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Rhea v. Alan Ritchey, Inc.

United States Court of Appeals, Fifth Circuit

May 30, 2017

DONNA RHEA, Plaintiff-Appellant,

         Appeal from the United States District Court for the Eastern District of Texas

          Before SMITH, PRADO, and GRAVES, Circuit Judges.

          JERRY E. SMITH, Circuit Judge.

         Donna Rhea was the beneficiary of an employee benefit plan organized under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1001 et seq. Rhea suffered injuries from medical malpractice. The plan covered some of her medical expenses. After she settled the malpractice claim, the plan sought reimbursement.

         The plan used a single document as both its summary plan description and its written instrument. That document had a reimbursement provision. Rhea refused to reimburse the plan, claiming that it did not have an enforceable written instrument. She sought a declaratory judgment and appeals an adverse summary judgment and attorneys' fees. Finding no error, we affirm.


         Alan Ritchey, Inc. ("Alan Ritchey"), is the sponsor and administrator of an employee benefit program called the "Alan Ritchey, Inc. Welfare Benefit Plan" ("the Plan"), which purports to comply with ERISA. Rhea, the wife of an Alan Ritchey employee, was a beneficiary of the Plan. In November 2011, Rhea underwent surgery and alleged injury from malpractice. The Plan covered $71, 644.77 of her medical expenses. After she settled the malpractice claim for more than that amount, the Plan sought reimbursement.

         As a beneficiary, Rhea received a document entitled "Summary Plan Description UnitedHealthcare Choice Plus Silver Plan for Alan Ritchey, Inc." The summary plan description ("SPD") contains reimbursement and subrogation language. It states that "if a third party causes a Sickness or Injury for which you receive a settlement, judgment, or other recovery, you must use those proceeds to fully return to the Plan 100% of any Benefits you received for that Sickness or Injury." The SPD adds, "If the Plan incurs attorneys' fees and costs in order to collect third party settlement funds held by you or your representative, the Plan has the right to recover those fees and costs from you."

         The SPD alludes to the existence of a separate "official Plan Document" and provides that "[i]n the event of any discrepancy between this Summary Plan Description and the official Plan Document, the Plan Document shall govern." But when the Plan paid Rhea's medical expenses, the SPD was the only document describing a beneficiary's rights and obligations under the Plan.[1]When Rhea's attorneys asked to see the "official Plan Document, " defendants produced an affidavit signed by Charla Moss, Alan Ritchey's benefits administrator, stating that the SPD "is the Plan document that has been accepted, ratified, and maintained by the Plan Sponsor, that contains all of the ERISA-required plan provisions, and operates as the Plan's official plan document."

         Rhea has refused to reimburse the Plan for the $71, 644.77 it spent on her medical treatment. She claims that Alan Ritchey did not have an ERISA-compliant written instrument in place when the Plan paid her medical expenses. As a result, she says, the Plan does not have a right to be reimbursed. Rhea also accuses Alan Ritchey of making "knowing misrepresentations" about the Plan's compliance with ERISA. Defendants claim that the Plan was ERISA-compliant at all relevant times and that it established a right to be reimbursed for Rhea's medical expenses.

         In September 2013, Rhea sued Alan Ritchey and the Plan for a declaratory judgment that she is not required to reimburse the Plan. Defendants filed a counterclaim requesting equitable relief and damages under ERISA. Both sides moved for summary judgment. The magistrate judge ("MJ") recommended granting summary judgment and $31, 415.50 in attorneys' fees and costs to defendants. The district court adopted those recommendations and entered final judgment against Rhea, who appeals.


         ERISA requires plan administrators to provide SPDs to beneficiaries. 29 U.S.C. § 1024(b)(1). An SPD must "reasonably apprise [plan] participants and beneficiaries of their rights and obligations under the plan" and must be "written in a manner calculated to be understood by the average plan participant." Id. § 1022(a). ERISA also mandates that plans "be established and maintained pursuant to a written instrument." Id. § 1102(a)(1). A plan's written instrument sets forth its terms and must do the following:

(1)provide a procedure for establishing and carrying out a funding policy and method consistent with the objectives of the plan and the requirements of this subchapter,
(2)describe any procedure under the plan for the allocation of responsibilities for the operation and administration of the plan (including any procedure described in section 1105(c)(1) of this title),
(3)provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan, and
(4)specify the basis on which payments are made to and from the plan.

Id. ยง 1102(b). Courts often refer to written instruments as "plan ...

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