[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 05-10973 June 27, 2006
THOMAS K. KAHN
CLERK
D. C. Docket No. 02-02197-CV-HS-S
ROLAND H. BICKLEY,
on behalf of Georgia Pacific Corporation
Life Health and Accident Plan and
all other similarly situated Plans,
Plaintiff-Appellant,
versus
CAREMARK RX, INC.,
CAREMARK, INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Alabama
(June 27, 2006)
Before ANDERSON, DUBINA and HILL, Circuit Judges.
DUBINA, Circuit Judge:
Appellant Roland H. Bickley (“Bickley”) brought a class action suit, on
behalf of the Georgia Pacific Corporation Life Health and Accident Plan (“the
Plan”) and all other similarly situated plans, pursuant to section 502(a)(2) and
(a)(3) of the Employment Retirement Income Security Act of 1974 (“ERISA”)
(codified at 29 U.S.C. § 1132(a)(2) and (a)(3)), against Caremark, Rx, Inc.1 and, its
subsidiary, Caremark, Inc. (“Caremark”). Bickley alleged that Caremark, as
Pharmacy Benefits Manager (“PBM”) of the Plan, is a fiduciary within the
meaning of ERISA and breached various fiduciary duties owed to the Plan in
violation of section 409 of ERISA (codified at 29 U.S.C. § 1109(a)).2 The district
court dismissed the action without prejudice, reasoning that Bickley failed to
exhaust his administrative remedies. Bickley Caremark Rx, Inc., 361 F. Supp. 2d
1317 (N.D. Ala. 2004). After careful review of the record, reading the parties’
briefs, and hearing oral argument, we affirm.
I. BACKGROUND
This case is one of many class actions that have been filed across the
country against Caremark for alleged breaches of its fiduciary duties to self-
1
Bickley’s claims against Caremark Rx, Inc. were dismissed by the district court and he does
not challenge the dismissal on appeal.
2
To prevent confusion between ERISA citations and the statutory numbers, reference will
be made to the ERISA citations.
2
funded employee benefit plans under ERISA. Bickley’s complaint3 alleges that he
is a participant in and beneficiary of the Plan, which is offered by his employer
Georgia-Pacific. The Plan is an employee benefit plan governed by ERISA and is
self-funded by Georgia-Pacific. Georgia-Pacific funds the Plan by placing its
money in a trust or similar account for its employees’ prescription drug benefits.
According to the complaint, employers which adopt self-funded plans
typically hire a third-party administrator to administer the plan and to pay
prescription drug claims for the employers using the plan’s money. In this case,
Bickley alleges that Georgia-Pacific’s prescription drug benefits are administered
by Caremark as a PBM. Georgia-Pacific’s relationship with Caremark is governed
by a contract (“PBM agreement”). In its capacity as PBM, Bickley alleges that
Caremark manages both the purchase and flow of prescription drugs on behalf of
the Plan. Specifically, Bickley alleges that Caremark buys drugs from
manufacturers, sells drugs to retail pharmacies, operates a service where Plan
members can fill their prescriptions by mail, and negotiates prescription drug
prices with manufacturers and retail pharmacies.
3
We refer to the complaint at issue, namely, the Second Amended Complaint (R. Vol. 6, Tab
87), as the “complaint.”
3
Bickley filed this class action suit against Caremark on behalf of the Plan pursuant
to section 502(a)(2) and (a)(3) of ERISA.4 Because of its management of the
prescription drug benefits, Bickley alleges that Caremark is a fiduciary to the Plan.
Bickley also alleges that Caremark breached its fiduciary duties, in violation of
ERISA section 409,5 by enriching itself “through undisclosed discounts, rebates,
coupons and other forms of compensation from drug companies and pharmacies.”
Bickley further alleges that Caremark creates undisclosed pricing “spreads”
between the discounted price it pays to retail pharmacies and drug manufacturers
4
Section 502(a)(2) and (a)(3) are two of ERISA’s civil enforcement provisions which state,
in relevant part:
(a) . . . A civil action may be brought . . .
(2) by the Secretary, or by a [plan] participant, beneficiary or fiduciary for
appropriate relief under Section 409 [29 U.S.C. § 1109];
(3) by a [plan] participant, beneficiary, or fiduciary (A) to enjoin any act or practice
which violates any provision of this title or the terms of the plan, or (B) to obtain
other appropriate equitable relief (i) to redress such violations or (ii) to enforce any
provisions of this title or the terms of the plan;
29 U.S.C. § 1132(a)(2)-(3) (emphasis added).
5
Section 409, which is referenced in section 502(a)(2), is captioned “Liability for breach of
fiduciary duty” and provides:
(a) Any person who is a fiduciary with respect to a plan who breaches any of the
responsibilities, obligations or duties imposed upon fiduciaries by this subchapter
shall be personally liable to make good to such plan any losses to the plan resulting
from each such breach, and to restore to such plan any profits of such fiduciary which
have been made through use of assets of the plan by the fiduciary, and shall be
subject to such other equitable or remedial relief as the court may deem appropriate,
including removal of such fiduciary.
29 U.S.C. § 1109(a).
4
and the discounted price it contracts to be reimbursed by the Plan. Bickley alleges
that Caremark receives undisclosed discounts, rebates, and soft dollars from drug
manufacturers in exchange for favoring that drug manufacturer’s drug over
another in its standardized formulary and drug switching programs. Bickley
asserts that Caremark failed to disclose these practices and retention of these
profits, and that Caremark evades the government’s best pricing statute, the
Omnibus Budget and Reconciliation Act, by conspiring with drug manufacturers.
Bickley sought declaratory and injunctive relief, attorneys’ fees and costs, and an
accounting for all Plan assets and profits Caremark retained for its own benefits.
Caremark filed a motion to dismiss based on lack of standing, failure to
state a claim, and failure to exhaust administrative remedies. The district court
alternatively held that if exhaustion was not required, Bickley’s complaint was due
to be dismissed with prejudice because he lacked statutory standing to sue on
behalf of the Plan under ERISA section 502(a)(2) or (a)(3) and because Caremark
did not constitute an ERISA fiduciary. The district court then issued an order
dismissing Bickley’s motion for class certification as moot. Bickley then
perfected this appeal.
5
II. STANDARD OF REVIEW
We review a motion to dismiss under the same standards as the trial court.
Stephens v. Dep’t of Health and Human Servs., 901 F.2d 1571, 1573 (11th Cir.
1990). “On a motion to dismiss, the facts stated in the appellant’s complaint and
all reasonable inferences therefrom are taken as true.” Id.
We review the district court’s decision to excuse a plaintiff’s failure to
exhaust administrative remedies for clear abuse of discretion. See Curry v.
Contract Fabricators, Inc., 891 F.2d 842, 846 (11th Cir. 1990), abrogated on
other grounds by Murphy v. Reliance Standard Life Ins. Co., 247 F.3d 1313, 1314
(11th Cir. 2001).
III. DISCUSSION
“The law is clear in this circuit that plaintiffs in ERISA actions must
exhaust available administrative remedies before suing in federal court.” Counts
v. Amer. Gen’l Life & Acc. Ins. Co., 111 F.3d 105, 108 (11th Cir. 1997). This
exhaustion requirement applies equally to claims for benefits and claims for
violation of ERISA itself. Perrino v. S. Bell Tel. & Tel. Co., 209 F.3d 1309, 1316
n.6 (11th Cir. 2000).6 “However, a district court has the sound discretion ‘to
6
Bickley urges this court to reconsider its precedent requiring exhaustion of administrative
remedies for claims alleging violation of statutory rights. However, unless otherwise directed by the
United States Supreme Court or this court en banc, we are bound by precedent to apply the
exhaustion requirement. See United States v. Thomas, 916 F.2d 647, 652 n.6 (11th Cir. 1990).
6
excuse the exhaustion requirement when resort to administrative remedies would
be futile or the remedy inadequate,’ . . . or where a claimant is denied ‘meaningful
access’ to the administrative review scheme in place.” Id. at 1315 (internal
citations omitted). “The decision of a district court to apply or not apply the
exhaustion of administrative remedies requirement for ERISA claims is a highly
discretionary decision which we review only for a clear abuse of discretion.” Id.
In this case, Bickley did not exhaust the administrative remedy outlined in
the Plan and the district court did not excuse the exhaustion requirement. On
appeal, Bickley argues that the district court should have excused his failure to
exhaust the administrative remedies because an administrative remedy was not
available for his claims of breach of fiduciary duty. He argues that the
administrative scheme set out in the Plan was limited solely to a claim for benefits,
and that the Plan explicitly provided that a participant who alleges violations of
fiduciary duty may file suit in federal court.7 Alternatively, Bickley argues that if
7
Neither party contends that it was improper for the district court to consider the Plan and the
PBM agreement in reaching its decision. A court is generally limited to reviewing what is within
the four corners of the complaint on a motion to dismiss. However, this court has held “where the
plaintiff refers to certain documents in the complaint and those documents are central to the
plaintiff’s claim, then the Court may consider the documents part of the pleading for purposes of
Rule 12(b)(6) dismissal, and the defendant’s attaching such documents to the motion to dismiss will
not require conversion of the motion into a motion for summary judgment.” Brooks v. Blue Cross
& Blue Shield, Inc., 116 F.3d 1364, 1369 (11th Cir. 1997). Both the Plan and the PBM agreement
are central to Bickley’s claim, thus the district court, along with this court, can consider the
documents in reaching its decision.
7
administrative procedures were available for his claims, such procedures were
futile and could not provide adequate relief. We disagree.
First, the language in the Plan upon which Bickley relies does not excuse
him from exhausting his administrative remedies before filing suit. In the Plan
Details, under the heading of “Statement of ERISA Rights,” it states that if “plan
fiduciaries misuse the plan’s money . . . [a plan participant] may seek assistance
from the U.S. Department of Labor, or . . . may file suit in federal court.” (R. Vol.
4, Tab 62, Ex. A at 83.) This Plan language, however, merely recites plan
participants’ general rights under ERISA and does not excuse a participant from
satisfying the exhaustion requirement. See Springer v. Wal-Mart Assocs. Group
Health Plan, 908 F.2d 897, 900 (11th Cir. 1990) (finding that despite plan’s
general language giving a participant the right to sue in federal court, the
exhaustion requirement must be satisfied first because “the right to seek federal
review matures only after that requirement has been appropriately satisfied or
otherwise excused”).
Second, we are not persuaded by Bickley’s argument that no administrative
procedure for his statutory claims was available because the administrative scheme
in the Plan only related to denial of benefit claims. Although the Plan’s
8
administrative scheme related to “claims,”8 the Plan also provided that “[i]f you
have questions about your plan, you should contact the Plan Administrator
[Georgia-Pacific]” and Georgia-Pacific “has the exclusive responsibility and
complete discretionary authority to control the operation and administration of the
Plan, with all power necessary to . . . resolve all interpretive, equitable and other
questions that shall arise in the operation and administration of this Plan.” (R.
Vol. 4, Tab 62, Ex. A at 81 & 83.) Thus, as the district court properly held,
“[t]aking all the provisions as a part of an integrated Agreement and viewing the
same provisions in the light of ERISA’s integrated statutory scheme, . . . Bickley
and other Plan members do have an administrative remedy.” Bickley, 361 F. Supp.
2d at 1336. According to the Plan, the Plan Administrator, Georgia-Pacific, or the
Plan Benefits Claim Processor, can receive and review claims such as Bickley’s
and respond. In fact, not only can Georgia-Pacific respond to such claims, it has
the duty to consider the pursuit of breach of fiduciary duty claims on behalf of the
Plan. See ERISA § 409.
We have repeatedly emphasized that the exhaustion requirement “reduce[s]
the number of frivolous lawsuits under ERISA, minimize[s] the cost of dispute
8
Under the Plan, “claims” are defined as “[a] demand to the Benefits Claim Processor for the
payment of benefits for reimbursable expenses under a medical, dental, disability, or other insurance
plan.” (R. Vol. 4, Tab 62, Ex. A at 55.)
9
resolution, enhance[s] the plan’s trustees’ ability to carry out their fiduciary duties
expertly and efficiently by preventing premature judicial intervention in the
decisionmaking process, and allow[s] prior fully considered actions by pension
plan trustees to assist courts if the dispute is eventually litigated.” Mason v. Cont’l
Group, Inc., 763 F.2d 1219, 1227 (11th Cir. 1985). This precept is most apt in this
case because the alleged injury to the Plan arises from a contractual relationship
between Georgia-Pacific and Caremark, and Georgia-Pacific has not had an
opportunity to fully consider Bickley’s allegations nor determine, as trustee of the
Plan, whether it is in the best interest of the Plan to pursue such allegations.
Allowing this case to go forward would result in “premature judicial intervention
in the decisionmaking process.” Id.
Finally, we conclude that the district court did not abuse its discretion in
failing to apply the futility exception. “[B]are allegations of futility are no
substitute for the ‘clear and positive’ showing of futility required before
suspending the exhaustion requirement.” Springer, 908 F.2d at 901 (citation
omitted). Here, Bickley’s claim of futility is merely speculative because he did not
even attempt to pursue the administrative procedure available so there is no
indication as to whether Georgia-Pacific was aware of Caremark’s alleged conduct
10
and, if aware, would have pursued the claims.9 Additionally, Bickley’s argument
that administrative review would be futile because resolution of his claims
requires ERISA interpretation, which Georgia-Pacific does not have the authority
to make, does not justify an exemption from the exhaustion requirement. Our
prior precedent makes clear that the administrative exhaustion requirement for
ERISA claims should not be excused merely because a claim is brought pursuant
to the statute. See Perrino, 209 F.3d at 1315 n.6. As such, Bickley was compelled
to first exhaust the available administrative remedies contained in the Plan prior to
filing suit in federal court. Accordingly, we hold that the district court did not
abuse its discretion in applying the exhaustion requirement to Bickley’s claims.
IV. CONCLUSION
For the foregoing reasons, we affirm the district court’s dismissal of
Bickley’s complaint without prejudice for failure to exhaust his administrative
remedies.10
We further affirm the district court’s order denying the motion for class
certification as moot.
AFFIRMED.
9
We are not persuaded by Bickley’s argument that exhaustion of administrative remedies was
futile because the remedy would be inadequate. The potential for an adequate legal remedy exists
in this case because, given an opportunity to address Bickley’s claim on behalf of the Plan, Georgia-
Pacific could provide the remedy Bickley seeks by pursuing a claim against Caremark.
10
Because we affirm the district court’s judgment of dismissal on the basis of exhaustion, we
need not address the alternative grounds for dismissal.
11