August 20, 2022

Audit sought by New York State Nurses Association Benefit Fund held within the scope of the Supreme Court's ruling in Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc.

New York State Nurses Association Benefit Fund [Fund] sought an audit of the Nyack Hospital’s [Hospital] payroll and wage records. The Hospital objected, claiming that the Fund had the authority to inspect only the payroll records of employees the Hospital identified as members of the collective bargaining unit. The federal district court held that the Fund was entitled to the records of all persons the Hospital identified as registered nurses but not to the records of any other employees.

The Second Circuit Court of Appeals reversed in part and affirm in part.* To the extent the district court granted the Hospital’s cross-motion for summary judgment and denied the Fund’s motion for summary judgment, the Circuit Court reverse. To the extent the district court granted the Fund’s motion for summary judgment and denied the Hospital’s cross-motion for summary judgment, the Circuit Court of Appeals affirmed the lower court's ruling. 

The Circuit Court held that the audit sought by the Fund was authorized by the Trust Agreement. Further, the Circuit Court opined that the Hospital did not present evidence that the audit constituted a breach of the Fund’s fiduciary duty within the meaning of ERISA. 

Accordingly, the Circuit Court concluded that the audit was within the scope of the Fund trustees’ authority under the United States Supreme Court’s decision in Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559.

*Judge Carney dissented in part in a separate opinion. 

Click HERE to access the Second Circuit's decision.

 

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