny coverage after the accident occurred.

    Copyright:

    Public Domain
    Download as PDF or read online from Scribd
    Download as pdf
    35 views5 pages

    United States Court of Appeals, Third Circuit

    Uploaded by

    Scribd Government Docs
    This document summarizes a court case regarding an employee's claim for medical benefits under an ERISA plan. The key points are: 1) An employee was seriously injured in a motorcycle accident and sought medical benefits under his employer's ERISA plan. However, the plan had not been formally amended in writing to exclude motorcycle accidents from coverage as the employer had announced. 2) The court found that the oral and written announcements did not constitute a valid amendment to the plan under ERISA, and therefore the plan covered the employee's claim. 3) The court also found the employer breached its fiduciary duty by backdating an amendment to wrongfully deny coverage after the accident occurred.

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    of 5

    952 F.

    2d 41
    14 Employee Benefits Cas. 2065

    Ricky CONFER and Holly Confer, and Erie Indemnity


    Company
    v.
    CUSTOM ENGINEERING COMPANY, Theodore E. Flower
    and Peter
    Traphagen; Custom Engineering Co. Employee Benefit Plan,
    a/k/a Custom Engineering Co. Employee Health Benefit
    Program, Custom Engineering Company, Trustee
    v.
    SELF-FUNDED PLANS, INC., and Manufacturers Life
    Insurance
    Company, Third-Party Defendant,
    Custom Engineering Company Employee Health and Benefit
    Plan
    a/k/a Custom Engineering Company Employee Health
    and Benefit Program and Custom
    Engineering Company, Appellants.
    No. 91-3246.

    United States Court of Appeals,


    Third Circuit.
    Argued Oct. 10, 1991.
    Decided Dec. 19, 1991.

    John M. Quinn, Jr. (argued), Kenneth W. Wargo, Quinn, Gent, Buseck


    and Leemhuis, Erie, Pa., for appellants.
    James D. McDonald, Jr. (argued), Daniel J. Pastore, The McDonald
    Group, James J. Stuczynski, Bernard Stuczynski & Bonanti, Erie, Pa., for
    appellees.
    Timothy J. Galanaugh, Murphy and O'Connor, Haddonfield, N.J., for
    third-party defendant.

    Before MANSMANN, NYGAARD and SEITZ, Circuit Judges.


    OPINION OF THE COURT
    PER CURIAM.

    In this ERISA action, the district court determined that plaintiff Ricky Confer is
    entitled to medical benefits under the Custom Engineering Employee Health
    Benefit Plan, because an oral statement of a change in a plan does not effect a
    modification of the plan's terms. The district court also determined that Custom
    Engineering Company, the Plan's administrator, breached its fiduciary duty to
    Confer by wrongfully denying him benefits. Confer v. Custom Eng'g Co.
    Employee Health Benefit Plan, No. 89-69 (W.D.Pa. Jan. 9, 1991).

    Custom Engineering and the Plan together appeal from the district court's
    determination that the Plan covers Confer's claim.1 They also appeal from the
    district court's denial of their motion for reconsideration and an award of
    attorney fees to Confer. 760 F.Supp. 75.

    We will affirm the district court's coverage determination and the district
    court's denial of reconsideration. Because the amount of attorney fees has not
    been finally determined, that issue is not properly before us and we do not
    reach its merits.

    I.
    4

    On April 1, 1985, Custom Engineering's president announced, in a speech to all


    employees, that the company's new health plan, effective on or about April 1,
    1985, would exclude coverage for motorcycle accidents. Custom Engineering
    also posted a bulletin board notice with the same information. Nonetheless, the
    Plan, which Custom Engineering received on April 10, 1985, and executed the
    following month, did not exclude motorcycle accidents from coverage.

    On June 1, 1985, Confer was seriously hurt in a motorcycle accident. Custom


    Engineering alleges that it was only then that it discovered that the written plan
    document did not exclude coverage for injuries incurred in a motorcycle
    accident. Custom Engineering's president then had an amendment prepared by
    Self-Funded Plans, Inc., which he signed sometime after Confer's accident and
    before July of 1985, backdating its effective date to April 10th. In September of
    1985, Self-Funded was responsible for handling claims and, based on the
    backdated amendment, denied coverage for all of Confer's injuries related to

    his motorcycle accident.


    6

    Confer sued Custom Engineering, its officers, Self-Funded, and the Plan to
    recover benefits. In a January 9, 1991, memorandum opinion, the district court
    held, inter alia, that (1) the Plan covered Confer's claim because it had not been
    effectively amended by the oral announcement, the posted bulletin, or the
    backdated amendment; (2) Custom Engineering--through its officers--had
    breached its fiduciary duty by backdating the amendment in order to deprive
    Confer of benefits; and (3) Custom Engineering showed extreme bad faith by
    backdating the plan and was liable for attorney fees.2

    In an accompanying order, the district court granted summary judgment against


    the Plan and Custom Engineering in the amount of $142,321.95. The district
    court further directed the Plan to cover all of Confer's future related medical
    expenses. The district court also awarded reasonable attorney fees and directed
    the submission of documents to support the amount requested.

    On January 25, 1991, Custom Engineering and the Plan filed a motion seeking
    reconsideration and revision of the January 9th order "to reflect Custom
    Engineering's subrogation rights, and to eliminate its liabilities for Ricky
    Confer's future medical expenses." The district court denied their motion,
    indicating that Custom Engineering and the Plan had not adequately brought
    either issue to the court's attention prior to the order granting summary
    judgment. Confer v. Custom Eng'g Co. Employee Health Benefit Plan, 760
    F.Supp. 75 (W.D.Pa.1991). Pursuant to Fed.R.Civ.P. 54(b), the district court
    entered final judgment on the January 9th order.

    Our review of an order of summary judgment is plenary. Country Floors, Inc. v.


    Partnership of Gepner & Ford, 930 F.2d 1056, 1060 (3d Cir.1991); Goodman v.
    Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976), cert. denied, 429 U.S.
    1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). We thus "apply the same test the
    district court should have utilized initially." Colgan v. Fisher Scientific Co., 935
    F.2d 1407, 1413 (3d Cir.1991) (quoting Goodman ), cert. denied, --- U.S. ----,
    112 S.Ct. 379, 116 L.Ed.2d 330 (1991).

    II.
    A.
    10

    Section 402(a)(1) of ERISA requires that "[e]very employee benefit plan shall
    be established and maintained pursuant to a written instrument." 29 U.S.C.
    1102(a)(1). This section precludes oral or informal amendments to employee

    benefit plans. See Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1163 (3d
    Cir.1990) and cases cited therein; see also Hamilton v. Air Jamaica, Ltd., 945
    F.2d 74 (3d Cir.1991).
    11

    Custom Engineering and the Plan acknowledge that the Plan's written
    instrument did not exclude Confer's claim at the time of his accident. Under
    Hozier, neither the speech nor the bulletin board announcement could
    effectively change that written instrument. Only a formal written amendment,
    executed in accordance with the Plan's own procedure for amendment, could
    change the Plan. Moreover, the change by means of a formal amendment could
    operate only prospectively. The district court correctly determined that the
    unamended Plan governed, and that it covered Confer's injuries.

    B.
    12

    The disposition of a motion for reconsideration is reviewable for abuse of


    discretion. Osei-Afriyie v. Medical College of Pennsylvania, 937 F.2d 876, 881
    (3d Cir.1991), petition for cert. filed, (Sept. 30, 1991) (No. 91-6061); Koshatka
    v. Philadelphia Newspapers, Inc., 762 F.2d 329, 333 (3d Cir.1985).

    13

    Custom Engineering and the Plan did not raise the issue of subrogation in any
    of their summary judgment papers. They did not argue, either, that Confer's
    employment status makes him ineligible for benefits. The district court found
    that Custom Engineering and the Plan had ample opportunity to make both
    arguments and failed to do so adequately. The district court exercised sound
    discretion when it refused to consider arguments that, in effect, had been
    waived. Thus, those arguments have not been properly preserved for appeal,
    and we do not reach their merits.

    C.
    14

    Because the district court has not yet quantified the attorney fees, we do not
    have jurisdiction over that issue, despite the Rule 54(b) certification. See Colon
    v. Hart (In re Colon), 941 F.2d 242, 245 (3d Cir.1991) (order allowing attorney
    fees but deferring quantification should be dismissed for lack of finality). The
    district court's final order pursuant to Fed.R.Civ.P. 54(b) did not expressly
    certify the question of fees, nor can we read the order to have done so, since
    that question has not yet been fully resolved. This lack of finality does not
    deprive us of jurisdiction over the merits, because as we stated in Colon,
    attorney fees should be considered apart from the merits for purposes of appeal.
    Id. at 245.

    III.
    15

    We will affirm both the grant of summary judgment against Custom


    Engineering and the Plan, and the denial of their motion for reconsideration.
    For lack of finality, we will dismiss that part of the appeal relating to attorney
    fees.

    Custom Engineering, its officers, and the Plan are represented by the same
    counsel. In this appeal at No. 91-3246, Custom and the Plan have filed a joint
    brief. There, they did not brief the issue of a breach of fiduciary duty by the
    corporation. In the reply brief to Ricky Confer's appeal, however, counsel states
    that because Custom Engineering must fund any amount for which the Plan is
    liable, "it is not really that significant what basis the lower court used to reach
    its conclusion of Custom [Engineering]'s liability." Brief for Appellees at 26,
    Confer v. Custom Eng'g Co., 952 F.2d 34 (3d Cir.1991). It is thus clear that
    Custom Engineering has not appealed from the determination that it breached a
    fiduciary duty, resting its challenge on contractual issues. Thus we will not
    address the fiduciary issue here

    The district court also held that Custom's officers and the Plan's supervisor
    were not fiduciaries and therefore not liable to Confer. We address Confer's
    appeal from that decision in a separate opinion at 952 F.2d 34

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