Consolidated Freightways Corp. v. Aetna, Inc.

K. Morgan Enterprises, Inc., Trustee of the Trust of Certain Creditors of Consolidated Freightways Corp. and Certain Affiliates (“Trustee”) appeals from a decision of the district court affirming a determination by the bankruptcy court regarding certain claims of priority made by Aetna, Inc. Aetna claimed priority for “claims for contributions to an employee benefit plan.” 11 U.S.C. § 507 (a)(5). The bankruptcy court agreed with Aetna and accorded priority. We affirm in part, reverse in part, and remand.

BACKGROUND

Consolidated Freightways Corporation of Delaware and its Affiliates (collectively “CFC”) operated a trucking and long-haul freight transportation business. CFC maintained self-funded medical health plans for non-union employees (“the Plans”), and Aetna administered the Plans. When employees or retired former employees or their providers had claims, they submitted the claims to Aetna, which reviewed them, determined if they should be allowed, and reimbursed the claimants when appropriate. Once Aetna issued the reimbursements, it submitted a request for payment to CFC, which, in principle, would then repay Aetna.

Alas, CFC fell on hard times and after ceasing business…