New York State Nurses Association Benefits Fund v. The Nyack Hospital

Summary

**Key Legal Topics:** ERISA; Multiemployer Benefit Fund Audit Authority; Fiduciary Duty; Trust Agreement Interpretation; Scope of Payroll Records; *Central States v. Central Transport* (472 U.S. 559). **Holdings:** The Second Circuit held that an ERISA multiemployer benefit fund was contractually authorized under its Trust Agreement to audit all payroll and wage records of a participating employer, not merely records of employees the employer identified as covered by the collective bargaining agreement. The employer failed to present evidence that the requested audit constituted a breach of the fund trustees' fiduciary duties of loyalty or prudence. The district court erred in limiting the audit to registered nurses only; the fund was entitled to the broader records to independently verify contribution accuracy and identify all potential plan participants. The court reversed in part and affirmed in part, remanding for entry of judgment consistent with the opinion and consideration of a confidentiality order.

Holdings

1. The Trust Agreement authorizes the Fund to audit the payroll and wage records of any Employer in connection with Employer Contributions, Employee Contributions, and/or reports. The language is broad and does not limit the audit to records of covered employees. The Trustees' good-faith interpretation is binding.
2. Nyack did not present evidence that the audit was an effort to expand plan coverage, acquire information for union goals, or was clearly wasteful. Therefore, the audit does not breach fiduciary duties.

Questions Presented

1. Whether the Trust Agreement authorizes the Fund to audit payroll records of all Nyack employees, not just registered nurses.
2. Whether the requested audit would violate the Fund's fiduciary duties under ERISA.

Disposition

reversed_and_remanded