King v. Blue Cross & Blue Shield of Illinois

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

GARY KING, as personal No. 15-55880
representative of Linda King,
Plaintiff-Appellant, D.C. No.
3:13-cv-01254-
v. CAB-JMA

BLUE CROSS AND BLUE SHIELD OF
ILLINOIS; UNITED PARCEL SERVICE OPINION
OF AMERICA, INC.; UPS HEALTH
AND WELFARE PLAN FOR RETIRED
EMPLOYEES; DOES, 1 through 10,
Defendants-Appellees.

Appeal from the United States District Court
for the Southern District of California
Cathy Ann Bencivengo, District Judge, Presiding

Argued and Submitted March 9, 2017
Pasadena, California

Filed September 8, 2017

Before: Richard A. Paez, Marsha S. Berzon,
and Morgan Christen, Circuit Judges.

Opinion by Judge Christen
2 KING V. BLUE CROSS AND BLUE SHIELD

SUMMARY*

Employee Retirement Income Security Act

The panel reversed the district court’s grant of summary
judgment in favor of the defendants in an ERISA action
regarding the denial of a welfare benefit plan participant’s
claim for medical benefits on the basis of the plan’s lifetime
benefit maximum.

The panel held that ERISA, as amended by the Patient
Protection and Affordable Care Act, does not ban lifetime
benefit maximums for certain retiree-only plans.

The panel held that the defendants violated ERISA’s
statutory and regulatory disclosure requirements by providing
a faulty summary of material modifications describing
changes to the lifetime benefit maximum. The panel
concluded that the summary did not reasonably apprise the
average plan participant that the lifetime benefit maximum
continued to apply to the retiree plan.

The panel also held that genuine disputes of material fact
precluded summary judgment on claims of breach of
fiduciary duty in the failure to comply with ERISA’s
disclosure requirements. The panel held that a defendant
claims administrator was a fiduciary because it had authority

*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 KING V. BLUE CROSS AND BLUE SHIELD 3

to grant, deny, and review benefits claims, and there was a
genuine dispute of material fact about whether this defendant
misled the ERISA plan participant.

The panel remanded the case to the district court.

COUNSEL

Patrick A. Calhoon (argued) and Craig A. Miller, Law
Offices of Craig A. Miller, San Diego, California, for
Plaintiff-Appellant.

Eileen R. Ridley (argued) and Alan R. Ouellette, Foley &
Lardner LLP San Francisco, California, for Defendant-
Appellee Blue Cross and Blue Shield of Illinois.

John Timothy McDonald (argued) and Sedric D. Bailey,
Thompson Hine LLP, Atlanta, Georgia, for Defendants-
Appellees United Parcel Service of America, Inc., and UPS
Health and Welfare Plan for Retired Employees.
4 KING V. BLUE CROSS AND BLUE SHIELD

OPINION

CHRISTEN, Circuit Judge:

Linda King participated in a welfare benefit plan that the
defendants sponsored and administered. In November 2012,
Mrs. King suffered a back infection that required immediate
surgery and extensive post-surgery rehabilitative care. After
initially approving her treatment as medically necessary, the
defendants denied her claim for benefits because Mrs. King
exceeded her plan’s $500,000 lifetime benefit maximum.

Mrs. King filed suit against the defendants—Blue Cross
and Blue Shield of Illinois, United Parcel Service of America,
Inc. (UPS), the UPS Health and Welfare Plan for Retired
Employees, and Does 1 through 10—under the Employment
Retirement Income Security Act of 1974 (ERISA). She
sought declaratory relief and alleged breach of contract and
breach of fiduciary duties. Mrs. King passed away while her
suit was pending before the district court and Mr. King was
substituted as the representative of her estate. In response to
the defendants’ motions for summary judgment, Mr. King
argued that the defendants failed to adequately disclose that
the lifetime benefit maximum applied to the plan. The
district court granted summary judgment to the defendants,
and Mr. King appeals.

We hold: (1) that ERISA, as amended by the Affordable
Care Act, does not ban lifetime benefit maximums for certain
retiree-only plans; (2) that the defendants violated ERISA’s
statutory and regulatory disclosure requirements by providing
a faulty summary of material modifications describing
changes to the lifetime benefit maximum in September 2010;
and (3) that genuine disputes of material fact preclude
 KING V. BLUE CROSS AND BLUE SHIELD 5

summary judgment on the breach of fiduciary duty claims.
Accordingly, we reverse the district court’s order granting
summary judgment.

BACKGROUND

I. The UPS Health and Welfare Package for Retired
Employees

UPS administers two employee welfare benefit plans
governed by ERISA: (1) the UPS Health and Welfare
Package for active employees (the Employee Plan); and
(2) the UPS Health and Welfare Package for Retired
Employees (the Retiree Plan). UPS is the Plan Administrator
and Plan Sponsor. Blue Cross is a claims administrator for
medical coverage under the plans.

Mrs. King became a participant in the self-funded Retiree
Plan as a covered dependent when her husband retired from
UPS in March 2011. The Retiree Plan offers medical, dental,
and vision coverage for eligible retired employees, their
spouses, and their dependent children. Coverage under the
Retiree Plan begins at retirement and ends when the retiree or
covered dependent turns sixty-five and becomes eligible for
Medicare.

A. The Summary Plan Description

The Retiree Plan’s substantive benefit provisions are
explained in the Summary Plan Description (SPD), which the
Retiree Plan Document incorporates by reference. The SPD
governs both the Employee Plan and the Retiree Plan, and is
comprised of two parts: (1) the 2006 SPD and (2) a series of
summaries of material modifications describing amendments
6 KING V. BLUE CROSS AND BLUE SHIELD

to the plans that have been adopted since 2006.1 The 2006
SPD is ninety-six pages and has nineteen sections on topics
such as “If a Claim is Denied,” “Retired Employee Health
Care Coverage,” and “ERISA and Other Important
Information.” The table of contents lists the nineteen
sections, but does not refer to any of the amendments that
appear in the summaries of material modifications.

UPS issued twelve such summaries between May 2006
and December 2012. Each summary indicates the month and
year it was issued and whether it modifies one or both of the
plans. UPS instructs plan participants to keep the summaries
with the 2006 SPD for future reference. The summaries vary
between one and four pages in length, and total twenty-five
pages all together. They are not cumulative; each summary
of material modifications describes only newly announced
amendments. Thus, to determine the current language for
each benefit provision, a plan participant must read the
relevant section from the 2006 SPD and then read all twelve
summaries of the plan modifications.

B. The Lifetime Benefit Maximum

The Employee Plan and Retiree Plan originally contained
different lifetime benefit caps on medical coverage. The
2006 SPD section titled “Retired Employee Health Care
Coverage” explains: “There is a new lifetime maximum that
begins when you retire and become eligible for benefits from
the UPS Health and Welfare Package for Retired

1
ERISA requires plan administrators to provide beneficiaries with
both a summary plan description and summaries of any material
modifications made to the plan. See 29 U.S.C. §§ 1022(a), 1024(b)(1).
 KING V. BLUE CROSS AND BLUE SHIELD 7

Employees.” On the next page, under the subheading “The
Lifetime Benefit Maximum,” the SPD states:

Up to $500,000 in lifetime medical benefits
(unlimited in HMO Option) can be paid for
each person participating in the UPS Health
and Welfare Package for Retired Employees.
Only benefits paid while you receive coverage
as a retired employee count toward the
$500,000 total. . . . Each January, up to
$1,000 in individual benefits paid during the
preceding year will automatically be restored.

In an earlier section titled “Medical,” the SPD explains that
the Employee Plan has a $1 million lifetime maximum. In
September 2010, however, UPS issued a summary of material
modifications (the 2010 Summary of Modifications) that
eliminated the Employee Plan’s lifetime benefit cap in
response to the Patient Protection and Affordable Care Act
(the Affordable Care Act). The 2010 Summary of
Modifications provided that this amendment would become
effective on January 1, 2011. The parties dispute whether this
modification also applies to the Retiree Plan.

C. The 2010 Summary of Modifications2

The 2010 Summary of Modifications included
amendments to both the Employee Plan and the Retiree Plan.
At the top of the first page, the 2010 Summary of
Modifications states, in italicized font:

2
See the Appendix for a copy of the 2010 Summary of Modifications.
8 KING V. BLUE CROSS AND BLUE SHIELD

This notice details Plan improvements,
changes, clarifications, and required
notifications effective January 1, 2011, unless
otherwise noted. Items noted with an asterisk
(*) do not apply to retirees or their covered
dependents. You should keep this with your
UPS Health and Welfare Package and UPS
Health and Welfare Package for Retired
Employees Summary Plan Description for
future reference.

Directly under this text, the page divides into two columns.
At the top of the column on the left-hand side of the page,
there is a single-spaced paragraph of text titled “Health Care
Reform*” in bold. Below the title, this paragraph states:

In March, President Obama signed into law
the Patient Protection and Affordable Care
Act (PPACA), also known as “health care
reform.” Effective January 1, 2011, PPACA
requires the following changes to your UPS-
administered health care plan. If the PPACA
provisions requiring these Plan changes are
ever repealed, the changes made solely as a
result of PPACA will be terminated and the
provisions of the Plan modified by PPACA
will be reinstated effective the date the law is
repealed.

Immediately below this paragraph is another bold heading,
which states “Grandfather Plan Status,” followed by two
paragraphs of single-spaced text. After these two paragraphs,
there is a third bold heading in the left column, which states
“Dependent Children Under Age 26,” followed by five
 KING V. BLUE CROSS AND BLUE SHIELD 9

paragraphs of single-spaced text. The text under this heading
continues from the bottom of the column on the left-hand side
of the first page to the column on the right-hand side of the
first page, and onto the second page. On the second page,
approximately one-third of the way down the left column,
there is a fourth bold heading, which states “Elimination of
Lifetime Maximum Benefits.” This section contains one
paragraph of single-spaced text:

Lifetime dollar limits on aggregate benefits
will be eliminated from your Plan effective
January 1, 2011. If you are an otherwise
eligible employee whose coverage previously
ended upon reaching your lifetime maximum
benefit under the Plan, you will have 30 days,
beginning the first day of the annual
enrollment period, to re-enroll in the Plan. If
you choose to enroll, your coverage is
effective January 1, 2011 (as long as you
continue to meet the Plan’s eligibility
requirements). You may also enroll any
dependents whose coverage ended upon
reaching their lifetime maximum.

Upon very close inspection, one can discern that the “Health
Care Reform*” heading at the top of the first page is in a
different font type than the three headings that follow,
including “Elimination of Lifetime Maximum Benefits.”
According to the defendants, the “Health Care Reform*”
heading is in Arial font, while the other headings are in Times
New Roman, and the Arial heading is in a larger font size.
The differences in font type and size are difficult to discern.
10 KING V. BLUE CROSS AND BLUE SHIELD

After the “Elimination of Lifetime Maximum Benefits”
section, the 2010 Summary of Modifications has three more
bold headings in Times New Roman font with corresponding
paragraphs of text. This text wraps from the column on the
left-hand side of the second page into the column on the
right-hand side. One-third of the way down the right column,
there is another bold heading in Arial font: “Mental Health
Parity.” This heading is followed by two more bold headings
in Times New Roman font on the second page. On the third
page, there are three bold headings in Arial font. None of the
other headings in the 2010 Summary of Modifications besides
“Health Care Reform*” contains an asterisk.

II. Plan Administration and Claim Appeals Process

The 2006 SPD grants UPS as Plan Administrator “the
exclusive right and discretion to interpret the terms and
conditions of the Plan, and to decide all matters arising in its
administration and operation, including questions of fact and
issues pertaining to eligibility for, and the amount of, benefits
to be paid by the Plans.”3 The 2006 SPD nonetheless
authorizes UPS “to delegate its administrative duties to one
or more individuals or committees within UPS, or to one or
more outside administrative services providers.” It elaborates
that “[p]resently, certain administrative services with regard
to the processing of claims and the payment of benefits are
provided under contract,” including a contract with Blue

3
The SPD further states: “Any such interpretation or decision shall,
subject to the claims procedure described herein, be conclusive and
binding on all interested persons, and shall, consistent with the Plans’
terms and conditions, be applied in a uniform manner to all similarly
situated participants and their covered dependents. The Plan
Administrator may delegate certain discretionary authority to one or more
committees.”
 KING V. BLUE CROSS AND BLUE SHIELD 11

Cross to administer medical coverage for some plan
participants.

The 2006 SPD describes a two-level appeals process for
denied benefit claims. Upon receiving written notice from
the claims administrator that a claim is denied, the participant
has 180 days to file a first-level appeal with the claims
administrator (i.e., Blue Cross). If the claims administrator
denies the claim again, the participant has 60 days to file a
second-level appeal with the UPS Claims Review Committee
(CRC). UPS delegated its discretion to interpret the plan to
the CRC.

III. Linda King’s Medical Claim

In the fall of 2012, Linda King suffered an infection that
caused the destruction of several vertebrae and necessitated
immediate back surgery and extensive rehabilitative care.
The record reflects that Mrs. King or her care providers
reached out to Blue Cross to obtain precertification for her
treatment starting in November 2012. The 2006 SPD
describes “precertification” as a process to ensure that
hospital stays, convalescent facility stays, home health care
services, and hospice services are “medically necessary and
appropriate.” Plan participants and their treating physicians
are notified by mail of the certification decision and
participants are charged a $250 fee for the failure to
precertify, but the 2006 SPD does not warn that even if a plan
participant obtains precertification, the plan or claims
administrator may still deny benefit claims for other reasons.

The record contains a series of letters from Blue Cross to
Mrs. King dated between November 28, 2012 and February
11, 2013. The letters approve medical care at several
12 KING V. BLUE CROSS AND BLUE SHIELD

hospitals and other facilities provided between November 7,
2012 and March 13, 2013. The letters all state that they are
“in response to a request for service(s)/procedure(s),” and
certify specific treatment as “medically necessary.” The
dates on the letters indicate that in some cases the letters were
sent after the approved care occurred. All the letters contain
the following qualification:

Approval through the Health Care
Management Department is not a guarantee of
payment of benefits. Payment of benefits is
subject to several factors, including, but not
limited to, eligibility at the time of service,
payment of premiums/contributions, amounts
allowable for services, supporting medical
documentation and other terms, conditions,
limitations and exclusions set forth in your . . .
Summary Plan Description . . . . For
questions regarding benefits, please contact
the Customer Service unit at the telephone
number listed on the back of your health
insurance card. You remain responsible for
any out-of-pocket requirements, including, but
not limited to, coinsurance, copayments,
deductibles and/or non-covered charges.

On February 19, 2013, Blue Cross sent Mrs. King an
explanation of benefits stating that only $133,601.41 of
$949,755 billed for medical care was covered by her plan
because she had reached the lifetime benefit maximum. The
explanation of benefits stated that Mrs. King may owe
Scripps Memorial Hospital $578,551.34 for care provided
 KING V. BLUE CROSS AND BLUE SHIELD 13

between November 2–28, 2012.4 Because the February 19
explanation of benefits indicated that Mrs. King reached her
plan’s lifetime benefit maximum in November 2012, it also
suggested that the plan would not cover the cost of care that
had already been provided between December 2012 and
February 2013.

In response, Mrs. King sent a letter to the Blue Cross
Claims Review Section on March 14, 2013. The letter
explained: (1) the explanation of benefits was the first written
notice Mrs. King received that her health insurance would not
cover all her medical bills; (2) the defendants had assured
Mrs. King and her husband that her health benefits had no
limit;5 (3) she had a telephone conversation with a Blue Cross
representative about an unrelated issue during the last week
of January 2013 in which the representative mentioned for the
first time that she was only $10,000 away from the lifetime
maximum; (4) after this conversation, Mrs. King immediately
purchased health insurance through her employment,
effective February 1, 2013; and (5) Mrs. King discharged
herself from a rehabilitation facility against medical advice
on February 9, 2013 out of concern that the care she received
would not be covered by the Retiree Plan. Mrs. King asked

4
The explanation of benefits does not explain the discrepancy
between the $816,153.59 in charges for care not covered by the plan and
the $578,551.34 that Mrs. King may owe her provider.
5
The letter does not specify which defendants assured Mrs. King and
her husband that her benefits had no limit. The letter states: “Both Blue
Cross and UPS have mislead [sic] us. My husband was assured that our
health benefits had no limit. I was reassured this was the case at least
weekly by case managers who spoke with Blue Cross.” Mrs. King passed
away in December 2014, and there is no declaration from her in the
record. Mr. King’s declaration does not mention these assurances.
14 KING V. BLUE CROSS AND BLUE SHIELD

Blue Cross to “review these facts and advise of your
decision.” Also on March 14, 2013, Blue Cross sent another
letter to Mrs. King announcing that she had reached the
lifetime maximum, but this letter informed her that the limit
was reached on January 1, 2013.

IV. The Instant Litigation

On May 30, 2013, Mrs. King filed suit against the
defendants under sections 502(a)(1)(B) and 502(a)(3) of
ERISA. See 29 U.S.C. § 1132(a)(1)(B), (a)(3). On June 3,
2013, Mrs. King’s counsel sent a letter to the CRC stating
that UPS had wrongfully imposed the $500,000 lifetime
benefit maximum, noting that Blue Cross did not respond to
Mrs. King’s first-level appeal, and including a copy of her
March 14 letter and the district court complaint. The letter
asked that UPS “immediately reconsider” its decision to
impose the lifetime benefit maximum. On July 10, 2013,
Blue Cross denied the first-level appeal, concluding that the
lifetime benefit cap applied to the Retiree Plan.

Mrs. King filed a first amended complaint on September
9, 2013. In it, she sought declaratory relief and alleged that
the defendants breached the Retiree Plan contract and their
fiduciary duties in violation of ERISA. The defendants
moved to dismiss, arguing that the 2010 Summary of
Modifications did not eliminate the lifetime benefit maximum
in the Retiree Plan.

The district court denied the motion to dismiss. It ruled
that the 2010 Summary of Modifications was ambiguous as
to whether the Retiree Plan was subject to a lifetime benefit
maximum, that both parties’ interpretations of the 2010
Summary of Modifications were “reasonable,” and that “the
 KING V. BLUE CROSS AND BLUE SHIELD 15

distinction in font type without more, such as indentation of
the subheadings, numbering, or different sized text may not
even alert the average plan participant that the Arial headings
are ‘major headings’ and that the Times New Roman
headings are subheadings within each major heading.”

Subsequently, the CRC notified Mrs. King that the
second-level review of her claim was “not favorable.” The
CRC emphasized the italicized disclaimer at the top of the
2010 Summary of Modifications’ first page, which states,
“Items noted with an asterisk (*) do not apply to retirees or
their covered dependents.” The CRC reasoned that the word
“items” does not mean “paragraphs,” suggesting that the
asterisk after the “Health Care Reform*” heading refers to
more than just the one paragraph immediately below the
heading.

The CRC also stressed that the sole paragraph under the
“Health Care Reform*” heading states that the Affordable
Care Act “requires the following changes to your UPS-
administered health care plan.” The CRC reasoned that
because there are no changes contained in that paragraph
itself, the heading must refer to paragraphs that follow. The
CRC noted that all the subsequent paragraphs describe
required changes under the Affordable Care Act until the
“Mental Health Parity” heading on the second page, and
concluded that because the “Health Care Reform*” and
“Mental Health Parity” headings are in a different font type
and size, all the text between these headings constitutes a
single “item.” Under the CRC’s interpretation, the
“Elimination of Lifetime Maximum Benefits” paragraph is
part of the larger “Health Care Reform*” item and the
asterisk indicates that the elimination of lifetime benefit
16 KING V. BLUE CROSS AND BLUE SHIELD

maximums does not apply to retirees or their covered
dependents.

On October 23, 2014, the defendants moved for summary
judgment. Roughly two months later, Mrs. King passed away
and Mr. King was substituted as the representative of Mrs.
King’s estate. The district court thereafter granted summary
judgment to the defendants, ruling that: (1) the plan
administrator did not abuse its discretion by interpreting the
Retiree Plan to include a lifetime benefit maximum; (2) the
reasonable expectations doctrine does not apply to self-
funded welfare benefit plans; (3) the Affordable Care Act did
not amend ERISA to ban lifetime benefit caps for retiree-only
plans; and (4) the defendants did not breach their fiduciary
duties to Mrs. King. The district court did not address Mr.
King’s argument that the 2010 Summary of Modifications
violates ERISA’s disclosure requirements. Mr. King timely
appealed.

STANDARDS OF REVIEW

“We review de novo a district court’s grant of summary
judgment.” Spinedex Physical Therapy USA Inc. v. United
Healthcare of Ariz., Inc., 770 F.3d 1282, 1288 (9th Cir.
2014). “The interpretation of a federal statute . . . is a
question of law, and we review it de novo.” Arnold v. Arrow
Transp. Co. of Del., 926 F.2d 782, 785 (9th Cir. 1991). With
respect to the breach of fiduciary duty claims, the court “must
determine, viewing the evidence in the light most favorable
to the nonmoving party, whether there are any genuine issues
of material fact and whether the district court correctly
applied the relevant substantive law.” Farr v. U.S. W.
Commc’ns, Inc., 151 F.3d 908, 913–14 (9th Cir. 1998).
 KING V. BLUE CROSS AND BLUE SHIELD 17

DISCUSSION

I. ERISA’s Ban on Lifetime Benefit Maximums

We first consider whether ERISA, as amended by the
Affordable Care Act, bans lifetime benefit maximums in
retiree-only plans for if it does, there would be no need to
reach plaintiff’s other claims. We conclude that it does not.

The Affordable Care Act amended both the Public Health
Service Act (PHSA) and ERISA. The amendment to the
PHSA states, in relevant part: “A group health plan and a
health insurance issuer offering group or individual health
insurance coverage may not establish . . . lifetime limits on
the dollar value of benefits for any participant or
beneficiary. . . .” 42 U.S.C. § 300gg-11(a)(1). The
Affordable Care Act added a clause to ERISA that states,
subject to exceptions not relevant here, “[T]he provisions of
part A of title XXVII of the Public Health Service Act (as
amended by the Patient Protection and Affordable Care Act)
shall apply to group health plans, and health insurance issuers
providing health insurance coverage in connection with group
health plans, as if included in this subpart. . . .” 29 U.S.C.
§ 1185d(a)(1) (emphasis supplied). These provisions include
the ban on lifetime benefit limits. Read in isolation, this
suggests that the Affordable Care Act incorporated the
PHSA’s ban on lifetime benefit limits into ERISA.

Section 732 of ERISA, however, creates an exception for
certain retiree-only plans. This exception, which predates the
Affordable Care Act, states: “The requirements of this part
(other than section 1185 of this title) shall not apply to any
group health plan (and group health insurance coverage
offered in connection with a group health plan) for any plan
18 KING V. BLUE CROSS AND BLUE SHIELD

year if, on the first day of such plan year, such plan has less
than 2 participants who are current employees.” 29 U.S.C.
§ 1191a(a). The parties do not dispute that the Retiree Plan
at issue is such a plan.

The plaintiff argues, however, that this ERISA exception
has been impliedly repealed by the Affordable Care Act’s
amendments to the PHSA which not only introduced a ban on
lifetime benefit limits, but also eliminated a similar exception
for certain retiree-only plans. Pub. L. No. 110-2, 121 Stat. 4.

The Supreme Court “has repeatedly stated . . . that absent
a clearly expressed congressional intention, repeals by
implication are not favored.” Branch v. Smith, 538 U.S. 254,
273 (2003) (citations omitted) (internal quotation marks
omitted). “An implied repeal will only be found where
provisions in two statutes are in ‘irreconcilable conflict,’ or
where the latter Act covers the whole subject of the earlier
one and ‘is clearly intended as a substitute.’” Id.
Irreconcilable conflict occurs if “there is a positive
repugnancy” between competing provisions or if those
provisions cannot “mutually co-exist.” Radzanower v.
Touche Ross & Co., 426 U.S. 148, 155 (1976) (quoting
Morton v. Mancari, 417 U.S. 535, 551 (1974)). “[W]hen two
statutes are capable of co-existence, it is the duty of the courts
. . . to regard each as effective.” Id.

The plaintiff submits that there is an “irreconcilable
conflict” between the ban on lifetime benefit limits in the
PHSA and the exception for retiree plans in ERISA. But “[i]t
is not enough to show that the two statutes produce differing
results when applied to the same factual situation, for that no
more than states the problem.” Id. Courts “ha[ve] not
hesitated to give effect to two statutes that overlap, so long as
 KING V. BLUE CROSS AND BLUE SHIELD 19

each reaches some distinct cases.” J.E.M. Ag Supply, Inc. v.
Pioneer Hi-Bred Int’l, Inc., 534 U.S. 124, 144 (2001);
Randolph v. IMBS, Inc., 368 F.3d 726, 731 (7th Cir. 2004)
(“Whether overlapping and not entirely congruent remedial
systems can coexist is a question with a long history at the
Supreme Court, and an established answer: yes.”). Although
the plaintiff suggests—in a footnote in his opening
brief—that the Affordable Care Act has all but eliminated the
distinction between ERISA and non-ERISA plans, ERISA
and the PHSA are not co-extensive in scope. For example,
ERISA, unlike the PHSA, exempts governmental plans from
many of its mandates. Compare 29 U.S.C. §§ 1002(32),
1003(b)(1), with 42 U.S.C. § 300gg-21(a)(1). Moreover, the
plaintiff has not shown that it is impossible for sponsors,
issuers, or administrators to conform to the requirements of
both ERISA and the PHSA. See Randolph, 368 F.3d at 731
(“Overlapping statutes do not repeal one another by
implication; as long as people can comply with both, then
courts can enforce both.”). Thus, we cannot say that the ban
on lifetime benefit limits in the PHSA and the exception for
certain retiree-only plans in ERISA are in irreconcilable
conflict, nor conclude that the ERISA exception was
impliedly repealed by the Affordable Care Act.

The district court did not err in ruling that ERISA’s ban
on lifetime benefit maximums does not apply to the Retiree
Plan.6

6
The Complaint and the First Amended Complaint broadly alleged
that the lifetime benefit limit in the Retirement Plan was lifted by the
Affordable Care Act and prayed for declaratory relief as well as relief
under ERISA. Since the plaintiff’s challenge did not arise under the
PHSA, the district court did not rule on, among other things, whether the
PHSA bans lifetime benefit limits in certain retiree-only plans. We
accordingly offer no opinion as to the merits of such a claim.
20 KING V. BLUE CROSS AND BLUE SHIELD

II. ERISA’s Disclosure Requirements

The plaintiff contends that the SPD, as amended by the
2010 Summary of Modifications, violates ERISA’s statutory
and regulatory disclosure requirements because it does not
reasonably apprise the average plan participant that the
lifetime benefit maximum continues to apply to the Retiree
Plan. We agree.

“ERISA’s central policy goal is to protect benefit plan
participants ‘by requiring the disclosure and reporting to
participants and beneficiaries of financial and other
information . . . and by providing for appropriate remedies,
sanctions, and ready access to the Federal courts.’” Scharff
v. Raytheon Co. Short Term Disability Plan, 581 F.3d 899,
904 (9th Cir. 2009) (alteration in original) (quoting 29 U.S.C.
§ 1001(b)). To further this goal, ERISA requires that benefit
plans provide participants with a SPD and a “summary of any
material modification in the terms of the plan.” See
29 U.S.C. § 1022(a).

The SPD and any summaries of material modifications
must “be written in a manner calculated to be understood by
the average plan participant.” Id. The SPD must also “be
sufficiently accurate and comprehensive to reasonably apprise
such participants and beneficiaries of their rights and
obligations under the plan.” Id. ERISA requires in particular
that the SPD include any “circumstances which may result in
disqualification, ineligibility, or denial or loss of benefits.”
Id. § 1022(b). This court summarized the combined effect of
these requirements in Scharff as:

[T]he SPD must explain the “circumstances
which may result in disqualification,
 KING V. BLUE CROSS AND BLUE SHIELD 21

ineligibility, or denial or loss of benefits” in a
manner “calculated to be understood by the
average plan participant,” and that
information must be “sufficiently accurate and
comprehensive to reasonably apprise” plan
participants of their rights and obligations
under the plan.

581 F.3d at 904 (quoting 29 U.S.C. § 1022(a)–(b)).

Federal regulations provide further detail on how to fulfill
ERISA’s disclosure requirements:

The format of the summary plan description
must not have the effect to [sic] misleading,
misinforming or failing to inform participants
and beneficiaries. Any description of
exception, limitations, reductions, and other
restrictions of plan benefits shall not be
minimized, rendered obscure or otherwise
made to appear unimportant. Such
exceptions, limitations, reductions, or
restrictions of plan benefits shall be described
or summarized in a manner not less prominent
than the style, captions, printing type, and
prominence used to describe or summarize
plan benefits. . . . The description or
summary of restrictive plan provisions need
not be disclosed in the summary plan
description in close conjunction with the
description or summary of benefits, provided
22 KING V. BLUE CROSS AND BLUE SHIELD

that adjacent to the benefit description the
page on which the restrictions are described is
noted.

29 C.F.R. § 2520.102-2(b).

The plaintiff cites to Spinedex, 770 F.3d at 1294–95, for
the proposition that benefit limitations are unenforceable if
they violate ERISA’s statutory and regulatory disclosure
requirements. In Spinedex, we held that limitation provisions
in two plans were unenforceable because they “were not
properly disclosed in the SPDs.” Id. at 1294. The provisions
were two-year limitations periods for filing suit to challenge
the denial of benefit claims under the plans at issue. Id. at
1295. The limitations periods were “buried deep” in the
SPDs, and were “not in ‘close conjunction’ to benefits
provisions.” Id. Spinedex further noted that there was no
“reference, adjacent to the benefits description, to the page
number on which the ‘Limitation of Action’ provision
appears.” Id.

Spinedex explained that this court employs “a ‘reasonable
plan participant’ standard” to analyze the disclosure
requirements in 29 C.F.R. § 2520.102-2(b), and concluded
that, under this standard, the court does not “require a plan
beneficiary to read every provision of an SPD in order to
ensure that he or she did not miss a limitation provision,”
because “[s]uch a requirement is what the regulation is
specifically designed to avoid.” 770 F.3d at 1295, 1296. The
court held that the limitations periods in the Spinedex plans
were unenforceable because they “were not disclosed in
compliance with 29 C.F.R. § 2520.102-2(b).” Id.
 KING V. BLUE CROSS AND BLUE SHIELD 23

The 2010 Summary of Modifications amending the SPD
that governs Mrs. King’s claim likewise does not satisfy
ERISA’s disclosure requirements because, at bottom, the
document was not “written in a manner calculated to be
understood by the average plan participant.” 29 U.S.C.
§ 1022(a).

First, rather than issue an amended SPD, or even
cumulative summaries of material modifications, UPS
announced plan amendments in a series of summaries, all of
which must be read in conjunction with the 2006 SPD to
determine available benefits.7 The format used by UPS
required plan participants to first read the 2006 SPD section
titled “Retired Employee Health Care Coverage,” where one
would learn about the lifetime benefit maximum. Next, the
participants would have to read all twenty-five pages of the
summaries of material modifications to determine whether
any amendments modified the lifetime maximum. There is
no comprehensive table of contents that allows participants to
verify which SPD terms have been amended by the
modifications or to confirm that any particular provision has
not been modified. The 2006 SPD benefit provisions do not
cross-reference the summaries of material modifications, and
the summaries do not consistently cross-reference the 2006
SPD. Notably, the 2010 Summary of Modifications does not
cross-reference the Retiree Plan’s lifetime benefit maximum.

7
We note that ERISA requires UPS as Plan Administrator to issue an
updated SPD every five years “which integrates all plan amendments
made within such five-year period.” 29 U.S.C. § 1024(b)(1)(B). The
record suggests that UPS did not comply with this requirement, because
UPS did not issue an updated SPD in 2011, five years after it issued the
2006 SPD.
24 KING V. BLUE CROSS AND BLUE SHIELD

Furthermore, even examining the 2010 Summary of
Modifications in isolation, the defendants’ interpretation
requires the average plan participant to read the entire
document, notice the subtle shift in font type and size
between the “Health Care Reform*” heading and the other
headings that follow, and somehow intuit that all of the text
between the “Health Care Reform*” heading on the first page
and the “Mental Health Parity” heading on the second page
describes required changes under the Affordable Care Act.
But the fact that all of these paragraphs relate to the
Affordable Care Act is not apparent from the text.8 In fact,
the “Elimination of Lifetime Maximum Benefits” paragraph
does not mention the Affordable Care Act at all. That
paragraph states:

Lifetime dollar limits on aggregate benefits
will be eliminated from your Plan effective
January l, 2011. If you are an otherwise
eligible employee whose coverage previously
ended upon reaching your lifetime maximum
benefit under the Plan, you will have 30 days,
beginning the first day of the annual
enrollment period, to re-enroll in the Plan. If
you choose to enroll, your coverage is
effective January l, 2011 (as long as you
continue to meet the Plan’s eligibility

8
Nor is it apparent, or even discernable upon close examination, that
the individual paragraphs between these two headings were intended to be
a single “item” because the paragraphs pertain to a diverse set of topics,
including “Grandfather Plan Status,” “Dependent Children Under Age
26,” “Elimination of Lifetime Maximum Benefits,” “Elimination of
Lifetime and Annual Dollar Limits for ‘Essential Benefits,’” “Elimination
of Pre-existing Conditions on Benefits for Children Under Age 19,” and
“HCSA Reimbursement of Over-the-Counter Drugs.”
 KING V. BLUE CROSS AND BLUE SHIELD 25

requirements). You may also enroll any
dependents whose coverage ended upon
reaching their lifetime maximum.

The effective date for the elimination of the lifetime
maximum is the same date mentioned in the first paragraph
under the “Health Care Reform*” heading, but other changes
in the 2010 Summary of Modifications, unrelated to the
Affordable Care Act, also use this effective date.

As explained, the defendants argue that the reference to
“the following changes” in the “Health Care Reform*”
paragraph indicates that the asterisk in the “Health Care
Reform*” heading applies to all the paragraphs between the
“Health Care Reform*” heading on the first page and the
“Mental Health Parity” heading on the second page. But
even assuming that the average Retiree Plan participant
would read this paragraph (despite the asterisk in the heading
which plainly states that the paragraph does not apply to
retirees), the participant would not know how many changes
are included in “the following changes.” That phrase can be
read to refer to just the changes in the next two paragraphs
under the heading “Grandfather Plan Status,” or it can be read
to refer to some unknown number of additional changes.

Notably, the two “Grandfather Plan Status” paragraphs
explicitly discuss the Affordable Care Act, but the next
heading is “Dependent Children Under Age 26,” and the five
paragraphs that follow it do not refer explicitly to the
Affordable Care Act at all. This organization could easily
suggest to the reader that these paragraphs do not relate to the
“Health Care Reform*” heading. Of the three sections that
follow “Elimination of Lifetime Maximum Benefits,” only
26 KING V. BLUE CROSS AND BLUE SHIELD

two mention the Affordable Care Act.9 In short, even
assuming that the average plan participant would read the
first paragraph—in spite of the fact that the heading with the
asterisk informs the reader that it does not apply to
retirees—the participant would not know how many of the
following paragraphs fall within “the following changes” not
applicable to the Retiree Plan. A participant could reasonably
conclude that the inapplicable changes include only the
“Grandfather Plan Status” paragraphs or only those
paragraphs that explicitly mention the Affordable Care Act.
Congress mandated that ERISA disclosures must be designed
to prevent plan participants from having to engage in such
close parsing of the text, format, and font to determine
whether a benefit limitation applies to their plan.

Comparing the 2010 Summary of Modifications to the
other summaries of material modifications demonstrates
several ways in which UPS could have made the 2010
amendments easier for the average plan participant to
understand. First, the October 2006 Summary of Material
Modifications places small subheadings directly below the
larger major headings, with no intervening text, to indicate

9
At oral argument, defense counsel was asked how—aside from the
subtle changes in font type and size—a plan participant would know that
the items associated with the “Health Care Reform*” heading end with the
“Mental Health Parity” heading. See Oral Argument at 19:09–23:30,
26:20–27:00, King v. Blue Cross & Blue Shield of Ill., No. 15-55880 (9th
Cir. March 9, 2017), http://www.ca9.uscourts.gov/media/view_video.p
hp?pk_vid=0000011172. Counsel responded that the participant would
know this because the “Mental Health Parity” heading is followed by a
paragraph that does not mention the Affordable Care Act. See id. at
26:20–27:00. But that is also true of the paragraph that immediately
precedes the “Mental Health Parity” heading, titled “HCRA
Reimbursement of Over-the-Counter Drugs.”
 KING V. BLUE CROSS AND BLUE SHIELD 27

that they are subheadings. The February 2007 Summary of
Material Modifications uses a noticeably larger font size for
the major headings. The October 2007 Summary of Material
Modifications employs asterisks next to six out of ten
headings in the document to indicate that all six of those
sections do not apply to retirees. Better yet, in September
2012, UPS issued separate summaries of material
modifications for the Employee Plan and the Retiree Plan,
clearly labeled as such at the top of the first page. UPS could
have used any one of these drafting strategies, among others,
to make clear that the lifetime benefit maximum still applied
to the Retiree Plan. The failure to do so was critical to Mrs.
King, who could have obtained health insurance to cover the
cost of her medical care through her own employment.

Even with the benefit of defense counsel’s argument, we
cannot agree that the subtle shifts in font size and use of a
single asterisk on the first page of the 2010 Summary of
Modifications can be described as “calculated to be
understood by the average plan participant.” 29 U.S.C.
§ 1022(a). Instead, the document obscures whether the
paragraph titled “Elimination of Lifetime Maximum
Benefits” applies to the Retiree Plan. For these reasons, we
conclude that the SPD, as amended by the 2010 Summary of
Modifications, violates ERISA’s statutory and regulatory
disclosure requirements. Whether the 2010 Summary of
Modifications violates ERISA disclosure requirements is a
distinct inquiry from whether the plan administrator abused
its discretion and whether the reasonable expectations
doctrine applies. See, e.g., Scharff, 581 F.3d at 906–07;
Estate of Shockley v. Alyeska Pipeline Serv. Co., 130 F.3d
403, 407 (9th Cir. 1997). Because we conclude that the
defendants’ notice of the amendment to the lifetime benefit
maximum violates ERISA, we do not address: (1) whether
28 KING V. BLUE CROSS AND BLUE SHIELD

UPS abused its discretion as Plan Administrator by
interpreting the Retiree Plan to include a $500,000 lifetime
benefit maximum; and (2) whether enforcing the lifetime
maximum would defeat Mrs. King’s reasonable expectations
of coverage.

III. Breach of Fiduciary Duties

The plaintiff argues that UPS, the Retiree Plan, and Blue
Cross breached their fiduciary duties to Mrs. King under
ERISA. “ERISA requires a ‘fiduciary’ to ‘discharge his
duties with respect to a plan solely in the interest of the
participants and beneficiaries.’” Farr, 151 F.3d at 914
(quoting 29 U.S.C. § 1104(a)). “The duty of loyalty is one of
the common law trust principles that apply to ERISA
fiduciaries, and it encompasses a duty to disclose.”
Washington v. Bert Bell/Pete Rozelle NFL Ret. Plan,
504 F.3d 818, 823 (9th Cir. 2007) (internal citation omitted)
(footnote omitted). “A fiduciary has an obligation to convey
complete and accurate information material to the
beneficiary’s circumstance, even when a beneficiary has not
specifically asked for the information.” Barker v. Am. Mobil
Power Corp., 64 F.3d 1397, 1403 (9th Cir. 1995).
“[F]iduciaries breach their duties if they mislead plan
participants or misrepresent the terms or administration of a
plan.” Id.

A. UPS and the Retiree Plan

The plaintiff argues that UPS and the Retiree Plan
breached their fiduciary duties to Mrs. King by failing to
comply with ERISA’s disclosure requirements. More
specifically, the plaintiff maintains that the 2010 Summary of
Modifications misled Mrs. King “into understanding that
 KING V. BLUE CROSS AND BLUE SHIELD 29

there was no lifetime cap on her plan.” UPS and the Retiree
Plan contend that this claim must fail because: (1) the Retiree
Plan is not ambiguous with respect to whether the lifetime
benefit maximum applies to Mrs. King’s claims; and
(2) neither UPS nor the Retiree Plan misrepresented this fact
to Mrs. King. The district court granted summary judgment
to the defendants. Because the SPD, as amended by the 2010
Summary of Modifications, does not comply with the
relevant statutory and regulatory disclosure requirements, the
district court erred by granting summary judgment to UPS
and the Retiree Plan on the breach of fiduciary duty claims.

UPS and the Retiree Plan had a duty to “provide
sufficiently detailed information” about whether the lifetime
benefit maximum applied to the Retiree Plan after the
September 2010 amendments. See Farr, 151 F.3d at 915. As
we have explained, the 2010 Summary of Modifications
failed to alert retirees and their covered dependents that,
despite the defendants’ announcement that the lifetime cap
would no longer apply to the Employee Plan, the defendants
intended that the lifetime maximum still apply to the Retiree
Plan. Therefore, we reverse the district court’s order granting
summary judgment to UPS and the Retiree Plan on the breach
of fiduciary duty claims.

B. Blue Cross

The plaintiff next argues that issues of material fact
preclude summary judgment on the breach of fiduciary duty
claim against the claims administrator Blue Cross. Blue
Cross responds that: (1) it does not qualify as an ERISA
fiduciary; and (2) it did not “provide inaccurate or misleading
information regarding the terms of Mrs. King’s benefit plan.”
The district court ruled that Blue Cross is not an ERISA
30 KING V. BLUE CROSS AND BLUE SHIELD

fiduciary and that Blue Cross did not make any
misrepresentations to the plaintiff. We respectfully disagree.

1. Fiduciary Status

As relevant here, ERISA defines a “fiduciary with respect
to a plan” to include a person who “exercises any
discretionary authority or discretionary control respecting
management of such plan” or “has any discretionary authority
or discretionary responsibility in the administration of such
plan.” 29 U.S.C. § 1002(21)(A). The Department of Labor’s
“questions and answers” relating to fiduciary responsibility
under ERISA explain that agents or employees who perform
“purely ministerial functions” do not qualify as fiduciaries,
29 C.F.R. § 2509.75-8, at D-2; neither do agents “whose sole
function is to calculate the amount of benefits to which each
plan participant is entitled in accordance with a mathematical
formula,” id. at D-3. On the other end of the spectrum, an
agent “who has the final authority to authorize or disallow
benefit payments in cases where a dispute exists” is a
fiduciary. Id. Blue Cross argues that it is not a fiduciary
because the SPD states that UPS has “the exclusive right and
discretion to interpret the terms and conditions of the Plan,”
UPS only delegated “administrative duties” to Blue Cross,
and UPS retained the authority to decide some appeals. This
argument rests on a misunderstanding of the fiduciary
designation under ERISA.

In Kyle Railways, Inc. v. Pacific Administration Services,
Inc., 990 F.2d 513, 517 (9th Cir. 1993), we held that benefit
plan insurers are not fiduciaries “unless they are given the
discretion to manage plan assets or to determine claims made
against the plan.” We cautioned that we do not “narrowly
interpret the phrase ‘discretion . . . to determine claims.’” Id.
 KING V. BLUE CROSS AND BLUE SHIELD 31

“While the mere provision of contractual benefits does not
make an insurance company a fiduciary under ERISA, an
insurer will be found to be an ERISA fiduciary if it has the
authority to grant, deny, or review denied claims.” Id. at 518
(internal citations omitted). A plan’s characterization of a
claim administrator’s duties as “ministerial” is not
determinative: we look past the plan’s characterization to
determine what duties the administrator actually performs.
See IT Corp. v. Gen. Am. Life Ins. Co., 107 F.3d 1415,
1419–20 (9th Cir. 1997).

Blue Cross processes and pays claims to plan participants
and conducts the first-level appeal for benefit denials.
Although the CRC conducts the second-level appeal, Blue
Cross makes initial benefit determinations for all plan
participants and makes final determinations for those
participants who do not appeal their claims to the CRC. This
requires that Blue Cross interpret the Retiree Plan to
determine whether to pay claims and whether to uphold
benefit denials on appeal. See id. at 1420. In short, Blue
Cross has the authority to grant, deny, and review denied
claims. Any one of these abilities would be sufficient to
confer fiduciary status under ERISA. See Kyle, 990 F.2d at
518. The district court erred by ruling that Blue Cross is not
an ERISA fiduciary.

2. Misrepresentations

The plaintiff argues that Blue Cross misled Mrs. King
with respect to whether her plan had a lifetime benefit cap
and when she reached the benefit limit. Blue Cross responds
that all the information it provided to Mrs. King was correct
and accurate. The district court ruled that “there is no
evidence that Blue Cross made any misrepresentations to
32 KING V. BLUE CROSS AND BLUE SHIELD

Plaintiff about the plan terms.” Again, we respectfully
disagree.

Based on the current record, we conclude that there is a
genuine dispute of material fact about whether Blue Cross
misled Mrs. King. We note, however, that there are key
pieces of evidence missing from the record on both sides.
The plaintiff points to the series of approval letters that Mrs.
King received from Blue Cross certifying her treatment as
“medically necessary,” Mrs. King’s phone call with a Blue
Cross representative during the last week of January, in which
the representative said that she was $10,000 away from the
lifetime maximum, and the March 14, 2013 letter stating that
Mrs. King reached her lifetime maximum on January 1,
2013.10 Although the approval letters all contained a
disclaimer that they were “not a guarantee of payment of
benefits,” they did not mention the lifetime benefit maximum.
The letters stated that payment was subject to any limitations
in the SPD, but, as discussed, the 2010 Summary of
Modifications was ambiguous with respect to whether the
lifetime benefit maximum applied to the Retiree Plan.

Blue Cross argues that the representative Mrs. King spoke
to in late January “would only have information concerning
claims that had been submitted and adjudicated in the
ordinary course of business at the time of the call.” Thus,
according to Blue Cross, the representative did not falsely

10
In her letter to Blue Cross on March 14, 2013, Mrs. King also stated
that the defendants assured her husband that her benefits had no limit and
that she “was reassured this was the case at least weekly by case managers
who spoke with Blue Cross.” The letter does not specify which defendant
made these assurances, and the record does not otherwise indicate whether
it was Blue Cross, UPS, or the Retiree Plan.
 KING V. BLUE CROSS AND BLUE SHIELD 33

represent that Mrs. King was $10,000 away from the lifetime
limit at the end of January. But Blue Cross does not cite to
any evidence in the record with respect to what claims had
been received or adjudicated at that point in time. The
explanation of benefits Blue Cross sent Mrs. King on
February 19, 2013 stated that her benefit claims from
November 2012 were denied because she had exceeded the
lifetime maximum, while the March 14, 2013 letter Blue
Cross sent to Mrs. King stated that she reached the limit on
January 1, 2013. A reasonable juror could conclude that Blue
Cross made misrepresentations to Mrs. King about the
lifetime benefit maximum. Therefore, the district court erred
by granting summary judgment to Blue Cross on the breach
of fiduciary duty claim.

IV. Remedy

In the First Amended Complaint, Mrs. King sought relief
under ERISA sections 502(a)(1)(B) and (a)(3).
Section 502(a)(1)(B) provides for a civil action “to recover
benefits due . . . under the terms of [the] plan,” while section
502(a)(3) provides for “equitable relief” to redress ERISA
violations. 29 U.S.C. § 1132(a)(1)(B), (a)(3). Mrs. King
originally argued that she was entitled to relief primarily
because the Affordable Care Act amended ERISA to require
the defendants to lift the lifetime benefit maximum in the
Retiree Plan. As discussed above, this argument fails.

On appeal, it is unclear whether Mr. King seeks relief
under section 502(a)(1)(B), section 502(a)(3), or both.
Because the district court granted summary judgment to the
defendants, it did not address the appropriate remedy for this
violation, and we decline to do so in the first instance. On
remand, after the plaintiff specifies whether he still seeks
34 KING V. BLUE CROSS AND BLUE SHIELD

relief under ERISA section 502(a)(1)(B), what type of
equitable remedy he seeks under section 502(a)(3), and why,
the district court should determine the appropriate remedy.

CONCLUSION

The plaintiff’s argument that ERISA, as amended by the
Affordable Care Act, requires the defendants to lift the
lifetime benefit maximum in the Retiree Plan fails. However,
the SPD, as amended by the 2010 Summary of Modifications,
violates ERISA’s statutory and regulatory disclosure
requirements, and the district court erred by granting
summary judgment to the defendants on the breach of
fiduciary duty claims. We therefore reverse the order
granting summary judgment to the defendants and remand to
the district court for proceedings consistent with this opinion.

REVERSED and REMANDED.
APPENDIX
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