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Confer v. Custom Engineering Co.

filed: December 19, 1991; As Corrected December 30, 1991.

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



Appeal from the United States District Court for the Western District of Pennsylvania. (D.C. Civil No. 89-00069E)

Before: Mansmann, Nygaard and Seitz, Circuit Judges.

Author: Per Curiam

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.*fn1 They also appeal from the district court's denial of their motion for reconsideration and an award of attorney fees to Confer.

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.

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.

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.*fn2

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, 50 L. Ed. 2d 748 , 97 S. Ct. 732 (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) ...


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