Fiduciary Status Does Not Hinge on Answering Plan Questions

June 3, 2004 ( - A human resource (HR) representative performing an administrative function requiring no discretion is not considered a benefits plan fiduciary under the guidelines set forth in the Employee Retirement Income Security Act (ERISA).

The U.S. 4 th Circuit Court of Appeals, upholding a lower court’s ruling, found an HR representative who merely reads the answer to a benefit question off a computer screen cannot be held up as a plan fiduciary.   The court, in Estate of Weeks v. Advance Stores Co. , found such a role could not be considered a fiduciary action “because such a function is administrative rather than discretionary,” the court said in a per curiam decision.

In the case, the mother of former Advance Stores Co employee Perry Weeks called the company to find out whether he was still insured by Advance’s group health plan after being diagnosed withacute leukemia relapse.   When Mrs. Weeks’ spoke with the HR representative Karen Yates, she was informed, incorrectly, that Perry Weeks was not covered by the plan because he was no longer an employee.  

During Weeks’ hospitalization the company sent to his home a letterdetailing his Consolidated Omnibus Budget Reconciliation Act (COBRA) rights.   Weeks, who had resigned from the company a week before his diagnosis and subsequent hospitalization, passed away shortly thereafter, before his wife had opened the letter.

Weeks applied for coverage of Perry’s hospital bills but Advance refused her request since COBRA coverage was not elected in the proper amount of time.   However, Weeks alleged Yates gave her incorrect information about Perry’s COBRA rights and that the HR representative in this case “probably should have” transferred her call to the plan administrator.   Thus, the failure of Yates to properly handle the question and direct her call to the proper authorities means Yates should be considered a plan fiduciary, Weeks argued.

In the initial case, the U.S. District Court for the Western District of Virginia determined that even though the COBRA notice was not opened prior to Perry Weeks’s death, the company satisfied its requirements under COBRA and thus could not be ordered to provide insurance for Weeks’s medical expenses.   Further, the lower court denied Weeks’s claims for reimbursement that Weeks’ argued the estate of Perry Weeks was entitled to due to Yates’ failure to properly answer her question.   Weeks appealed the decision.

Appellate Ruling

The appellate court turned to Section 1002(21)(A) of ERISA for the definition of a fiduciary and relying on this definition found “Yates’ job activities did not make her an ERISA fiduciary.”   Even though Yates’ job activities included answering employee questions about the company’s benefit plans, the court found when performing this roles, Yates only repeated information handed down by upper-management.  

“Thus, although Yates may have exercised some discretion in the overall performance of her job duties, Yates did not have any discretionary authority or control over the manner in which employee plans were managed and administered,” the court said.  

Speaking specifically to Weeks’s argument that Yates’ neglected her fiduciary responsibility by failing to transfer Weeks’s call to the plan administrator, the court said, “In determining whether a person qualifies as an ERISA fiduciary, we do not look at what that person should have done.”   Rather, the court held fast to its determination that a person is a fiduciary only if the person ” actually exercised any discretionary authority over the management and administration of the plan in question.”   Yates’ in this case did not exercise any such authority, the court found.

The case isof Weeks v. Advance Stores Co. , 4th Circuit, Number 03-1926.