ILNews

Court: Company not negligent in trust demise

Jennifer Nelson
January 1, 2008
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The 7th Circuit Court of Appeals upheld a magistrate judge's ruling in favor of a Michigan company on claims that it was negligent in managing an Indiana trust that eventually collapsed.

Magistrate Judge John Paul Godich, of the U.S. District Court Southern District of Indiana's Indianapolis Division, granted summary judgment in favor of Benefit Actuaries on Indiana Funeral Directors Insurance Trust's claims that Benefit violated its fiduciary duty under ERISA, and negligently failed to provide competent advice while managing the trust.

The trust appealed the ruling, Indiana Funeral Directors Insurance Trust, an Indiana trust v. Benefit Actuaries, Incorporated, No. 07-2351, arguing Magistrate Judge Godich erred in granting summary judgment on its claim that Benefit assumed the duty to comply with Michigan law; that Benefit didn't breach its duty to provide competent services as a third-party administrator, insurance broker, and advisor; and the judge erred in finding Benefit didn't breach its duty by failing to advise the trustees about risks or raising stop-loss deductibles and its poor financial situation.

The trust was created in 1972 and administered as a multiple insurance employer welfare arrangement (MEWA) to provide health benefits to funeral home employees. The trustees hired Benefit to serve as the third-party administrator, insurance broker, and advisor.

In the mid-1990s, the trust began to lose money because more claims were filed than the trust had money to cover from its self-funded health plan. The trust maintained stop-loss coverage, which would reimburse the trust for a specific amount it paid a participant over the deductible.

When financial troubles were evident, Benefit suggested the trust switch to a fully insured plan through an insurance provider, but the trust refused because it would raise the premiums substantially.

In 1997, the trust fired Benefit and later switched to a fully insured plan once it was evident the trust could no longer afford to cover the claims.

Magistrate Judge Godich found in favor of Benefit on the trust's claims and granted the Michigan company summary judgment.

The judge was correct in granting summary judgment on the trust's claim that Benefit assumed the duty to comply with Michigan law because there was nothing in the contract between the two companies that said Benefit would follow Michigan law while administering the Indiana trust, wrote Circuit Judge Terrence Evans. Nor does the trust submit evidence to show Benefit assumed the duty to provide competent actuarial advice.

Benefit didn't breach its duty to provide competent services; the magistrate judge based his decision on the testimony of Benefit's president that until 1997, the trust wasn't on the brink of ruin. Also, there is proof the trustees continuously disregarded Benefit's advice in terms of obtaining more stop-loss coverage or switching to a fully insured plan, wrote Judge Evans.
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  1. I will continue to pray that God keeps giving you the strength and courage to keep fighting for what is right and just so you are aware, you are an inspiration to those that are feeling weak and helpless as they are trying to figure out why evil keeps winning. God Bless.....

  2. Some are above the law in Indiana. Some lined up with Lodges have controlled power in the state since the 1920s when the Klan ruled Indiana. Consider the comments at this post and note the international h.q. in Indianapolis. http://www.theindianalawyer.com/human-trafficking-rising-in-indiana/PARAMS/article/42468. Brave journalists need to take this child torturing, above the law and antimarriage cult on just like The Globe courageously took on Cardinal Law. Are there any brave Hoosier journalists?

  3. I am nearing 66 years old..... I have no interest in contacting anyone. All I need to have is a nationality....a REAL Birthday...... the place U was born...... my soul will never be at peace. I have lived my life without identity.... if anyone can help me please contact me.

  4. This is the dissent discussed in the comment below. See comments on that story for an amazing discussion of likely judicial corruption of some kind, the rejection of the rule of law at the very least. http://www.theindianalawyer.com/justices-deny-transfer-to-child-custody-case/PARAMS/article/42774#comment

  5. That means much to me, thank you. My own communion, to which I came in my 30's from a protestant evangelical background, refuses to so affirm me, the Bishop's courtiers all saying, when it matters, that they defer to the state, and trust that the state would not be wrong as to me. (LIttle did I know that is the most common modernist catholic position on the state -- at least when the state acts consistent with the philosophy of the democrat party). I asked my RCC pastor to stand with me before the Examiners after they demanded that I disavow God's law on the record .... he refused, saying the Bishop would not allow it. I filed all of my file in the open in federal court so the Bishop's men could see what had been done ... they refused to look. (But the 7th Cir and federal judge Theresa Springmann gave me the honor of admission after so reading, even though ISC had denied me, rendering me a very rare bird). Such affirmation from a fellow believer as you have done here has been rare for me, and that dearth of solidarity, and the economic pain visited upon my wife and five children, have been the hardest part of the struggle. They did indeed banish me, for life, and so, in substance did the the Diocese, which treated me like a pariah, but thanks to this ezine ... and this is simply amazing to me .... because of this ezine I am not silenced. This ezine allowing us to speak to the corruption that the former chief "justice" left behind, yet embedded in his systems when he retired ... the openness to discuss that corruption (like that revealed in the recent whistleblowing dissent by courageous Justice David and fresh breath of air Chief Justice Rush,) is a great example of the First Amendment at work. I will not be silenced as long as this tree falling in the wood can be heard. The Hoosier Judiciary has deep seated problems, generational corruption, ideological corruption. Many cases demonstrate this. It must be spotlighted. The corrupted system has no hold on me now, none. I have survived their best shots. It is now my time to not be silent. To the Glory of God, and for the good of man's law. (It almost always works that way as to the true law, as I explained the bar examiners -- who refused to follow even their own statutory law and violated core organic law when banishing me for life -- actually revealing themselves to be lawless.)

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