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Service Employees International Union Local 2000 Health and Welfare Fund v. Agency for Community Transit, Inc.

United States District Court, E.D. Missouri, Eastern Division

January 18, 2018

SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 2000 HEALTH AND WELFARE FUND, et al., Plaintiffs,
v.
AGENCY FOR COMMUNITY TRANSIT, INC., Defendant.

          MEMORANDUM AND ORDER

          CATHERINE D. PERRY UNITED STATES DISTRICT JUDGE.

         This case arises out of a disagreement between an employer and an ERISA benefits plan about the meaning of certain language in a collective bargaining agreement relating to when a covered employee may opt out of employer-provided health coverage. The employer, defendant Agency for Community Transit, Inc. (ACT), claims that the specific terms of the operative CBA permit an employee to opt out at any time upon meeting two conditions: 1) furnishing the employer with written proof of insurance under another health plan, and 2) furnishing the employer with a written request not to be covered by the employer-provided health plan. The plaintiff Fund[1] and its trustees claim that the CBA must be read in conjunction with the Summary Plan Document, which states that any change in coverage can be made only during a period of open enrollment. Applying ordinary principles of contract law, I agree with the employer, ACT, that the terms of the CBA control in this case, and an employee may opt out of coverage at any time upon meeting the two conditions specified in the CBA. I will therefore grant ACT summary judgment in this action.

         Background

         The CBA at issue in this case was signed by ACT and the Service Employees International Union Local 1 on March 18, 2016, and was in effect from January 1, 2016, through December 31, 2017. (ECF #41-2.) The CBA governed the terms and conditions of employment for ACT's covered employees during this period, including the provision of health insurance. Article 14 of the CBA specifically required ACT to partially fund health insurance benefits for covered employees who did not opt out of the employer-provided health plan. The CBA's opt-out clause, § 14.6, provided as follows:

If an employee can furnish the Employer with written proof that the employee is insured under another health plan, and the employee furnishes the Employer with a written request not to be covered under the Employer's health plan, then the Employer will pay that employee $100.00 per month in lieu of any payments toward the health plan as long as the affected employee would be eligible for a premium contribution from the Employer and proof of other coverage is maintained.

         On April 7, 2016, ACT employee Janice Martin made a written request to opt out of ACT's employer-provided health plan and submitted proof of alternative health insurance. ACT stopped contributing to the Fund for Martin in April 2016 and began paying her the $100 cash-in-lieu-of-benefit payments. On April 27, 2016, ACT employee Jeff McAleenan made a written request to opt out of ACT's employer-provided health plan and submitted proof of alternative health insurance. ACT stopped contributing to the Fund for McAleenan in May 2016 and began paying him the cash-in-lieu-of-benefit payments.

         The Fund sued ACT, alleging that ACT remained obligated to pay contributions to the Fund on Martin's and McAleenan's behalf through the remainder of 2016. Specifically, the Fund claims that the employees' drop of coverage was improper because it was done outside an open enrollment period, which, the Fund claims, is the only time permitted under the Plan[2] for an employee to change coverage. The Fund points to language in the Plan that states that once an election for coverage is made during an open enrollment period, that election is “valid for one year and cannot be changed” except for what the Fund calls certain “qualifying events.” The Fund alleges that because the employees' drop of coverage was improper under the Plan and they remained eligible for coverage, ACT remained obligated to pay contributions to the Fund on their behalf.

         Both parties move for summary judgment.

         Legal Standard

         Summary judgment must be granted when the pleadings and proffer of evidence demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). I must view the facts in the light most favorable to the nonmoving party, “but only ‘if there is a genuine dispute as to those facts.'” RSA 1 Ltd. P'ship v. Paramount Software Assocs., Inc., 793 F.3d 903, 906 (8th Cir. 2015) (quoting Torgerson, 643 F.3d at 1042).

         The parties agree that the relevant facts are not in dispute, but each argues that the law as applied to those facts requires that judgment be entered in its respective favor. For the following reasons, ACT is entitled to judgment as a matter of law on the undisputed facts of this case.

         Discussion

Under Section 515 of ERISA, [e]very employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.

29 U.S.C. § 1145. Under Section 515, therefore, the Fund may collect only those contributions that ACT is contractually obligated to pay. Carpenters Fringe Benefit Funds of Ill. v. McKenzie Eng'g, 217 F.3d 578, 582 (8th Cir. 2000). See also DeVito v. Hempstead China Shop, Inc., 38 F.3d 651, 654 (2d Cir. 1994) (Fund's ...


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