`For the First Circuit
`
`
`
`
`No. 22-1317
`
`MASSACHUSETTS LABORERS' HEALTH AND WELFARE FUND;
`TRUSTEES OF THE MASSACHUSETTS LABORERS'
`HEALTH AND WELFARE FUND, as Fiduciaries,
`
`Plaintiffs, Appellants,
`
`v.
`
`BLUE CROSS BLUE SHIELD OF MASSACHUSETTS,
`
`Defendant, Appellee.
`
`
`APPEAL FROM THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MASSACHUSETTS
`
`[Hon. F. Dennis Saylor, IV, U.S. District Judge]
`
`
`
`Before
`
`Gelpí, Lynch, and Thompson,
`Circuit Judges.
`
`
`
`
`
`
`
`
`
`D. Brian Hufford, with whom Jason S. Cowart, Leila Bijan,
`Zuckerman Spaeder LLP, Peter K. Stris, John Stokes, and Stris &
`Maher LLP were on brief, for appellants.
`Sarah M. Karchunas, Attorney, Plan Benefits Security
`Division, Office of the Solicitor, Department of Labor, with whom
`Seema Nanda, Solicitor of Labor, G. William Scott, Associate
`Solicitor for Plan Benefits Security, Jeffrey M. Hahn, Counsel for
`Appellate and Special Litigation, and Robin Springberg Parry,
`Senior Regulatory Attorney, were on brief, for the Secretary of
`Labor, amicus curiae.
`Jeffrey M. Harris, Steven C. Begakis, and Consovoy McCarthy
`PLLC on brief for PatientRightsAdvocate.org, Inc. and Families
`USA, amici curiae.
`
`
`
`Evan Miller, with whom David T. Raimer, Joseph P. Falvey, and
`Jones Day were on brief, for appellee.
`Anthony F. Shelley and Miller & Chevalier Chartered on brief
`for Blue Cross Blue Shield Association, amicus curiae.
`Allison S. Egan, Michael E. Kenneally, Deborah S. Davidson,
`Charles L. Solomont, Henry M. Marley, and Morgan, Lewis & Bockius
`LLP on brief for ERISA and Trust Law Professors, amici curiae.
`
`
`
`April 25, 2023
`
`
`
`
`
`LYNCH, Circuit Judge. From 2006 to 2022, Blue Cross
`
`Blue Shield of Massachusetts ("BCBSMA") served under contract as
`
`a third-party administrator (a "TPA") for the self-funded
`
`multiemployer group health plan (the "Plan") administered by the
`
`Massachusetts Laborers' Health and Welfare Fund (the "Fund").
`
`BCBSMA was also a TPA for other benefit plans during this period.
`
`By contracting with BCBSMA, the Fund made available to
`
`the Plan's participants the discounted rates that BCBSMA
`
`negotiates with a network of medical providers. Among other
`
`contractual obligations, BCBSMA was responsible for repricing
`
`participants' claims according to its provider arrangements and
`
`transmitting approved claim payments to providers on behalf of the
`
`Fund.
`
`In 2021, the Fund sued BCBSMA, alleging that the Fund
`
`had discovered various instances in which BCBSMA paid providers in
`
`amounts exceeding the negotiated rates. The Fund brought three
`
`claims under the Employee Retirement Income Security Act of 1974
`
`("ERISA"), 29 U.S.C. § 1001 et seq., all of which depended on the
`
`assertion that BCBSMA was a fiduciary of the Plan.
`
`The district court granted BCBSMA's motion to dismiss
`
`under Federal Rule of Civil Procedure 12(b)(6), holding that the
`
`Fund had failed to plausibly allege that BCBSMA was an ERISA
`
`fiduciary with respect to the actions subject to the Fund's
`
`complaint. See Mass. Laborers' Health & Welfare Fund v. Blue Cross
`
`- 3 -
`
`
`
`Blue Shield of Mass., No. 21-cv-10523, 2022 WL 952247, at *1 (D.
`
`Mass. Mar. 30, 2022). We affirm.
`
`I. Background
`
`A. The Parties and Their Contractual Relationship
`
`When reviewing the grant of a motion to dismiss for
`
`failure to state a claim, "we accept as true all well-pleaded facts
`
`alleged in the complaint and draw all reasonable inferences
`
`therefrom in the [plaintiff]'s favor." Legal Sea Foods, LLC v.
`
`Strathmore Ins. Co., 36 F.4th 29, 34 (1st Cir. 2022) (alteration
`
`in original) (quoting Alston v. Spiegel, 988 F.3d 564, 571 (1st
`
`Cir. 2021)).
`
`The Fund operates the Plan for members of the Laborers'
`
`Local Union in Massachusetts and parts of northern New England.
`
`Because the Plan is self-funded, the Fund is responsible for paying
`
`all covered healthcare claims submitted on behalf of the Plan's
`
`participants. The Fund is financed from employer contributions,
`
`which in turn are partly funded through deductions from
`
`participants' paychecks.
`
`In 2006, the Trustees of the Fund, on behalf of the Fund,
`
`entered into a contract with BCBSMA to have BCBSMA help administer
`
`the Plan as a TPA. As a preferred-provider organization (a "PPO"),
`
`BCBSMA negotiates favorable rates with a network of healthcare
`
`providers. This negotiation is independent from the relationship
`
`between BCBSMA and the Fund. By contracting with BCBSMA, the Fund
`
`- 4 -
`
`
`
`was able to make the discounted rates available to all participants
`
`who received covered in-network medical care from BCBSMA's
`
`preferred providers.
`
`The terms of the Fund's and BCBSMA's agreement were laid
`
`out in an administrative services agreement (the "ASA"),1 which
`
`also referenced a summary plan description (the "SPD")2 which was
`
`prepared by the Fund and distributed to Plan participants. We
`
`describe the basic features of the ASA and SPD in turn and refer
`
`to further provisions of the documents throughout our legal
`
`analysis.3
`
`1. The ASA
`
`The parties executed the ASA in 2006 to govern the terms
`
`of their relationship. The ASA provided that BCBSMA would "perform
`
`certain administrative services in connection with" the Plan. "In
`
`
`1
`The ASA is titled "Administrative Services Account
`Agreement."
`
`2
`The SPD is titled "A Summary of Plan Features." ERISA
`requires the distribution of summary plan descriptions to
`participants and beneficiaries. See 29 U.S.C. § 1024(b).
`
`3
`Because the ASA and SPD were "cited in the complaint and
`attached to [BCBSMA's] motion to dismiss," In re Fid. ERISA Float
`Litig., 829 F.3d 55, 60 (1st Cir. 2016), and because no party
`challenges their authenticity, the district court properly
`reviewed the two documents, and we continue to consider them on
`appeal, see Beddall v. State St. Bank & Tr. Co., 137 F.3d 12, 17
`(1st Cir. 1998) ("When . . . a complaint's factual allegations are
`expressly linked to -- and admittedly dependent upon -- a document
`(the authenticity of which is not challenged), that document
`effectively merges into the pleadings and the trial court can
`review it in deciding a motion to dismiss under Rule 12(b)(6).").
`
`- 5 -
`
`
`
`performing [those] services," BCBSMA agreed to "be, and function
`
`as, an independent contractor to the Fund and as a service provider
`
`to the [Plan]." The ASA was "not intended to create an agency,
`
`partnership or joint venture relationship between the parties."
`
`The administrative services BCBSMA agreed to perform
`
`included "arranging for a network of health care providers[4] whose
`
`services [were] covered by the [Plan], providing services to
`
`network providers, claims processing, individual case management,
`
`medical necessity review, utilization review, quality assurance
`
`programs and disease monitoring and management services." BCBSMA
`
`"reserve[d] the right to make changes to its provider
`
`network . . . at any time" and to "negotiate different claim
`
`payment rates and arrangements with its providers." These rates
`
`and arrangements were influenced by various factors that were
`
`"based on all or a subset of [BCBSMA]'s book of business."
`
`Of particular relevance here, BCBSMA agreed to "make its
`
`PPO network of preferred health care providers available to
`
`[p]articipants in the Plan." In essence, by selecting providers
`
`from BCBSMA's PPO network, Plan participants could benefit from
`
`the volume discounts that BCBSMA had previously negotiated. The
`
`claims determination process proceeded as follows.
`
`
`4
`The ASA defined the term "health care providers" as
`including "hospital, physician and ancillary service providers."
`
`- 6 -
`
`
`
`First, medical providers who administered care to Plan
`
`participants would submit claims to BCBSMA, which would "receive
`
`and reprice all covered claims . . . in accordance with [its]
`
`provider reimbursement arrangements." To "reprice" the claims,
`
`BCBSMA would "conduct a medical necessity and utilization review"
`
`of the claims using the "medical policy, medical technology
`
`assessment guidelines and utilization review policies as set forth
`
`in" an attachment to the ASA.
`
`After BCBSMA "repriced" the claims by calculating the
`
`appropriate payment rate, it would transmit the repriced claims to
`
`the Fund. The Fund would then enter the claims into its "claims
`
`processing system" to "determine member eligibility, the
`
`availability of benefits and claims adjudication." The Fund
`
`"adjudicated" the claims by determining whether they were covered
`
`under the Plan and by calculating deductibles and copayments.
`
`"Following the Fund's adjudication, the final approval or denial"
`
`was "forwarded by the Fund to [BCBSMA], including all applicable
`
`deductible,
`
`copayment
`
`and
`
`coinsurance
`
`information
`
`and
`
`limitations."
`
`Finally, once BCBSMA received the Fund's final approval,
`
`BCBSMA would "remit the appropriate claim payment[5] to the network
`
`
`5
`The ASA defined "[c]laim [p]ayments" as "the amounts
`[BCBSMA] pays on behalf of the Fund for [p]articipants' health
`care benefits when billed by the provider[s]."
`
`- 7 -
`
`
`
`provider." For any adjudicated claim that was disputed by a Plan
`
`participant, the Fund was solely "responsible to process and make
`
`a decision regarding such [an] appeal."
`
`To compensate BCBSMA for its administrative services,
`
`the Fund agreed to pay BCBSMA an "administrative charge" in a
`
`"fixed dollar amount." As the administrator of a self-funded plan,
`
`the Fund also "retain[ed] the ultimate financial responsibility
`
`and liability for all covered claims under the Plan." "Because
`
`[BCBSMA] [would] pay providers . . . before being able to bill the
`
`Fund," the Fund agreed to pay a "working capital amount" to BCBSMA
`
`"for estimated [c]laim [p]ayments." This working capital amount
`
`was "based on [BCBSMA]'s estimate of the amount needed to pay
`
`claims on a current basis."
`
`The agreed-upon payment process was as follows. First,
`
`in "weekly installments," the Fund would "pay a fixed monthly
`
`payment amount" which included both the working capital amount and
`
`the estimated administrative charge. Then, in "one-month
`
`intervals," BCBSMA would perform a "settlement calculation" to
`
`determine
`
`whether
`
`the
`
`combined
`
`weekly
`
`payments
`
`had
`
`undercompensated or overcompensated BCBSMA for the actual claim
`
`payments it had transmitted to providers that month and the actual
`
`administrative charges it had incurred.6 If the settlement
`
`
`6
`In particular, BCBSMA added "[t]otal paid claims" and
`"actual administrative charges due" and then subtracted the "sum
`
`- 8 -
`
`
`
`calculation revealed that the Fund owed BCBSMA an additional
`
`amount, the Fund would "wire to [BCBSMA] such amount . . . with
`
`its next scheduled weekly payment." But if the settlement
`
`calculation demonstrated that the paid amount had exceeded the
`
`amount actually due to BCBSMA, then BCBSMA would "apply (credit)
`
`such amount . . . to the Fund's next scheduled weekly payment,"
`
`unless applying such a credit was "prohibited by applicable law,"
`
`in which case BCBSMA would "promptly refund the difference . . .
`
`to the Fund."
`
`The ASA also contemplated recovery operations for
`
`erroneously paid claims. The original version of the ASA provided
`
`generally that each party would be "fully responsible" for its own
`
`errors that caused a claim to be paid "to or on behalf of an
`
`ineligible person," paid in "more or less than the correct amount"
`
`due, or paid to an "incorrect provider."
`
`Two amendments to the ASA added more specific recovery
`
`provisions. First, a 2010 amendment provided that BCBSMA could
`
`"pursue recoveries for claims paid as a result of fraud or abuse."
`
`BCBSMA could seek recovery directly or "through other appropriate
`
`recovery operations, including subrogation and provider claim
`
`
`of weekly payments" received from the Fund. After applying
`"adjustments" based on the previous month's settlement
`calculation, BCBSMA arrived at the net amount owed to, or due from,
`the Fund, representing both provider payments and administrative
`charges.
`
`- 9 -
`
`
`
`payment audits." If BCBSMA obtained recovery, it would credit to
`
`the Fund "the amount of the recovery attributable to services for"
`
`the Fund's participants, but would retain either a 20% "recovery
`
`fee" or, if "outside support costs" (such as fees for engaging
`
`outside counsel) were incurred in pursuing recovery, the Fund's
`
`"pro rata share" of those costs. The Fund agreed that "neither
`
`the [Fund], the [Plan], nor any [participant] ha[d] any legal or
`
`beneficial ownership interest in these recovery amounts retained
`
`by [BCBSMA]." However, BCBSMA was authorized to retain these
`
`amounts only if the need for recovery was "attributable to a third
`
`party and not attributable to an error made by [BCBSMA]."
`
`Second, a 2016 amendment provided that if claim payments
`
`were "too high or too low due [to] reasons such as the use of
`
`incorrect claim payment rates," BCBSMA would "reprocess impacted
`
`claims and bill or credit the [Fund]." But if it was "not
`
`administratively practical or reasonable to reprocess impacted
`
`claims due to the specific situation," BCBSMA could "instead
`
`negotiate a settlement with the provider," in which case BCBSMA
`
`would "credit or bill the [Fund] based on its pro rata share of
`
`the settlement."
`
`Although the ASA explicitly designated the Trustees of
`
`the Fund as ERISA fiduciaries, it did not do so for BCBSMA. In
`
`relevant part, the ASA provided the following:
`
`- 10 -
`
`
`
`The Trustees are the "administrator" and
`"named fiduciary" of the Fund as that term is
`defined in Section 3(16)(A) and 402(a),
`respectively, of ERISA. [BCBSMA] is engaged
`as an independent contractor to perform the
`specific duties and responsibilities which the
`Trustees delegate to it. It is understood and
`agreed that [BCBSMA] exercises its duties
`within the framework of the Plan of Benefits
`established by the Trustees. [BCBSMA] and the
`Trustees of the Fund accept that the
`definitions of a fiduciary are contained in
`ERISA Section 3(21)(A).
`
`
`2. The SPD
`
`The Plan's terms were summarized in the SPD, which was
`
`referenced in the ASA and distributed to Plan participants. The
`
`SPD, which was prepared by the Fund, provided information to
`
`participants on benefits, coverage eligibility, and various other
`
`Plan terms.
`
`The SPD informed participants that the Fund had "entered
`
`into an arrangement with a [PPO] that contracts with hospitals,
`
`physicians and other health care providers to provide
`
`[participants] with medical services at discounted rates." The
`
`SPD identified BCBSMA as "[t]he Fund's PPO . . . for most medical
`
`expenses," and explained that participants should select providers
`
`who participated in BCBSMA's network in order to "receive the
`
`highest benefit level." The SPD stated to participants that if
`
`they chose in-network providers, then the "billed charges that
`
`[would] be considered covered expenses [would] never be more than
`
`the negotiated rate." It also informed participants that "[a]ny
`
`- 11 -
`
`
`
`provider in the PPO network [would] be paid directly by [BCBSMA]"
`
`and that participants would be "responsible for [their] deductible
`
`and copayment amounts."
`
`The SPD further stated that the "Trustees, the Fund
`
`Administrator and other individuals with delegated responsibility
`
`for the administration of the Plan [would] have discretionary
`
`authority to interpret the terms of the Plan and to determine
`
`eligibility and entitlement to Plan benefits in accordance with the
`
`terms of the Plan." It also notified participants that they were
`
`"entitled to certain rights and protections under . . . ERISA,"
`
`and stated the following:
`
`In addition to creating rights for Plan
`participants, ERISA imposes duties upon the
`people who are responsible for the operation
`of employee benefit plans. The people who
`operate your plan, called "fiduciaries" of the
`plan, have a duty to do so prudently and in
`the interest of you and other Plan
`participants and beneficiaries.
`
`
`B. The Allegations of Overpayment
`
`The Fund regularly conducts performance audits of its
`
`contractors. To that end, in July 2018, the Fund hired
`
`ClaimInformatics, LLC ("ClaimInformatics"), a company that audits
`
`healthcare claims to discover and recover improper payments. The
`
`Fund asked ClaimInformatics to perform a "payment integrity
`
`review" of the Fund's claims that were paid by BCBSMA to providers.
`
`- 12 -
`
`
`
`After reviewing payments made between 2016 and 2018,7
`
`ClaimInformatics allegedly discovered thousands of claims that
`
`were erroneously paid or paid in the incorrect amount. In its
`
`first stage of review, ClaimInformatics purportedly identified
`
`5,574 such claims and found that providers had been overpaid by
`
`over $1.4 million.
`
`C. The Lawsuit
`
`On March 26, 2021, the Fund sued BCBSMA in the U.S.
`
`District Court for the District of Massachusetts. The Fund's
`
`complaint, as later amended, asserted three claims under ERISA:
`
`Count One alleged a breach of fiduciary duty in violation of 29
`
`U.S.C. § 1109(a); Count Two alleged self-dealing with Plan assets
`
`in violation of 29 U.S.C. § 1106(b)(2); and Count Three sought
`
`injunctive relief under 29 U.S.C. § 1132(a)(3). The complaint
`
`also asserted four state-law claims.
`
`The complaint made two distinct sets of factual
`
`allegations against BCBSMA in support of the Fund's ERISA claims.
`
`The first concerned BCBSMA's behavior prior to paying providers;
`
`the second concerned BCBSMA's actions after payment.8
`
`
`7
`Because ClaimInformatics' review was of claims from 2016
`to 2018, all relevant claims were paid after the 2016 amendment to
`the ASA, which took effect on January 1, 2016.
`
`8
`Throughout the complaint, the Fund noted that BCBSMA
`refused to provide the Fund requested documents and other
`information concerning BCBSMA's internal policies, provider
`contracts, medical records, and audit results. The Fund does not
`argue that these quarrels over nondisclosure and confidentiality
`
`- 13 -
`
`
`
`First, citing ClaimInformatics' audit results, the Fund
`
`alleged that BCBSMA failed to accurately price claims, resulting
`
`in millions of dollars in overpayments to providers. According to
`
`the Fund, ClaimInformatics identified various errors that caused
`
`the overpayments. First, ClaimInformatics allegedly noted a
`
`pattern of BCBSMA calculating claim payments to be higher than the
`
`amounts providers actually billed -- for example, ClaimInformatics
`
`asserted that when one hospital billed $38,786 for a claim, BCBSMA
`
`then priced that claim at $120,614. ClaimInformatics also
`
`purportedly discovered instances in which BCBSMA erroneously
`
`priced two hospital stays as separate admissions in contravention
`
`of BCBSMA's inpatient readmission policy, which provided that if
`
`a patient was readmitted to a hospital for a related diagnosis
`
`within a week of discharge, the cost of readmission would be
`
`included in the price of the initial admission. Similarly,
`
`although BCBSMA's observation room billing policy was to charge a
`
`one-day rate for observation room stays up to twenty-four hours
`
`and a two-day rate for all longer stays, ClaimInformatics allegedly
`
`identified cases where BCBSMA incorrectly charged the two-day rate
`
`for stays shorter than twenty-four hours when those stays spanned
`
`two calendar days. Further, with regard to the degree of patient
`
`
`are relevant to the question of whether BCBSMA was a fiduciary.
`We thus decline to consider this aspect of the parties' dispute in
`our analysis.
`
`- 14 -
`
`
`
`illness –- for which hospitals use numeric codes to classify
`
`severity, ranging from 1 (minor) to 4 (extreme) -- ClaimInformatics
`
`purportedly found that BCBSMA accepted a "statistically improbable
`
`number of claims" with level 4 severity, leading to excessively
`
`high payments to hospitals. Finally, as alleged by the Fund,
`
`ClaimInformatics noted various other idiosyncratic errors; for
`
`example, BCBSMA accepted a hospital's designation of a procedure
`
`as a "foot amputation" despite the doctor's billing it as a "toe
`
`amputation," and BCBSMA processed a claim without inquiry where a
`
`provider charged three hours for a procedure known to take no more
`
`than five minutes.
`
`Second, the Fund's complaint alleged that BCBSMA's
`
`recovery operations entailed self-dealing by BCBSMA at the expense
`
`of the Fund. The Fund principally contended that BCBSMA collected
`
`wrongful and excessive recovery fees. For example, the Fund
`
`claimed that there were "numerous instances of BCBSMA causing an
`
`error itself, catching it, fixing it, and collecting a recovery
`
`fee," such that BCBSMA retained a recovery fee even when
`
`overpayments stemmed from its own errors. According to the Fund,
`
`BCBSMA also once retained a recovery fee despite not recovering
`
`any overpayment (rather, a hospital had adjusted a claim amount
`
`prior to payment), and once retained an inflated recovery fee by
`
`applying the recovery fee percentage to the original claim amount
`
`instead of the recovered amount. The complaint further alleged
`
`- 15 -
`
`
`
`that BCBSMA, without authorization, increased the recovery fee
`
`percentage from 20% to 30% for all recoveries and began charging
`
`a 19% "Coding Advisor Program Fee" on savings to the Fund from
`
`BCBSMA's post-payment audits of out-of-network claims. Finally,
`
`in relation to the alleged observation room billing errors, the
`
`Fund claimed that BCBSMA pursued provider settlements (rather than
`
`full recoveries via reprocessing claims) even when it was
`
`"administratively practical [and] reasonable" to reprocess the
`
`claims. These settlements would, allegedly,
`
`"grossly
`
`undercompensate" the Fund.
`
`BCBSMA moved to dismiss the Fund's complaint under
`
`Federal Rule of Civil Procedure 12(b)(6), and in a carefully
`
`reasoned opinion issued on March 30, 2022, the district court
`
`granted the motion. Mass. Laborers' Health & Welfare Fund, 2022
`
`WL 952247, at *1. The district court noted that the Fund's ERISA
`
`claims were premised on BCBSMA's being a "fiduciary" under the
`
`statute.9 Id. at *7, *16. After rejecting the Fund's argument
`
`that BCBSMA was named as a fiduciary in the SPD (an argument that
`
`
`9
`The court noted that although nonfiduciaries can incur
`liability under § 1132(a)(3) if they "participate[] in a fiduciary
`breach" by another person, the Fund had not alleged that BCBSMA
`participated in any breach by other fiduciaries, so Count Three,
`like Counts One and Two, was based on the proposition that BCBSMA
`was itself a fiduciary. Mass. Laborers' Health & Welfare Fund,
`2022 WL 952247, at *16. On appeal, the Fund does not challenge
`the district court's approach as to Count Three; rather, it
`continues to argue that BCBSMA was, in fact, a fiduciary.
`
`- 16 -
`
`
`
`the Fund does not pursue on appeal), id. at *7-8, the district
`
`court turned to the question of whether BCBSMA was a "functional
`
`fiduciary" under ERISA, id. at *8. The court held that BCBSMA was
`
`not a functional fiduciary. Id. at *15. First, the court held
`
`that because BCBSMA was required to apply its negotiated rates,
`
`its alleged failure to do so did not reflect an exercise of
`
`"discretion" such as would make BCBSMA a fiduciary due to
`
`discretionary control over the management of the Plan. Id. at *9;
`
`see id. at *9-12. Second, the court found that the working capital
`
`amount was not an asset of the Plan and thus rejected the Fund's
`
`contention that BCBSMA was a fiduciary due to its authority over
`
`the management or disposition of Plan assets. See id. at *12-15.
`
`The court also held that even if the working capital amount was a
`
`Plan asset, BCBSMA had not exercised sufficient "authority or
`
`control" over the working capital amount to render BCBSMA a
`
`fiduciary. Id. at *15. The district court dismissed the Fund's
`
`ERISA claims and declined to exercise supplemental jurisdiction
`
`over the Fund's state-law claims. See id. at *16.
`
`The Fund timely appealed.
`
`II. Analysis
`
`We review de novo the district court's dismissal of the
`
`complaint on the basis that BCBSMA lacked fiduciary status. See
`
`In re Fid. ERISA Fee Litig., 990 F.3d 50, 55 (1st Cir. 2021). In
`
`conducting this inquiry, we evaluate whether the complaint
`
`- 17 -
`
`
`
`"state[s] a claim to relief that is plausible on its face." In re
`
`Fid. ERISA Float Litig., 829 F.3d 55, 59 (1st Cir. 2016) (quoting
`
`Saldivar v. Racine, 818 F.3d 14, 18 (1st Cir. 2016)). We first
`
`"distinguish the complaint's factual allegations (which must be
`
`accepted as true) from its conclusory legal allegations (which
`
`need not be credited)," and then "determine whether the factual
`
`allegations are sufficient to support the reasonable inference
`
`that the defendant is liable." Id. (quoting Saldivar, 818 F.3d at
`
`18). "[W]e need not credit the complaint's statement that [the
`
`working capital amount] [was] a '[P]lan asset,' for that label
`
`represents a legal conclusion, not a factual assertion." Id.
`
`Likewise, the complaint's assertion that BCBSMA exercised control
`
`respecting the management or disposition of the working capital
`
`amount, and the complaint's statement that BCBSMA exercised
`
`discretionary control respecting Plan management, are legal
`
`assertions that we need not credit. See In re Fid. ERISA Fee
`
`Litig., 990 F.3d at 56-57.
`
`A person10 can be a fiduciary under ERISA in two ways.
`
`See id. at 55. First, a person is a "named fiduciary" if identified
`
`as such in a plan instrument or pursuant to a procedure specified
`
`
`10 ERISA defines the term "person" to include individuals
`and various business entities. See 29 U.S.C. § 1002(9).
`
`- 18 -
`
`
`
`in the plan. 29 U.S.C. § 1102(a). The Fund does not contend that
`
`BCBSMA was a named fiduciary.11
`
`Second, a person can become a "functional fiduciary" by
`
`"performing at least one of several enumerated functions with
`
`respect to a plan." Beddall v. State St. Bank & Tr. Co., 137 F.3d
`
`12, 18 (1st Cir. 1998); see 29 U.S.C. § 1002(21)(A). A person is
`
`a functional fiduciary
`
`with respect to a plan to the extent (i) he
`exercises any discretionary authority or
`discretionary control respecting management
`of such plan or exercises any authority or
`control respecting management or disposition
`of its assets, (ii) he renders investment
`advice for a fee or other compensation, direct
`or indirect, with respect to any moneys or
`other property of such plan, or has any
`authority or responsibility to do so, or (iii)
`he has any discretionary authority or
`discretionary
`responsibility
`in
`the
`administration of such plan.
`
`29 U.S.C. § 1002(21)(A) (emphasis added).
`
`The statutory language establishes that "functional
`
`fiduciary status is not an all-or-nothing designation." In re
`
`Fid. ERISA Fee Litig., 990 F.3d at 55. Rather, a person can be a
`
`fiduciary "for some purposes and not for others." Id. "In every
`
`case charging breach of ERISA fiduciary duty, then, the threshold
`
`question is . . . whether [a] person was acting as a fiduciary
`
`
`11 The Fund made this argument to the district court, but
`the district court rejected it, see Mass. Laborers' Health &
`Welfare Fund, 2022 WL 952247, at *7-8, and the Fund does not renew
`it on appeal.
`
`- 19 -
`
`
`
`(that is, was performing a fiduciary function) when taking the
`
`action subject to complaint." Pegram v. Herdrich, 530 U.S. 211,
`
`226 (2000); see also Beddall, 137 F.3d at 18 ("[F]iduciary
`
`liability arises in specific increments correlated to the vesting
`
`or performance of particular fiduciary functions in service of the
`
`plan, not in broad, general terms."). Accordingly, we must analyze
`
`separately whether BCBSMA was a fiduciary when taking the two
`
`distinct actions subject to the Fund's complaint: first, when
`
`pricing claims and allegedly overpaying providers, and second,
`
`when pursuing recoveries of overpaid amounts and retaining
`
`associated fees before reimbursing the Fund.
`
`In arguing that BCBSMA was a fiduciary, the Fund cites
`
`only subsection (i) of ERISA's definition of functional fiduciary.
`
`The Fund argues both that BCBSMA exercised "discretionary
`
`authority or discretionary control respecting management of [the]
`
`[P]lan"12 and that BCBSMA exercised "authority or control
`
`respecting management or disposition of [the Plan's] assets." 29
`
`U.S.C. § 1002(21)(A)(i). We address these two arguments in turn.
`
`
`12 The Fund does not contend that BCBSMA had "discretionary
`authority or discretionary responsibility in the administration"
`of the Plan under subsection (iii) of the definition, 29 U.S.C.
`§ 1002(21)(A)(iii), so we need not decide the extent to which this
`portion of the definition differs from subsection (i).
`
`- 20 -
`
`
`
`A. Discretionary Authority or Discretionary
`Control Respecting Plan Management
`
`The Fund first contends that BCBSMA was a fiduciary to
`
`the extent that it exercised discretionary authority over the
`
`Plan's management. The Fund does not argue that BCBSMA's
`
`management of its PPO network and negotiation of rates with
`
`providers made it a fiduciary with respect to the Plan. Nor does
`
`the Fund challenge the ASA's provision that BCBSMA "reserved the
`
`right to make changes to its provider network at any time" and to
`
`"negotiate different claim payment rates and arrangements with its
`
`providers." Rather, the Fund maintains that BCBSMA exercised
`
`discretion in applying already negotiated rates to claims
`
`submitted on behalf of the Plan's participants. It further
`
`contends that BCBSMA's control over recovery and settlement
`
`operations amounted to discretionary authority over Plan
`
`management.
`
`The Department of Labor has issued an interpretive
`
`bulletin concerning ERISA fiduciary status, which has been
`
`published in the Federal Register.13 See 29 C.F.R. § 2509.75-8.
`
`The interpretive bulletin provides that a person who has "no power
`
`to make any decisions as to plan policy, interpretations, practices
`
`
`13 As part of its analysis and interpretation of an agency's
`applicable federal statute, a court may consider, along with other
`relevant legal sources, the agency's interpretive bulletins on the
`matter. See, e.g., Reich v. Newspapers of New Eng., Inc., 44 F.3d
`1060, 1071-73 (1st Cir. 1995).
`
`- 21 -
`
`
`
`or procedures, but who perform[s] [various] administrative
`
`functions for an employee benefit plan, within a framework of
`
`policies, interpretations, rules, practices and procedures made by
`
`other persons" is not a fiduciary because that person is performing
`
`"purely ministerial functions." Id. § 2509.75-8(D-2); see also
`
`Pharm. Care Mgmt. Ass'n v. Rowe, 429 F.3d 294, 301 (1st Cir. 2005)
`
`(noting that "purely ministerial" duties are "not sufficient" to
`
`render an individual a fiduciary); Beddall, 137 F.3d at 18 ("[T]he
`
`mere . . . performance of mechanical administrative tasks generally
`
`is insufficient to confer fiduciary status."). These
`
`nondiscretionary administrative functions include, inter alia, the
`
`"[a]pplication of rules determining eligibility for participation
`
`or benefits," the "[c]alculation of benefits," and the
`
`"[p]rocessing of claims." 29 C.F.R. § 2509.75-8(D-2); see also
`
`Livick v. Gillette Co., 524 F.3d 24, 29 (1st Cir. 2008) (holding
`
`that providing estimate of future benefits did not involve
`
`discretion); Baxter v. C.A. Muer Corp., 941 F.2d 451, 455 (6th
`
`Cir. 1991) (per curiam) ("[A] person without the power to make
`
`plan policies or interpretations but who performs purely
`
`ministerial functions such as processing claims, applying plan
`
`eligibility rules, communicating with employees, and calculating
`
`benefits, is not a fiduciary under ERISA."); Schmidt v. Sheet Metal
`
`Workers' Nat'l Pension Fund, 128 F.3d 541, 544 n.1, 547 (7th Cir.
`
`- 22 -
`
`
`
`1997) (declining to attribute fiduciary status to an individual
`
`who "determin[ed] benefit amounts due under the plan").
`
`An entity is a fiduciary when it exercises discretionary
`
`authority or control over plan management, even if pursuant to the
`
`terms of a contract. See Ed Miniat, Inc. v. Globe Life Ins. Grp.,
`
`Inc., 805 F.2d 732, 737 (7th Cir. 1986) ("[I]f a specific term
`
`(not a grant of power to change terms) is bargained for at arm's
`
`length, adherence to that term is not a breach of fiduciary duty.
`
`No discretion is exercised when an insurer merely adheres to a
`
`specific contr