           RECOMMENDED FOR FULL-TEXT PUBLICATION
                Pursuant to Sixth Circuit Rule 206                        2    Seaway Food Town, Inc. v.                  No. 01-4285
        ELECTRONIC CITATION: 2003 FED App. 0376P (6th Cir.)                    Medical Mutual of Ohio
                    File Name: 03a0376p.06
                                                                                             _________________
UNITED STATES COURT OF APPEALS                                                                    COUNSEL
                  FOR THE SIXTH CIRCUIT                                   ARGUED:         Anastasia Kay Hanson, SPENGLER
                    _________________                                     NATHANSON, P.L.L., Toledo, Ohio, for Appellant. James
                                                                          D. Thomas, SQUIRE, SANDERS & DEMPSEY, Cleveland,
 SEAWAY FOOD TOWN , INC.         X                                        Ohio, for Appellee. ON BRIEF: Anastasia Kay Hanson,
         Plaintiff-Appellant,     -                                       Lisa E. Pizza, Theodore M. Rowen, SPENGLER
                                  -                                       NATHANSON, P.L.L., Toledo, Ohio, for Appellant. James
                                  -  No. 01-4285                          D. Thomas, Christopher R. Shea, SQUIRE, SANDERS &
           v.                     -                                       DEMPSEY, Cleveland, Ohio, for Appellee.
                                   >
                                  ,
 MEDICAL MUTUAL OF OHIO ,                                                                    _________________
                                  -
         Defendant-Appellee. -
                                                                                                 OPINION
                                  -                                                          _________________
                                  -
                                 N                                          CLAY, Circuit Judge. Plaintiff, Seaway Food Town, Inc.
      Appeal from the United States District Court                        (“Seaway”), filed suit against Defendant, Medical Mutual of
      for the Northern District of Ohio at Toledo.                        Ohio (“Medical Mutual”), formerly known as Blue Cross &
     No. 98-07576—James G. Carr, District Judge.                          Blue Shield Mutual of Ohio (“BC/BS”), alleging that BC/BS
                                                                          breached its fiduciary duties to Seaway in violation of the
                      Argued: May 1, 2003                                 Employee Retirement Income Security Act of 1974
                                                                          (“ERISA”), as amended, 29 U.S.C. §§ 1001-1461. Seaway
             Decided and Filed: October 23, 2003                          appeals from the district court’s order entered on October 10,
                                                                          2001, granting Medical Mutual’s motion for summary
         Before: CLAY and GIBBONS, Circuit Judges;                        judgment and denying Seaway’s motion for summary
                 CLELAND, District Judge.*                                judgment. For the reasons set forth below, we AFFIRM the
                                                                          district court’s order.




    *
     The Ho norable Robert H. Cleland, United States District Judge for
the Eastern District of Michigan, sitting by designation.



                                  1
No. 01-4285                      Seaway Food Town, Inc. v.              3    4     Seaway Food Town, Inc. v.                 No. 01-4285
                                   Medical Mutual of Ohio                          Medical Mutual of Ohio

                   STATEMENT OF FACTS                                        resulting from the provider discounts, and that BC/BS did not
                                                                             owe any fiduciary duties to Seaway during negotiations for
                        Procedural History                                   the contract terms. Seaway, on the other hand, argued that the
                                                                             contract terms were ambiguous, and that, because BC/BS was
   On September 28, 1998, Seaway filed a complaint against                   administering Seaway’s plan, BC/BS owed fiduciary duties
Medical Mutual alleging that BC/BS breached its fiduciary                    to Seaway throughout their contractual relationship. The
duties with respect to its administration of Seaway’s                        district court conducted a hearing on the parties’ motions for
employee health benefit plan (“plan”) in violation of ERISA.                 summary judgment on September 20, 2001.
Specifically, Seaway alleges that BC/BS breached its
fiduciary duties to Seaway by failing to (1) use accurate data                 By order issued on October 10, 2001, the district court
to estimate the amount of discounts (hereafter referred to as                granted Medical Mutual’s motion for summary judgment and
“provider discounts”1) BC/BS expected to receive from                        denied Seaway’s motion for summary judgment. The district
healthcare providers, (2) disclose the true nature and extent of             court held that BC/BS did not act as an ERISA fiduciary
the provider discounts it actually received, and (3) pass along              during negotiations with Seaway and that unambiguous
to Seaway the provider discounts it actually received.                       contract terms authorized BC/BS to retain any funds resulting
Seaway also alleged Ohio common law claims of breach of                      from the provider discounts for its sole benefit. The district
contract and conversion. Seaway sought various relief,                       court therefore concluded that Seaway was not entitled to a
including restitution in the amount of provider discounts                    pass-through of actual provider discounts. The district court
retained by BC/BS.                                                           also held that Seaway’s state law claims were preempted by
                                                                             ERISA. On November 7, 2001, Seaway filed a notice of
  Medical Mutual filed an answer to the complaint on                         appeal, contesting the ruling that BC/BS did not act as an
November 20, 1998. In its answer, Medical Mutual                             ERISA fiduciary.
counterclaimed for contribution and indemnification of any
judgment rendered against it and for attorney’s fees and costs                                    Substantive History
incurred in defending the suit. Seaway filed an answer to the
counterclaims on December 1, 1998.                                               A. The Parties
  Both Medical Mutual and Seaway filed motions for                             Seaway is an Ohio corporation with its principal place of
summary judgment on June 1, 2001 and June 26, 2001,                          business in Maumee, Ohio. From 1990 to 1995, Seaway
respectively. Medical Mutual argued that unambiguous terms                   employed approximately 4000 employees and operated
contained in a series of contracts governing BC/BS and                       approximately sixty supermarkets throughout Michigan and
Seaway’s relationship authorized BC/BS to retain any funds                   Ohio.
                                                                               Medical Mutual is an Ohio mutual organization with its
                                                                             principal place of business in Cleveland, Ohio. Medical
    1
      W hen providers join the health benefit plan, they agree to accept     Mutual is the successor to BC/BS. From 1991 to 1998,
discounted fees in lieu of payment in full. See, e.g., HC A H ealth Servs.   BC/BS served as an administrator of Seaway’s plan pursuant
of Georgia, Inc. v. Em ployers Health Ins. Co., 240 F.3d 982 , 987 (11th     to a series of contracts.
Cir. 2001).
No. 01-4285                     Seaway Food Town, Inc. v.               5   6        Seaway Food Town, Inc. v.                           No. 01-4285
                                  Medical Mutual of Ohio                             Medical Mutual of Ohio

  B. Seaway’s Selection of BC/BS                                            indicated that BC/BS would estimate the provider discounts
                                                                            it expected to receive in 1991, and would then pass along the
  In 1990, Seaway began searching for a new claims                          estimated provider discounts to Seaway through lower
administrator for its employee health benefit plan for the                  administrative fees and stop-loss premiums.3
coming year. To assist in the search, Seaway employed
Findley, Davies and Company (“FDC”), a health benefits                        In October of 1990, Seaway selected BC/BS’s traditional
consulting firm headquartered in Toledo, Ohio. FDC, on                      indemnity plan proposal, and selected BC/BS to administer its
behalf of Seaway, solicited health maintenance organization                 plan in 1991. BC/BS began administering Seaway’s plan in
plan proposals and traditional indemnity plan proposals from                January of 1991 pursuant to the terms of two memoranda
six companies, including BC/BS. After receiving the                         dated October 4, 1990 and November 5, 1990, respectively.
proposals, FDC prepared a written report in which it analyzed
the financial aspects of each company’s proposal and                            C. The 1991 Group Contract
recommended that Seaway give further consideration to the
companies that submitted the most competitive proposals.                      BC/BS and Seaway executed a “Group Contract” on April
FDC presented the report to Seaway at a meeting on August                   16, 1991, which was effective from January 1, 1991 to
29, 1990. During the meeting, Seaway instructed FDC to                      December 31, 1991 (“the 1991 Group Contract”). Under the
solicit proposals from two additional companies that Seaway                 1991 Group Contract, BC/BS’s duties included paying
specifically identified. Shortly thereafter, FDC solicited and              providers for claims made by Seaway’s employees, and
received proposals from the two companies. Several                          billing Seaway on a weekly basis for the claims paid,
meetings between FDC and Seaway followed.                                   administrative fees, and stop-loss premiums. Section 9.5 of
                                                                            the 1991 Group Contract provides:
  FDC began negotiations, on behalf of Seaway, with the
companies that submitted the most competitive proposals,                        Some of the Plan’s [4] contracts with Providers [5] allow
including BC/BS. According to the deposition testimony of                       discounts, allowances, incentives, adjustments and
Waldo E. Yeager, Seaway’s Senior Vice President of Finance,                     settlements. These amounts are for the sole benefit of the
one of the issues discussed during negotiations between                         Plan and the Plan will retain any payments resulting
BC/BS and Seaway was whether BC/BS would pass along
provider discounts to Seaway. Yeager testified that from
discussions with BC/BS, it was Seaway’s understanding that                       3
                                                                                  The phrase “stop-loss premiums” refers to prem iums for stop-loss
BC/BS would pass along provider discounts to Seaway.                        insurance coverage–insurance coverage that caps the amount of charges
According to the deposition testimony of Floyd C. Melby,2 a                 for which Seaway could be held liable per contract period.
Seaway employee who assisted FDC in soliciting proposals                         4
and who reported to Yeager, BC/BS’s proposal indicated the                      The 199 1 G roup Contract refers to BC/BS as the “P lan” and to
method by which BC/BS would pass along the provider                         Seaway as the “Group ” or the “Employer.” (J.A. at 638 .)
discounts to Seaway. Yeager testified that BC/BS’s proposal                      5
                                                                                  Section 1.13 of the 1991 Group Contract defines the term
                                                                            “Provider” as “a ho spital, facility other provider, physician or professional
   2
                                                                            other provider as stated in the Certificate, Schedule of Benefits, Riders
       At the time of his deposition, Melby was an employee of BC/BS.       and Indo rsements.” (J.A. at 639.)
No. 01-4285                            Seaway Food Town, Inc. v.          7    8       Seaway Food Town, Inc. v.                        No. 01-4285
                                         Medical Mutual of Ohio                        Medical Mutual of Ohio

  therefrom. All claims submitted to the Plan will have                           Addenda I and II were attached to the 1991 Group Contract,
  copayment and deductible amounts calculated according                        and were both incorporated by reference into the 1991 Group
  to the Provider’s charges for Covered Services [6]                           Contract. Addendum II provided that “[a]ll of the terms,
  without regard to the Plan’s discounts, allowances or                        conditions and provisions of the [1991 Group] Contract apply
  incentives.                                                                  to this Addendum unless specifically modified herein.” (J.A.
                                                                               at 650.) In addition, Addendum II detailed the reimbursement
(J.A. at 646.) The contract fell within the definition of an                   arrangement between BC/BS and Seaway, which is referred
ERISA-covered plan, as it “was established . . . for the                       to as the “billed charges”8 arrangement. Under this
purpose of providing for its participants or their beneficiaries,              arrangement, BC/BS charged Seaway the amount that
through the purchase of insurance or otherwise . . . medical,                  providers actually billed for rendering covered services to
surgical, or hospital care or benefits, or benefits in the event               Seaway’s employees. Addendum II also detailed the amount
of sickness, accident, disability, [or] death . . . .”7                        of administrative fees and stop-loss premiums for which
                                                                               Seaway was responsible. Neither the 1991 Group Contract
                                                                               nor Addendum II reflected Seaway’s understanding that
                                                                               BC/BS would pass along estimated provider discounts to
                                                                               Seaway through lower administrative fees and stop-loss
    6                                                                          premiums.
      Section 1.7 of the 1991 Group Contract defines the term “Covered
Service” as “a Provider’s service, supply, product or accommodation
described in a Co vered Person’s Certificate or Schedule of Benefits, Rider       At his deposition, Yeager testified that the 1991 Group
or Ind orsem ent for which the Plan pays.” (J.A. at 6 38.)                     Contract “appeared to be . . . a boilerplate type of agreement
                                                                               . . . which we . . . understood to be representing all of the
    7                                                                          details that had been discussed . . . .” (J.A. at 528.) Yeager
        In full, the ap plicab le pro vision states:
                                                                               testified that he could not recall whether FDC reviewed the
    The terms “employee welfare benefit plan” and “welfare plan” mean          1991 Group Contract, but he was “pretty sure” that FDC did
    any plan, fund, or program which was heretofore or is hereafter            so. (J.A. at 528.) Yeager also testified that he could not
    established or maintained by an employer or by an employee
    organization, or by both, to the extent that such plan, fund, or           recall whether he had discussed the terms of the 1991 Group
    program was established or is maintained for the purpose of                Contract with FDC before he signed it on behalf of Seaway.
    providing for its participants or their beneficiaries, through the
    purchase of insurance o r otherwise, (A) med ical, surgical, or hospital
    care or benefits, or benefits in the event of sick ness, acciden t,
    disab ility, death or une mplo yment, or vacation ben efits,
    app renticeship or other training program s, or day care ce nters,
    scholarship funds, or prepaid legal services, o r (B) any benefit
    described in section 186(c) of this title (other than pensions on
    retirement or death, and insurance to provide such pensions).
                                                                                   8
29 U.S.C. § 1002(1). An “employee welfare benefit plan” may also be                  Section 1(a) of Addendum II defines the term “Billed Charges” as
deemed an “employee benefit plan” or a “plan.” Id. § 1002(3). T he term        “a Provider’s published charges for Covered Services, before any am ounts
“plan” is used in the provision defining a “fiduc iary,” as discussed infra.   for Provid er discounts, inc entives, allowances or settleme nts or for
Id. § 1002(21 )(A).                                                            ded uctibles or co paym ents.” (J.A. at 650.)
No. 01-4285                Seaway Food Town, Inc. v.      9    10   Seaway Food Town, Inc. v.                  No. 01-4285
                             Medical Mutual of Ohio                 Medical Mutual of Ohio

  D. The 1992 and 1993 Renewals                                  BC/BS and Seaway executed a renewal, which was
                                                               effective from January 1, 1993 to December 31, 1993 (“the
   On behalf of Seaway, in mid-1991, FDC began                 1993 renewal”). Yeager signed the 1993 renewal on behalf
negotiations, with BC/BS for a renewal of the 1991 Group       of Seaway. The 1993 renewal was contained in a new
Contract for the following year. An issue frequently           Addendum II, which was incorporated by reference into the
discussed during the negotiations was whether BC/BS would      1991 Group Contract. The terms of the 1993 renewal are
pass along a higher percentage of the estimated provider       identical, in all relevant respects, to the terms of the 1992
discounts to Seaway than the percentage BC/BS typically        renewal, except the 1993 renewal changed the guaranteed
offered customers. In a letter dated November 1, 1991,         discount against billed charges from 13.56% to 7.74%.
BC/BS informed Seaway that estimated provider discounts
were being passed along to Seaway through lower                  E. The 1994 Group Contract and Subsequent
administrative fees, lower stop-loss premiums, and a                Contracts
guaranteed discount against billed charges. BC/BS also
informed Seaway that BC/BS was “at risk financially” due to       In 1993, FDC began negotiations with BC/BS regarding
its estimation of the provider discounts. (J.A. at 668.)       contract terms for the coming year. In a letter dated
                                                               September 3, 1993, FDC requested that BC/BS assure that it
  BC/BS and Seaway executed a renewal, which was               would pass along 100% of the estimated provider discounts
effective from January 1, 1992 to December 31, 1992 (“the      to Seaway in the same manner as the past renewals. FDC also
1992 renewal”). Yeager signed the 1992 renewal on behalf       requested that BC/BS explain the distinction between the
of Seaway. The 1992 renewal was contained in a new             existing billed charges arrangements, under which Seaway
Addendum II, which was incorporated by reference into the      received a guaranteed discount against billed charges, and a
1991 Group Contract. The 1992 renewal provided that “[a]ll     “paid claims” arrangement, under which Seaway would
of the terms, conditions and provisions of the [1991 Group]    receive a pass-through of the actual provider discounts.
Contract apply to this Addendum unless specifically modified   BC/BS complied with FDC’s requests in a letter dated
herein.” (J.A. at 673.) The 1992 renewal indicated that        September 13, 1993.
BC/BS and Seaway had a billed charges arrangement. The
1992 renewal also indicated that BC/BS passed along the          Instead of executing a renewal, on August 8, 1994, BC/BS
estimated provider discounts to Seaway through lower           and Seaway executed a “Group Contract” which was effective
administrative fees, lower stop-loss premiums, and a           from January 1, 1994 to December 31, 1994 (“the 1994
guaranteed discount of 13.56% against billed charges.          Group Contract”). Section 9.5 of the 1994 Group Contract
                                                               provides:
  On behalf of Seaway, in mid-1992, FDC began negotiations
with BC/BS for a renewal of the 1991 Group Contract for the      The Group is obligated to pay the premiums specified by
following year. During the negotiations, BC/BS represented       this Contract when due, and [BC/BS] shall have no right
that it would continue to pass along 100% of the estimated       to any additional amounts from the Group. [BC/BS] is
provider discounts to Seaway.                                    obligated to pay for Covered Services pursuant to this
                                                                 Contract, and the Group shall have no right to any
                                                                 additional amounts from [BC/BS].
No. 01-4285                 Seaway Food Town, Inc. v.      11   12   Seaway Food Town, Inc. v.                   No. 01-4285
                              Medical Mutual of Ohio                 Medical Mutual of Ohio

  Some of [BC/BS’s] contracts with Providers allow                                     DISCUSSION
  discounts, allowances, incentives, adjustments and
  settlements. These amounts are for the sole benefit of        A. Standard of Review
  [BC/BS], and [BC/BS] will retain any payments resulting
  therefrom. All institutional claims submitted to [BC/BS]        This Court reviews a district court’s grant or denial of
  will have co-payment and deductible amounts, when             summary judgment de novo. Best v. Cyrus, 310 F.3d 932,
  applicable, calculated according to the Provider’s charges    934 (6th Cir. 2002). Summary judgment is appropriate “if the
  for Covered Services without regard to [BC/BS’s]              pleadings, depositions, answers to interrogatories, and
  discounts, allowances or incentives.                          admissions on file, together with the affidavits, if any, show
                                                                that there is no genuine issue as to any material fact and that
(J.A. at 753.)                                                  the moving party is entitled to a judgment as a matter of law.”
                                                                Fed. R. Civ. P. 56(c). In reviewing the district court’s grant
  Addenda I, II, and III were attached to the 1994 Group        or denial of summary judgment, this Court “draw[s] all
Contract. Addendum III indicated that BC/BS passed along        justifiable inferences in the light most favorable to the
100% of the estimated provider discounts to Seaway through      nonmoving party.” Best, 310 F.3d at 934 (citing Matsushita
lower administrative fees, lower stop-loss premiums, and a      Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587
guaranteed discount of 7.98% against billed charges.            (1986)).

  In 1995, BC/BS and Seaway switched from the billed              B. ERISA Fiduciary Status
charges arrangement to the paid claims arrangement. The
contract years from 1995 to 1998 are not at issue.                Under ERISA:

  F. The Audit                                                    [A] person is a fiduciary with respect to a plan to the
                                                                  extent (i) he exercises any discretionary authority or
  In 2000, Seaway employed Schmidt, Long & Associates,            discretionary control respecting management of such
Inc. (“Schmidt”) to perform an audit of BC/BS’s records.          plan or exercises any authority or control respecting
Schmidt prepared a report in which it compared the provider       management or disposition of its assets, (ii) he renders
discounts BC/BS actually received against the provider            investment advice for a fee or other compensation, direct
discounts BC/BS passed along to Seaway. Schmidt                   or indirect, with respect to any moneys or other property
concluded that Seaway was owed $714,879.25 for provider           of such plan, or has any authority or responsibility to do
discounts retained by BC/BS from 1991 to 1994, plus interest.     so, or (iii) he has any discretionary authority or
Seaway seeks restitution in that amount on appeal.                discretionary responsibility in the administration of such
                                                                  plan.

                                                                29 U.S.C. § 1002(21)(A). “ERISA also defines a ‘person’ to
                                                                include a corporation.” Hamilton v. Carell, 243 F.3d 992,
                                                                998 (6th Cir. 2001) (citing 29 U.S.C. § 1002(9)). “The
                                                                Supreme Court has recognized that ERISA ‘defines
No. 01-4285                  Seaway Food Town, Inc. v.        13    14   Seaway Food Town, Inc. v.                    No. 01-4285
                               Medical Mutual of Ohio                    Medical Mutual of Ohio

“fiduciary” not in terms of formal trusteeship, but in                was not yet in existence . . . . During negotiations,
functional terms of control and authority over the plan . . . .’”     Seaway was free to seek and chose a different
Id. (quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 262             administrator with a better plan and lower costs.
(1993)). This Court has stated:                                       ....
                                                                      ERISA regulates the management and administration of
  [W]e must examine the conduct at issue to determine                 employee benefit plans. Here, Seaway asks this Court to
  whether it constitutes “management” or “administration”             regulate the establishment of a plan. ERISA is not
  of the plan, giving rise to fiduciary concerns, or merely           intended to regulate such conduct. To reiterate, ERISA
  a business decision that has an effect on an ERISA plan             is not involved in regulating conduct affecting the
  not subject to fiduciary standards.                                 establishment of a plan or with its terms. Simply put,
                                                                      ERISA’s concern is with the elements of a plan and its
Hunter v. Caliber Sys., Inc., 220 F.3d 702, 718 (6th Cir.             administration after it has been established.
2000) (internal quotation marks and alterations omitted)
(citing Sengpiel v. B.F. Goodrich Co., 156 F.3d 660, 666 (6th       (J.A. at 222) (emphasis in original) (internal quotation marks
Cir. 1998)). Thus,                                                  and citations omitted). The district court also held that
                                                                    Section 9.5 of the 1991 and 1994 Group Contracts authorized
  [i]n every case charging breach of ERISA fiduciary duty           BC/BS to retain the actual provider discounts for its sole
  . . . the threshold question is not whether the actions of        benefit. The district court reasoned:
  some person employed to provide services under a plan
  adversely affected a plan beneficiary’s interest, but               The administrative services contract[s] clearly state[] that
  whether that person was acting as a fiduciary (that is, was         provider discounts are for the “sole benefit” of [BC/BS].
  performing a fiduciary function) when taking the action             Seaway cannot point to any language in the contract[s]
  subject to complaint.                                               that would provide Seaway with a right to the actual
                                                                      provider discounts during 1991 through 1994.
Pegram v. Herdrich, 530 U.S. 211, 226 (2000); see also                According to the terms of the administrative services
Mich. Affiliated Healthcare Sys., Inc. v. CC Sys. Corp., 139          contract[s], Seaway had no right to a pass through of
F.3d 546, 549 (6th Cir. 1998) (recognizing that the definition        actual provider discounts.
of an ERISA fiduciary not only includes persons specifically          ....
named as fiduciaries by the plan, but also any person who             On its face, § 9.5 is clear and unambiguous.
exercises discretionary control or authority over a plan’s            Nonetheless, Seaway asks that I look past the face of the
management, administration, or assets).                               administrative services contract[s] to extrinsic evidence.
                                                                      Seaway contends that there is a “latent” ambiguity in
  In its October 10, 2001 order, the district court held that         § 9.5 . . . . I decline, however, to have recourse to
BC/BS did not act as an ERISA fiduciary when negotiating              extrinsic evidence to create ambiguity in § 9.5.
contract terms with Seaway. The district court reasoned:
                                                                    (J.A. at 224-25.) In its order, the district court only
  At that point[,] [BC/BS] was in no position to exercise           considered whether BC/BS acted as a fiduciary when
  discretion or authority or administer the plan. The plan
No. 01-4285                 Seaway Food Town, Inc. v.       15    16    Seaway Food Town, Inc. v.                    No. 01-4285
                              Medical Mutual of Ohio                    Medical Mutual of Ohio

negotiating contract terms with Seaway, and when complying        excess premiums were to be refunded to the plaintiffs. The
with Section 9.5 of the 1991 and 1994 Group Contracts.            Seventh Circuit held that BC/BS was not an ERISA fiduciary
                                                                  because BC/BS did not exercise discretionary authority with
   On appeal, Seaway argues that the district court erred in      respect to the setting of the premium rates. Id. at 1132. The
failing to consider whether BC/BS acted as an ERISA               Seventh Circuit reasoned that the parties had entered into an
fiduciary when exercising control over Seaway’s plan assets.      “arm’s length bargain presumably governed by competition
Medical Mutual argues that Seaway waived for appellate            in the marketplace” that specified the premium rates. Id.
review the argument that BC/BS acted as fiduciary when
exercising control over Seaway’s plan assets because Seaway         In Ed Miniat, Inc. v. Globe Life Ins. Group, Inc., 805 F.2d
did not raise the argument in the district court. Regardless of   732, 737 (7th Cir. 1986), the Seventh Circuit clarified its
whether Seaway raised the argument in the district court, we      holding in Schulist as follows:
hold that the argument is without merit.
                                                                    Schulist stands for the proposition that if a specific
   Seaway argues that BC/BS exercised continuing control            [contract] term (not a grant of power to change terms) is
over Seaway’s plan assets inasmuch as Seaway paid funds to          bargained for at arm’s length, adherence to that term is
BC/BS on a weekly basis, BC/BS in turn paid a portion of the        not a breach of fiduciary duty. No discretion is exercised
funds to providers for payment of billed charges incurred by        when an insurer merely adheres to a specific contract
Seaway’s employees, and BC/BS retained the remaining                term. When a contract, however, grants an insurer
portion of the funds for its sole benefit. Seaway claims that       discretionary authority, even though the contract itself is
the remaining portion of the funds arose from the provider          the product of an arm’s length bargain, the insurer may
discounts received by BC/BS. Seaway further argues that             be a fiduciary.
BC/BS’s control over funds in the form of plan assets gave
rise to ERISA fiduciary status.                                   The plaintiffs in Ed Miniat were participating employers in a
                                                                  retirement life reserve insurance plan issued by the
  Medical Mutual argues that because Section 9.5 of the 1991      defendants. The plaintiffs argued that the defendants
and 1994 Group Contracts authorized BC/BS to retain any           breached their fiduciary duties under ERISA by retaining
funds resulting from the provider discounts for its sole          more than one-half of the premiums paid by the plaintiffs,
benefit, such funds belonged to BC/BS and not to the plan.        without having issued any insurance under the plan. The
Medical Mutual therefore argues that BC/BS’s control over         Seventh Circuit held that the plaintiffs alleged a claim that the
such funds did not give rise to ERISA fiduciary status. We        defendants were ERISA fiduciaries. Ed Miniat, 805 F.2d at
agree.                                                            738. The Seventh Circuit reasoned that the defendants’
                                                                  power to amend or alter the terms of the plan constituted the
  In Schulist v. Blue Cross & Blue Shield, 717 F.2d 1127 (7th     requisite discretionary authority over plan assets. Id.
Cir. 1983), the plaintiffs were trustees of employee health and
welfare benefit plans issued by BC/BS. The plaintiffs argued        We agree with the Seventh Circuit’s reasoning that where
that BC/BS breached its fiduciary duties under ERISA by           parties enter into a contract term at arm’s length and where
retaining excess premiums paid by the plaintiffs. The series      the term confers on one party the unilateral right to retain
of contracts between the parties did not provide that the         funds as compensation for services rendered with respect to
No. 01-4285                  Seaway Food Town, Inc. v.       17
                               Medical Mutual of Ohio

an ERISA plan, that party’s adherence to the term does not
give rise to ERISA fiduciary status unless the term authorizes
the party to exercise discretion with respect to that right. See
Ed Miniat, 805 F.2d at 737; Schulist, 717 F.2d at 1132; see
also F.H. Krear & Co. v. Nineteen Named Trs., 810 F.2d
1250, 1259 (2nd Cir. 1987) (stating that “after a person has
entered into an agreement with an ERISA-covered plan, the
agreement may give it such control over factors that
determine the actual amount of its compensation that the
person thereby becomes an ERISA fiduciary with respect to
that compensation”).

   Contrary to Seaway’s argument, we find that Section 9.5 of
the 1991 and 1994 Group Contracts does not authorize
BC/BS to exercise discretion with respect to any funds
resulting from the provider discounts. Section 9.5 specifically
authorizes BC/BS to retain such funds for its “sole benefit.”
The “sole benefit” language precludes BC/BS from exercising
discretion with respect to such funds. We therefore hold that
BC/BS’s adherence to Section 9.5 did not give rise to ERISA
fiduciary status. See Ed Miniat, 805 F.2d at 737; Schulist,
717 F.2d at 1132.

                      CONCLUSION

  For the forgoing reasons, we AFFIRM the district court’s
order.
