Unreported / Non-Citable
Background
Synergy HR LLC, doing business as Zynergia HR, together with Zynergia Insurance Agency LLC and Zynergia Staffing, LLC, sued Next Level Administrators, LLC and Acrisure Claims Services, LLC in the Central District of California. Their June 16, 2026 complaint asserted third-party-beneficiary breach of contract, breach of the implied covenant, professional negligence and claims mishandling, breach of fiduciary duty, and tort of another. The defendants moved to dismiss under Rule 12(b)(6), and Judge Christina A. Snyder heard the motion on October 19, 2026.
The complaint described a large-deductible workers' compensation program administered for SUNZ Insurance Company. Synergy alleged a $500,000 per-accident deductible and responsibility for funding claim expenses and reserves through a Loss Fund. Next Level administered claims under a Claims Services Agreement with Sunz; a December 2024 addendum added ACS with the same rights and obligations. Synergy alleged excessive and duplicate medical-bill-review fees, payments on denied claims, inflated reserves, and other mishandling that increased its funding obligations and program costs.
The agreement required Next Level to adjust claims subject to Sunz's ultimate authority and to hold Claims Bank Account funds in trust for Sunz. It also stated that its provisions were solely for the contracting parties' benefit and that there were no third-party beneficiaries. Synergy nevertheless argued that its contributions economically funded the account and that insured-facing duties made it an intended beneficiary. These allegations framed the motion; the court did not decide whether the alleged mishandling actually occurred.
The Court’s Holding
The court granted dismissal of the contract claim under California's three-part Goonewardene test. Although the parties did not seriously dispute that Synergy could benefit from proper performance, the court found no motivating purpose to benefit insureds. The agreement was intended to help Sunz perform claims-adjusting, cost-containment, case-management, and administrative tasks. Provisions reserving ultimate authority to Sunz and requiring funds to be held for Sunz reinforced that conclusion. The court also held that allowing Synergy to sue was inconsistent with the contract's objectives and the parties' reasonable expectations, particularly given the express disclaimer and Sunz's separate action against Next Level in Florida.
The implied-covenant claim failed because Synergy was not a third-party beneficiary. The negligence claim separately failed for lack of a duty. Relying on Sanchez and the Biakanja policy considerations, the court emphasized the administrators' contractual relationship with and control by the insurer, the potential for conflicting loyalties, existing exposure to the insurer, and the limited additional deterrence from insured lawsuits. It rejected the argument that the large-deductible structure required a different result and found the alleged reputational and other non-economic injuries insufficient to justify departing from the no-duty line of authority.
The fiduciary-duty claim failed because the trust language ran to Sunz and the complaint did not plausibly allege that the administrators knowingly undertook to act primarily for Synergy's benefit or subordinate their interests to it. Allegations of exclusive operational control were contradicted by the agreement's reservation of authority to Sunz. Finally, tort of another was not an independent claim and could not supply damages without a viable underlying tort. The court dismissed all five claims but granted Synergy fourteen days to file a first amended complaint if appropriate, noting that amendment appeared futile as to certain claims.
Key Takeaways
- Economic exposure to a contractor's performance does not by itself make an insured an intended third-party beneficiary of the insurer's services contract.
- An express no-third-party-beneficiaries clause, insurer control, and the insurer's ability to enforce its own contract supported dismissal of the contract and implied-covenant claims.
- The court declined to create a negligence duty owed by third-party claims administrators to insureds merely because the insureds funded a large-deductible program.
- Trust language protecting the insurer's funds did not establish a fiduciary relationship between the administrators and the insureds.
- The tort-of-another theory could not survive after the underlying negligence and fiduciary-duty claims failed, and the dismissal was not a final judgment foreclosing amendment because the court allowed fourteen days to amend if appropriate.
Why It Matters
The decision applies California's third-party-beneficiary and adjuster-duty principles to an insured-funded, large-deductible workers' compensation arrangement. It distinguishes direct economic consequences from enforceable contractual rights and treats the written allocation of authority and benefits as central to both contract and tort analysis.
The ruling leaves Synergy an opportunity to amend but supplies no merits determination on the alleged billing and claims-handling misconduct. It also does not resolve Sunz's separate contract action against Next Level.