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GRUBER v. HUBBARD BERT KARLE WEBER

November 18, 1987

Robert Gruber, et al., Plaintiffs
v.
Hubbard Bert Karle Weber, Inc., et al., Defendants



The opinion of the court was delivered by: WEBER

 In November 1981, the Lake Erie Employers' Association (LEEA) was created as a non-profit corporation, offering employee health benefit plans to employers in Pennsylvania and Ohio. In its short life it had as members about 500 employers covering approximately 6000 employees.

 From its inception, LEEA's plans were administered by Hubbard Bert Karle Weber, Inc. (HBKW), an insurance agency. LEEA was governed by a Board of Directors and many of HBKW's principals served as directors and/or officers of LEEA. In February 1985, after little more than 3 years of operation, LEEA was forced into bankruptcy when its assets failed to cover outstanding obligations for benefits under the plan. *fn1"

 These several suits were filed under ERISA, 29 U.S.C. §§ 1132 et seq., alleging that HBKW and LEEA's various officers and directors breached their fiduciary obligations in numerous respects, thereby causing LEEA's insolvency. *fn2" We have certified 2 classes of plaintiffs:

 
1) Employers who were members of LEEA and have employees or their dependents who have incurred medical bills not paid by LEEA.
 
2) All employees and their dependents who were beneficiaries of the LEEA plans and who have incurred medical bills not paid by LEEA.

 The relief which plaintiffs seek is simple. Because HBKW allegedly caused LEEA's insolvency, leaving beneficiaries' medical bills unpaid, plaintiffs seek compensation in the amount of the unpaid benefits, plus attorneys' fees and costs. It is this claim of relief which presents the salient issue here.

 1. HBKW's MOTION FOR SUMMARY JUDGMENT

 Defendant HBKW and the individual defendants have moved for summary judgment on the premise that ERISA does not permit a suit by the beneficiaries of a plan against plan administrators for compensatory damages. Rather defendants argue, beneficiaries may only recover for the benefit of the plan which in the present case is defunct.

 The Act in Section 502, 29 U.S.C. § 1132, describes the forms of civil action permitted to enforce the Act, including two relevant in this case:

 
(a) Persons empowered to bring a civil action.
 
A civil action may be brought -
 
1.) by a participant or beneficiary -
 
A.) . . .
 
B.) To recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.
 
2.) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title.

 We first examine the § 502(a)(1) cause of action. Following McMahon v. McDowell, 794 F.2d 100, (3d Cir. 1986), we conclude that the claims asserted here cannot be classified as § 502(a)(1) claims. Such claims are "personal in nature", seeking to define a particular individual's rights under the plan. Id., at 109; Livolsi v. R.A.M. Construction Company, 728 F.2d 600 (3d Cir. 1984). In this suit there does not appear to be any dispute about any individual's entitlement to payment by LEEA. The definition of the plaintiff-class would eliminate persons not entitled ...


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