>The federal judge turned away a number of arguments from the TPA that it merely performed a ministerial function and applied the plan’s provisions without exercising independent judgment, EBIA reported.
>The plan had charged that the TPA was incompetent and breached its fiduciary duties because it made billing errors and did not properly handle coordination of benefits, subrogation, or annual and lifetime caps.
- The court ruled that the plan’s provisions were “not so detailed as to be the equivalent of a mathematical equation” and that reasonable people could disagree about whether particular claims were covered.
- To the TPA’s claims that it didn’t have final claims authority, the court pointed out that trustees had never overruled a grant of a claim and that the TPA decided the “overwhelming majority” of cases.
- Regarding the claim that the TPA shouldn’t be considered a fiduciary because the plan’s checking account was only minimally funded, the judge ruled that the balance normally maintained in an account does not determine fiduciary status. Moreover, when the TPA notified the plan of the weekly deposit amount, the plan only checked the notice for mathematical errors, which the court took to mean that the TPA effectively had access to larger amounts of plan funds.
>However, the court determined that the TPA’s retention of interest earned on the plan’s checking account was negotiated compensation under the contract between the plan and the TPA and was not a fiduciary breach.
The case is Guardsmark, Inc. v. Blue Cross & Blue Shield of Tenn., Civ. No. 01-2117 (W.D. Tenn. 2004).
« Oversight Sought for Pa. Municipal Pensions