Harvey v. Machigonne Benefits Administrators
| Decision Date | 02 December 2000 |
| Docket Number | No. 00-CV-41-B.,00-CV-41-B. |
| Citation | 122 F.Supp.2d 179 |
| Parties | Linda HARVEY, Plaintiff, v. MACHIGONNE BENEFITS ADMINISTRATORS and Crowe Rope Industries Employee Benefits Plan, Defendants. |
| Court | U.S. District Court — District of Maine |
N. Laurence Willey, Jr., Marie E. Hansen, Ferris, Dearborn & Willey, P.A., Brewer, for Linda Harvey, plaintiffs.
David C. King, Brent A. Singer, Rudman & Winchell, Bangor, Lee H. Bals, Marcus, Grygiel & Clegg, P.A., Portland, for Machigonne Benefits Administrators, Crowe Rope Industries Employee Benefits Plan, defendants.
Before the Court are three motions for summary judgment filed by Plaintiff, Linda Harvey, Defendant, Crowe Rope Industries Employee Benefits Plan ("the Plan"), and Defendant, Machigonne Benefits Administrators ("Machigonne"), respectively. (Docket # 8, # 10, # 11.) Also, the Court has before it a Motion in Limine filed by Defendant Machigonne to exclude the testimony of Plaintiff's expert witness (Docket # 13). Plaintiff claims that Defendants have violated the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001—1461, and certain Maine insurance statutes, 24-A M.R.S.A. §§ 2436-A, 2729-A, 2836. Defendant Machigonne has filed a counterclaim seeking declaratory relief pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. The Court considers the four motions herein, but chooses not to consider Defendant Machigonne's counterclaim at this time.1 For the reasons discussed below, Plaintiff's Motion for Summary Judgment is DENIED, and Defendant the Plan's Motion for Summary Judgment is GRANTED. Defendant Machigonne's Motion for Summary Judgment is GRANTED to the extent that it challenges Plaintiff's claims. Consequently, Defendant Machigonne's Motion in Limine is rendered MOOT.
A federal court grants summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court must view the facts "in the light most amicable to the party contesting summary judgment, indulging all reasonable inferences in that party's favor." Pagano v. Frank, 983 F.2d 343, 347 (1st Cir.1993). In this case, the relevant facts are not in dispute. Thus, the Court lays out below the facts of the case as described by the parties.
On March 14, 1998, Plaintiff, Linda Harvey, was a passenger in an automobile owned and driven by John Curtis, her fiancé at the time. As Harvey and Curtis proceeded southward on North Searsport Road in Frankfort, Maine, another car driven by Sonia Mitchell approached from the opposite direction. Apparently exceeding the speed limit, Mitchell spun out of control, crossed the median, and struck the vehicle occupied by Harvey and Curtis.
The crash caused considerable injuries to Harvey, for which she incurred $23,377.05 in medical bills. Harvey was out of work for a total of nine weeks. Her base weekly salary was $346.50, so her total lost wages were $3,118.50. Her injuries have caused her permanent impairment and will require her to take medications for the rest of her life.
Apparently, Mitchell was at fault for the accident. Mitchell, however, was without car insurance at the time of the collision. Curtis' automobile was insured under a policy in his name with the Dairyland Insurance Company ("Dairyland"). The Dairyland policy provided for $20,000 in uninsured motorist coverage. Following settlement, Dairyland tendered $20,000 to Harvey.
Also, Harvey and Curtis had purchased a joint insurance policy on Harvey's vehicle (separate from Curtis' car) with Concord General Insurance Company ("Concord") in the amount of $100,000 for uninsured motorist coverage and $5,000 for medical coverage. Concord settled with Harvey in the amount of $36,000, $24,000 of which is being held in escrow per agreement of the parties.
At the time of the incident, Harvey was an employee of Crowe Rope Industries ("Crowe Rope"), a manufacturer of bulk rope, cordage and twine.2 Crowe Rope established and maintained Defendant Crowe Rope Industries Employee Benefit Plan, which Defendants characterize as a self-funded employee welfare benefit plan pursuant to section 1002(1) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001—1461. The Plan provides medical benefits to Crowe Rope's employees. Defendant Machigonne Benefits Administrators is a private company that administers the Plan as a service to Crowe Rope. As an employee of Crowe Rope, Harvey was a participant in the Plan. She paid contributions to the Plan, which she characterizes as a health insurance plan.
The Plan, Crowe Rope and Machigonne do not issue insurance policies, nor do they have licenses to do so. The Plan, however, is backed by a stop-loss insurance policy provided by LDG/State Mutual. Stop-loss insurance reimburses a plan in the event that the costs of providing medical benefits exceed the plan's budget. An insurance agency, Healey & Associates, helped Crowe Rope design the Plan and acted as a broker for the purchase of the stop-loss policy. The Plan has not purchased health insurance to cover its participants.
To date, neither the Plan nor Machigonne have given any funds to Harvey in regard to the injuries she sustained on March 14, 1998. She has used the disbursements from Dairyland and Concord to pay for some of her medical bills. Currently, Harvey is unable to pay some of her outstanding bills, and her credit rating suffers. Defendants contend that they will cover Harvey's medical expenses, but only after she signs a subrogation agreement, according to language in the Plan's operating document (the "Plan Document"). The Plan Document states in pertinent part:
In the event of an accident or illness which may give rise to a right of recovery by a covered person from a third party, the right to receive benefits under this Plan shall be conditioned upon the covered person, or his/her personal representatives delivering to the Plan a signed agreement to repay amounts recovered from a third party.
(Plan Document at VII-1.)3 Based on this language, Defendants have refused to pay for any of Harvey's medical expenses until she signs a subrogation agreement. Harvey, however, has refused to sign the subrogation agreement because she argues that such a demand is unfair and violative of Maine's insurance laws.
In her Complaint, Harvey alleges that the Plan and Machigonne have violated ERISA, 29 U.S.C. §§ 1001-1461 (Count I) and portions of Maine's insurance code, 24-A M.R.S.A. §§ 2729-A, 2836 (Count II), and 24-A M.R.S.A. § 2436-A (Count III). Harvey requests that the Court order Defendants to pay her medical bills and decree that Defendants are not entitled to repayment from the funds that Harvey has received from Concord and Dairyland. In Count III, Harvey makes the additional demand that Defendants pay compensatory damages for emotional distress plus punitive damages. Also, Harvey asks for attorney fees, interest and costs.
With its answer, Machigonne filed a counterclaim against Harvey, asking the Court to issue a declaratory judgment decreeing that Harvey is not entitled to any payments from either Defendant until she signs the disputed subrogation agreement, and that neither Defendant is subject to regulation as an insurer under 24-A M.R.S.A. § 2436-A with respect to matters relating to the administration of the Plan. Machigonne also asks for attorney fees and costs. Soon thereafter, all of the parties moved for summary judgment as to Plaintiff's claims.
Plaintiff asserts that Defendants' refusal to pay her medical expenses violates ERISA, 29 U.S.C. §§ 1001-1461. ERISA comprehensively regulates, among other things, employee welfare benefit plans that provide medical, surgical, or hospital care, or benefits in the event of sickness, accident, disability or death. See 29 U.S.C. § 1002(1); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). Designed to provide employers throughout the United States with consistency in how they manage their benefits plans, ERISA includes a provision broadly preempting state law. See 29 U.S.C. § 1144(a) (); Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987) (). At the same time, ERISA specifies that "nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities." 29 U.S.C. § 1144(b)(2)(A). Thus, federal law governs employer benefits plans, while state law regulates insurance. See, e.g., FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990).
Citing section 1132 of ERISA, Plaintiff maintains that Defendants are obligated to pay her medical bills. The relevant statutory provision states
A civil action may be brought —
(1) by a participant or beneficiary —
(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;
29 U.S.C. § 1132(a). Defendants have refused to pay Plaintiff's medical expenses. Defendants argue that they are entitled to refuse payment because the terms of the Plan state that "the right to receive benefits under this Plan shall be conditioned upon the covered person, or his/her personal representatives delivering to the Plan a signed agreement to repay amounts...
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