Blue Cross & Blue Shield of Alabama v. Sanders

• Decision Date: 13 April 1998
• Docket Number: No. 97-6178,97-6178
• Citation: 138 F.3d 1347
• Parties: 11 Fla. L. Weekly Fed. C 1208 BLUE CROSS & BLUE SHIELD OF ALABAMA, Plaintiff-Appellee, v. Doyle G. SANDERS and Tina M. Sanders, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1347

138 F.3d 1347

11 Fla. L. Weekly Fed. C 1208

BLUE CROSS & BLUE SHIELD OF ALABAMA, Plaintiff-Appellee, v. Doyle G. SANDERS and Tina M. Sanders, Defendants-Appellants.

No. 97-6178.

United States Court of Appeals, Eleventh Circuit.

April 13, 1998.

Jimmy E. Alexander, Athens, AL, for Defendants-Appellants.

Kimberly R. West, Birmingham, AL, for Plaintiff-Appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before TJOFLAT and HULL, Circuit Judges, and KRAVITCH, Senior Circuit Judge.

KRAVITCH, Senior Circuit Judge:

This case, brought under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461, presents questions of subject matter jurisdiction, federal preemption, and statute of limitations.

Blue Cross and Blue Shield of Alabama ("Blue Cross") sued Doyle G. Sanders and Tina M. Sanders ("the Sanderses") under ERISA, 29 U.S.C. § 1132(a)(3)(B). The district court denied summary judgment to the Sanderses and granted summary judgment to Blue Cross. See Blue Cross & Blue Shield of Ala. v. Sanders, 974 F.Supp. 1416 (N.D.Ala.1997). We affirm.

I.

From June 1990 to May 1992, the Sanderses were participants in a health benefits plan ("the Plan") offered through Mr. Sanders's employer, the Nichols Research Corporation ("NRC"). The Plan, an "employee welfare benefit fund" under 29 U.S.C. § 1002(1), was self-funded by NRC, which paid the cost of all claims approved by Blue Cross, the "Claims Administrator" under the terms of the Plan. See Plan at 1, § I, p 2.

The version of the Plan at issue here was executed on August 23, 1991, with a retroactive effective date of January 1, 1991. The "Subrogation" provision of the Plan stated in part:

If the Claims Administrator pays or provides any benefits for a Member under this Plan, it is subrogated to all rights of recovery which that Member has in contract, tort or otherwise against any person or organization for the amount of benefits paid or provided. That means that the Claims Administrator may use the Member's right to recover money from that other person or organization.

Separate from and in addition to the Claims Administrator's right of subrogation, if an Employee or a member of his family recovers money from the other person or organization for any injury or condition for which benefits were provided by the Claims Administrator, the Member agrees to reimburse the Claims Administrator from the recovered money that amount of benefits the Claims Administrator has paid or provided.... The right to reimbursement of the Claims Administrator comes first even if the Member is not paid for all of his claim for damages ... or if the payment he receives is for, or is described as for, his damages (such as personal injuries) for other than health care expenses....

Plan at 38, § XI--Subrogation, pp 1-2 (emphasis in original).

In March 1991, Mrs. Sanders was injured in an automobile accident, which resulted in various medical expenses. Blue Cross authorized the Plan to pay medical providers a total of $12,678.69 for these expenses. In November 1991, the Sanderses filed suit in Alabama state court against both the owner and the driver of the vehicle. The suit did not include any claim for medical expenses. The Sanderses won a default judgment, which was satisfied by a payment of $200,000 in October 1992. They did not notify Blue Cross about the judgment, but Blue Cross, upon learning of the judgment, requested that they reimburse the Plan in the amount of $12,678.89. They refused.

In April 1996, Blue Cross, on behalf of the Plan, sued the Sanderses in federal district court under 29 U.S.C. § 1132(a)(3)(B). Section 1132(a)(3) states in part:

A civil action may be brought ... by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.

In its complaint, Blue Cross requested that the court: (1) pursuant to 29 U.S.C. § 1132(a)(3)(B)(i), issue a declaratory judgment interpreting Section XI of the Plan to require, inter alia, that the Sanderses reimburse the Plan the amount of $12,678.89; and (2) pursuant to 29 U.S.C. § 1132(a)(3)(B)(ii), enforce Section XI of the Plan and obtain reimbursement from the Sanderses in the amount of $12,678.89.

In their answer, the Sanderses admitted that Blue Cross was a fiduciary seeking equitable relief under 29 U.S.C. § 1132(a)(3). See Answer at 2, p 4 ("The Defendants admit the allegations of paragraphs 1 through 7 except this action is not prosecuted by Nichols Research Corporation's Employee's Health Benefit Plan, the real party in interest, as required by Rule 17, Federal Rules of Civil Procedure."); Complaint at 2, p 5 (stating that the court had subject matter jurisdiction under 29 U.S.C. § 1132(a)(3) because the action was brought by a fiduciary under an employee welfare benefit plan to enforce provisions of the plan); id. at p 3 (stating that Blue Cross was a Plan fiduciary with standing to bring an action under 29 U.S.C. § 1132(a)(3)); Answer at 2-3, pp 3(c), 6, 12 (stating that Blue Cross was seeking "equitable" relief ¹).

The parties filed cross-motions for summary judgment. The district court denied summary judgment to the Sanderses and granted summary judgment to Blue Cross. See Blue Cross & Blue Shield of Ala. v. Sanders, 974 F.Supp. 1416 (N.D.Ala.1997). In its order, the court determined that the Plan conflicted with Alabama's common law of subrogation, but it ruled that ERISA preempted this state law. Id. at 1419-22. The court concluded: "Under the plan's provisions on subrogation, the plan is entitled to recover the $12,678.69 that it has paid for Tina M. Sanders' injuries." Id. at 1422. ²

On appeal, the Sanderses argue that:

(1) the district court lacked subject matter jurisdiction over this case brought under 29 U.S.C. § 1132(a)(3)(B) because:

(a) Blue Cross was not a "fiduciary" under 29 U.S.C. § 1132(a)(3); and

(b) the relief sought was not "equitable" under 29 U.S.C. § 1132(a)(3)(B);

(2) Alabama law prohibited Blue Cross, on behalf of the Plan, from recovering money from the Sanderses' tort action;

(3) the instant action was barred by the statute of limitations; and

(4) the reimbursement provision of the Plan should not apply retroactively to medical benefits that were paid on Mrs. Sanders's behalf before the Plan was executed. ³

We analyze the Sanderses' arguments de novo, applying the same legal standards that bound the district court and viewing all facts and any reasonable inferences therefrom in the light most favorable to the non-moving party. See Hale v. Tallapoosa County, 50 F.3d 1579, 1581 (11th Cir.1995). Summary judgment is appropriate only when "there is no genuine issue of material fact and ... the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

II.

The Sanderses contend that the district court lacked subject matter jurisdiction over the instant suit brought under 29 U.S.C. § 1132(a)(3)(B) because: (a) Blue Cross was not a "fiduciary" under 29 U.S.C. § 1132(a)(3); and (b) the relief sought was not "equitable" under 29 U.S.C. § 1132(a)(3)(B).

The Sanderses did not make this argument before the district court. Indeed, in their answer, they explicitly admitted that Blue Cross was a fiduciary seeking equitable relief. See Answer at 2-3, pp 3(c), 4, 6, 12. Notwithstanding the Sanderses' failure to raise the issue in the district court, this court may review subject matter jurisdiction sua sponte. See Baltin v. Alaron Trading Corp., 128 F.3d 1466, 1468 (11th Cir.1997) (stating that this court may conduct plenary review of subject matter jurisdiction and that this court has the obligation to inquire into subject matter jurisdiction whenever it may be lacking) (citations omitted); see also Fed.R.Civ.P. 12(h)(3) ("Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.").

In determining whether the district court had subject matter jurisdiction, we respect the important distinction between the lack of subject matter jurisdiction and the failure to state a claim upon which relief can be granted. In Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946), the Court ruled that a claim alleged to arise under federal law should not be dismissed for lack of subject matter jurisdiction if "the right of the petitioners to recover under their complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another." Id. at 685, 66 S.Ct. at 777. Thus, a federal court may dismiss a federal question claim for lack of subject matter jurisdiction only if: (1) "the alleged claim under the Constitution or federal statutes clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction"; or (2) "such a claim is wholly insubstantial and frivolous." Id. at 682-83, 66 S.Ct. at 776. Under the latter Bell exception, subject matter jurisdiction is lacking only "if the claim 'has no plausible foundation, or if the court concludes that a prior Supreme Court decision clearly forecloses the claim.' " Barnett v. Bailey, 956 F.2d 1036, 1041 (11th Cir.1992) (quoting Olivares v. Martin, 555 F.2d 1192, 1195 (5th Cir.1977)); see also McGinnis v. Ingram Equipment Co., Inc., 918 F.2d 1491, 1494 (11th Cir.1990) (en banc) ("The test of federal jurisdiction is not whether the cause of action is one on which the claimant can recover. Rather the test is whether 'the cause of action alleged is so patently without merit as to justify ... the court's dismissal for want of jurisdiction.' ") (quoting Dime Coal Co. v. Combs, 796 F.2d 394, 396 (11th Cir.1986)).

Under the reasoning of Bell...