Bennett v. Kaiser Permanente Southern California Employees Pension Plan…

Background

Sharon Walker was a longtime employee of Southern California Permanente Medical Group (SCPMG). She went on leave in July 2015 because of plasma cell leukemia. Her leave was approved through October 2016.

Beginning in September 2015, Sharon’s brother, Victor Walker, helped her seek retirement benefits from the Kaiser Permanente Retirement Plan for Southern California Permanente Medical Group, referred to as the Kaiser Plan. On December 3, 2015, Victor spoke with Plan representatives, who arranged for Sharon’s employment to end effective December 4, 2015. The opinion notes a dispute about whether Victor had authority under a power of attorney to request that termination. Sharon died on December 7, 2015, before the paperwork needed to pay retirement benefits was completed.

Sharon’s son, Errol Bennett, later claimed “Death Benefits” as a “Qualified Dependent” under the Kaiser Plan. The Plan’s terms provided that a dependent death benefit could be paid if a vested participant died before benefits began and while the participant was still employed. The Plan defined a Qualified Dependent to include certain children age 18 or younger and, if no such child existed, certain older individuals who were claimed as dependents on the participant’s tax return and met additional requirements. If the participant died after employment ended, the Plan stated that death benefits would be paid only to a spouse or domestic partner.

The Plan denied Bennett’s claim in April 2020, and his administrative appeal was rejected in June 2022. The Plan explained that Sharon’s employment had ended three days before her death. The Plan referred Bennett to Frank Hurtarte, an SCPMG representative, to seek a change to the termination date. Hurtarte declined, explaining that SCPMG could not change its records because Victor, who held Sharon’s power of attorney, had requested the December 4 termination date. SCPMG had also processed Sharon’s final paycheck and sent a notice concerning continuation of health insurance.

Bennett brought two claims under ERISA: a claim for equitable relief for breach of fiduciary duty under 29 U.S.C. § 1132(a)(3), and a claim for declaratory relief concerning denial of benefits under § 1132(a)(1)(B). He sought a change to Sharon’s termination date and a finding that he qualified for dependent death benefits. Defendants SCPMG and the Kaiser Plan moved to dismiss both claims.

Legal standard

The court applied Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally recognized claim supported by enough factual allegations. At this stage, the court accepts well-pleaded factual allegations as true and views them favorably to the plaintiff, but it does not accept conclusory statements or unreasonable inferences.

Breach-of-fiduciary-duty claim

Bennett alleged that SCPMG, through Hurtarte, breached an ERISA fiduciary duty by refusing to change Sharon’s employment-termination date. A fiduciary is a person or entity that performs specified discretionary functions involving a benefit plan, such as managing or administering the plan or controlling plan assets. The court explained that an employer may be a fiduciary for some actions but act only as an employer for other actions.

Defendants argued that determining Sharon’s employment-termination date was an employer function, not a fiduciary function. The court found that the Kaiser Plan’s provisions concerning SCPMG’s obligation to provide employment information did not resolve whether SCPMG acted as a fiduciary when Hurtarte refused to change the date.

The court nevertheless held that Bennett had not adequately alleged that Hurtarte was acting as a functional fiduciary. The complaint asserted that Hurtarte was serving as a functional fiduciary, but it did not explain how his conduct met the legal definition. Bennett’s opposition brief relied on statutory language about authority or control over plan assets, but the court found that quoting the statute was insufficient. The fact that Hurtarte’s decision may have affected Bennett’s benefits determination did not by itself establish that he was performing a fiduciary function.

The court therefore granted the motion to dismiss the breach-of-fiduciary-duty claim.

Denial-of-benefits claim

Defendants argued that Bennett was not entitled to benefits under the Kaiser Plan because Sharon died after her employment ended and before completing the benefit-commencement process. The court agreed that the Plan’s terms made a Qualified Dependent eligible for the relevant death benefit only if the participant died while still employed. The complaint stated that SCPMG’s records listed December 4, 2015, as Sharon’s termination date, and that SCPMG had declined to change it.

Bennett acknowledged that the dependent death benefit could not be paid unless Sharon’s termination date was changed. He also acknowledged in his opposition that there was then no viable claim for benefits under § 1132(a)(1)(B). He explained that he had included the claim because, if he succeeded in changing the termination date through the fiduciary-duty claim, the benefits claim might then be enforceable, and he did not want to risk a statute-of-limitations problem. The court found that Bennett did not provide a legal defense of the benefits claim.

The court therefore granted the motion to dismiss the denial-of-benefits claim.

Disposition

The court granted Defendants’ motion to dismiss. It stated that, at this stage, it could not say that amendment would be futile. Bennett may therefore file an amended complaint within 21 days of the order, provided counsel can do so consistently with Rule 11 obligations. The court also set a case-management conference for April 1, 2025, at 2:00 p.m. by public Zoom webinar.