316 F.Supp.2d 46 (2004) | Cited 0 times | D. Maine | March 24, 2004


The United States Magistrate Judge filed with the court on January21, 2004, with copies to counsel, his Report and Recommended Decision onDefendant's Motion for Summary Judgment. The plaintiff filed an objectionto the Recommended Decision on February 9, 2004. I have reviewed andconsidered the Recommended Decision, together with the entire record; Ihave made a de novo determination of all matters adjudicated bythe Recommended Decision; and I concur with the recommendations of theUnited States Magistrate Judge for the reasons set forth in theRecommended Decision, except as follows, and determine that no furtherproceeding is necessary.

In Count III of the Amended Complaint, the plaintiff, PatientAdvocates, alleges that the Employee Retirement Income Security Act("ERISA") preempts 22Page 2M.R.S.A. §§ 8701-8712. That state statute creates the MaineHealth Data Organization ("MHDO") and charges it with creating andmaintaining "a useful, objective and comprehensive health informationdatabase" to be used to "improve the health of Maine citizens." 22M.R.S.A. § 8703(1). To fulfill its statutory obligation, MHDOrequires certain entities, including third-party administrators andthird-party payers, to provide it with health care claims data, such asprovider information, payment information, diagnoses, and demographicinformation for plan members. Code Me. Rules § 90-590. PatientAdvocates is a third-party administrator that provides various servicesto many ERISA welfare benefit plans, including processing and payingclaims. In 2002, Patient Advocates reported that it processed 77,664health care claims on behalf of its client plans. Def.'s Statement ofMaterial Facts ("SMF") ¶ 13; Pl's Reply SMF ¶ 13. As a result, itobtains information from these plans that is subject to the MHDOreporting requirements. Patient Advocates argues that the information,however, amounts to "plan assets," and is therefore beyond the reach ofthe state law.

In his recommended decision, the Magistrate Judge correctly observedthat the parties had not made clear which provision of ERISA was atissue. Because one of Patient Advocates' cited cases identified29 U.S.C. § 1106(b)(1) as the provision at issue, the Magistrate Judgeunderstandably limited his analysis of Count III to that provision.Section 1106(b)(1) prohibits a plan fiduciary from dealing with "theassets of the plan in his own interest or for his own account."Page 3But the parties agreed that Patient Advocates was not a planfiduciary. The Magistrate Judge therefore concluded that "the statutedoes not apply to the plaintiff at all" and did not reach the questionwhether the data constitute "plan assets." Recommended Decision at 8.

In its objection to the recommended decision, Patient Advocates arguesthat 29 U.S.C. § 1104 and 1106 "in tandem essentially require a planfiduciary to deal with plan assets in an ordinary and prudent manner andfor the exclusive benefit of the beneficiaries of a plan." Pl's Objectionat 14. Patient Advocates argues that, as an agent for various planfiduciaries, it is bound by the same standards that ERISA imposes onfiduciaries. According to Patient Advocates, the data that MHDO seeksamount to "plan assets" that fiduciaries are bound to preserve for thebenefit of the plan beneficiaries. In response, MHDO does not argue thatthe Magistrate Judge's reasoning with regard to Count III was correct.Instead, it agues only that the requested information is not "planassets" and that, if it is, the Maine law does not conflict with ERISAfiduciary obligations. Because the parties apparently agree that CountIII is not foreclosed by the mere fact that Patient Advocates is not afiduciary, I turn to whether the data at issue in this case should betreated as "plan assets" under ERISA.Page 4

ERISA does not define the term "plan assets."1 Even the broadestdefinition of "plan assets," however, contemplates something of value.See Health Coast Controls v. Bichanich, 968 F. Supp. 396, 399(N.D. Ill. 1997). Patient Advocates argues that the information MHDOrequests is valuable intellectual property for which "[c]orporationsroutinely pay thousands of dollars. . . ." Objection at 16. ButPatient Advocates has not produced any evidence to sustain this factualassertion on this summary judgment motion. See Celotex Corp. v.Catrett, 477 U.S. 317 (where non-moving party will bear the burdenof proof on a dispositive issue at trial it must designate "specificfacts showing that there is a genuine issue for trial"). Saying that theinformation has economic value does not make it so. The summary judgmentrecord does not support Patient Advocates' assertion that the data atissue in this case have financial value.2Page 5

Moreover, Patient Advocates has produced no evidence to show that it orthe plan sponsors treated this information as a plan asset (before thecurrent controversy).3 29 U.S.C. § 1103 provides that, with someexceptions not relevant here, "all assets of an employee benefit planshall be held in trust by one or more trustees." MHDO points out thatnone of the plan documents related to Patient Advocates' administrationof health plans suggest that this information is held in trust. Def.'sSMF at ¶ 27.4 And there is no evidence in the record that thedata are, in fact, held in trust.

Data or information that a plan administrator accumulates in the courseof administering a plan are certainly not conventional "plan assets."Normally, this claims data will be mere by-products of administeringbenefit plans. Unlike stocks, bonds, cash, investment contracts and other"hard" assets, claims information typically is not acquired for its valueor held as an investment.Page 6Moreover, there is no evidence that the data in this case arevaluable or that the plan sponsors viewed or treated the data as assetsof the plans. Without deciding whether information or data could everconstitute "plan assets" under ERISA, I conclude that the data here arenot plan assets.

Finally, if the claims data were to qualify as plan assets, the issuewould remain whether a state law mandating their disclosure for inclusionin a health information database conflicts with the obligations thatERISA places on plan fiduciaries. ERISA requires plan fiduciaries to dealwith plan assets prudently, 29 U.S.C. § 1104(a), and to hold them forthe exclusive benefit of participants and beneficiaries. Id.§ 1103(c). I am skeptical that a plan fiduciary would violate theseprovisions of ERISA by complying with a state law requiring the fiduciaryto provide claims information for a database used to improve the healthof Maine citizens. See Egelhoff v. Egelhoff 532 U.S. 141(2001).

It is therefore ORDERED that the Recommended Decision of theMagistrate Judge is hereby ADOPTED. The defendant's motion forsummary judgment is GRANTED.


1. There are Department of Labor regulations discussing two types of"plan assets": plan investments in another entity,29 C.F.R. § 2510.3-101, and participant contributions, id. §2510.3-102. But these regulations are clearly not exhaustive definitionsof plan assets. Although the term "plan assets" is not defined in ERISAor the regulations, the term appears throughout the statute and carries ahost of obligations. For example, "plan assets" are required to be heldin trust, 29 U.S.C. § 1103(a), to be used for the exclusive benefitof participants and beneficiaries, id. § 1103(c)(1), and to be allocated among participants andbeneficiaries upon termination of the plan. Id. §1344.

2. Patient Advocates relies on Acosta v. PacificEnterprises, 950 F.2d 611, 620 (9th Cir. 1990), where the court saidthat "[i]n order to determine whether a particular item constitutes an`asset of the plan,' it is necessary to determine whether the item inquestion may be used to the benefit (financial or otherwise) of thefiduciary at the expense of the plan participants or beneficiaries."Acosta involved allegations of fiduciary self-dealing,allegations not present in this case. Because the summary judgment recorddoes not support Patient Advocates' assertion that the information hasvalue, I do not need to decide whether Acosta's definition of"plan assets" applies in this Circuit or outside the context of fiduciaryself-dealing.

3. The Department of Labor has opined that "plan assets": generally are to be identified on the basis of ordinary notions of property rights under non-ERISA law. This identification process includes consideration of any contract or other legal instrument involving the plan, including the plan documents. It also requires the consideration of the actions and representations of the parties involved.DOL Letter Opinion 92-02A (Jan. 17, 1992).

4. MHDO asserts that "[t]he plan documents related to plaintiff'sadministration of health plans for its clients do not designate claimsdata or other plan information as a plan asset, or indicate that theclaims data is held in trust." Def.'s SMF ¶ 27. Patient Advocates'response is: "Qualify. The assertions contained in number 27 constitutelegal arguments based on the language of the documents referred to."Pl.'s Reply SMF at ¶ 27. MHDO's assertion is a statement about whatthe documents contain (or do not contain); it is not a legal argument.Because Patient Advocates did not deny or controvert MHDO's assertion, itis deemed admitted. Local Rule 56(e).

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