Dale Fossen, D&M Fossen, Inc. v. Caring for Montanans, Inc.

• Decision Date: 24 January 2014
• Docket Number: No. CV 09–61–H–CCL.,CV 09–61–H–CCL.
• Citation: Dale Fossen, D&M Fossen, Inc. v. Caring for Montanans, Inc., 993 F.Supp.2d 1254 (D. Mont. 2014)
• Court: U.S. District Court — District of Montana
• Parties: Dale FOSSEN, D and M Fossen, Inc., Larry Fossen, L and C Fossen, M and C Fossen, Inc., and Fossen Brothers Farms, a Partnership, Plaintiffs, v. CARING FOR MONTANANS, INC., f/n/a Blue Cross and Blue Shield of Montana, Inc., Defendant.

993 F.Supp.2d 1254

Dale FOSSEN, D and M Fossen, Inc., Larry Fossen, L and C Fossen, M and C Fossen, Inc., and Fossen Brothers Farms, a Partnership, Plaintiffs,

v.CARING FOR MONTANANS, INC., f/n/a Blue Cross and Blue Shield of Montana, Inc., Defendant.

No. CV 09–61–H–CCL.

United States District Court,

D. Montana,

Helena Division.

Signed Jan. 24, 2014.

Lawrence A. Anderson, Anderson Law Office, Great Falls, MT, John M. Morrison, Morrison, Sherwood, Wilson & Deola, PLLP, Helena, MT, for Plaintiffs.

Michael F. McMahon, Bernard F. Hubley, Stefan T. Wall, McMahon Wall & Hubley, Helena, MT, for Defendant.

OPINION & ORDER

CHARLES C. LOVELL, Senior District Judge.

Before the Court are motions filed by the parties.Defendant has filed its second Motion for Summary Judgment.Plaintiffs have filed their second Motion for Remand or, in the alternative, Motion to Certify Questions.Each motion is opposed.Having considered the briefs and arguments of the parties, the Court is prepared to rule.

Background

This case returns to the Court on remand from the Court of Appeals of the Ninth Circuit, following this Court's grant of summary judgment to Defendant.The Ninth Circuit panel affirmed this Court's finding that a Montana statute,Mont.Code Ann. § 33–22–526(2)(a), was preempted by an identical ERISAstatute, 29 U.S.C. § 1182(b)(1).Fossen v. Blue Cross and Blue Shield of Montana, Inc.,660 F.3d 1102, 1111–12(9th Cir.2011).This Court also found that AMI/MCCT ¹ met the federal definition of a multiple employer welfare association for purposes of the federal statute.Because this Court did not provide a legal analysis of Plaintiffs' non-preempted state claim for appellate review, the panel remanded for further proceedings by this Court in that regard.

This opinion will provide a legal analysis of Plaintiffs' non-preempted state claims for the purpose of determining whether Plaintiffs should be permitted to proceed on their Amended Complaint or whether final summary judgment should be granted to Defendant, as is now requested.

Second Motion for Remand

Before addressing Defendant's summary judgment motion, however, the Court must consider Plaintiff's second motion for remand to state court and alternative motion for certification of questions to the Montana Supreme Court.Having considered the parties' arguments, it is this Court's belief that the state claims are not unclear and they do not raise complex issues of state law.Because this Court has delved deeply into the federal claim upon which summary judgment was granted and has invested considerable resources in this litigation, and because the state law claims are fundamentally dependent upon and/or restricted by that federal claim, it would be a waste of judicial resources to remand this case to a state district court for litigation beginning anew.

The decision to certify a question to a state supreme court is discretionary.SeeEckard Brandes, Inc. v. Riley,338 F.3d 1082, 1087(9th Cir.2003).Even when state law is unclear, certification is not obligatory.SeeLehman Bros. v. Schein,416 U.S. 386, 390, 94 S.Ct. 1741, 40 L.Ed.2d 215(1974).In this case, the Court remains dubious of Plaintiffs' assertion that state insurance law is unclear, and therefore the Court will hold this question pending its analysis of the state claims as follows.

Second Motion for Summary Judgment

Summary judgment is proper if the pleadings, the discovery and disclosures on file, and affidavits show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.Fed.R.Civ.P. 56(c);seeAnderson v. Liberty Lobby, Inc.,477 U.S. 242, 257–58, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986).Material facts are those that may affect the outcome of the case.Seeid. at 248, 106 S.Ct. 2505.A dispute about a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party.Seeid. at 248–49, 106 S.Ct. 2505.

The party moving for summary judgment has the initial burden of identifying those portions of the pleadings, discovery and disclosures on file, and affidavits that demonstrate the absence of a genuine issue of material fact.SeeCelotex Corp. v. Catrett,477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986).When the nonmoving party has the burden of proof at trial, the moving party need point out only “that there is an absence of evidence to support the nonmoving party's case.”Id. at 325, 106 S.Ct. 2548.If the moving party meets this initial burden, the non-moving party must go beyond the pleadings and—by its own affidavits or discovery—set forth specific facts showing a genuine issue for trial.SeeFed.R.Civ.P. 56(e);Celotex,477 U.S. at 324, 106 S.Ct. 2548;Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538(1986).If the non-moving party does not produce evidence to show a genuine issue of material fact, the moving party is entitled to summary judgment.SeeCelotex,477 U.S. at 323, 106 S.Ct. 2548.In ruling on a motion for summary judgment, inferences drawn from the underlying facts are viewed in the light most favorable to the non-moving party.SeeMatsushita,475 U.S. at 587, 106 S.Ct. 1348.

1.History of Model Insurance Code in Montana.

“The statutes at issue here are part of a statutory scheme enacted by the Montana Legislature in 1959.”Shupak v. New York Life Ins. Co.,780 F.Supp. 1328, 1337(D.Mont.1991).As in Shupak,the statute at issue in the instant case, 33–18–206(2)², is part of Montana's Model Insurance Code, and, specifically, part of the Unfair Trade Practices Act (“UTPA”)codified asChapter 18 of Title 33.This Model Insurance Code was promulgated by the National Association of Insurance Commissioners, id.(citingMontana's Comprehensive New Insurance Law,22 Mont.LawRev. 1, 9(1960)), and has been adopted in 48 states.Shupak,780 F.Supp. at 1337(citingMoradi–Shalal v. Fireman's Fund Ins. Co.,46 Cal.3d 287, 250 Cal.Rptr. 116, 758 P.2d 58, 63(1988)).The “vast majority” of these states “have declined to imply a private remedy for its violation.”Id.(citingMoradi–Shalal,250 Cal.Rptr. 116, 758 P.2d at 63–64).According to Shupak,“the National Association of Insurance Commissioners has reiterated that ‘[t]he 1971 Model Act does not contain an individual right of action provision’.”Id.(citingMoradi–Shalal,250 Cal.Rptr. 116, 758 P.2d at 65(citing2 N.A.I.C. Proceedings (1980) 345–46)).Therefore, the Shupak court held that the two UTPAstatutes(33–18–204, –212) at issue in that case did not provide an independent private right of action to a plaintiff.Shupak,780 F.Supp. at 1338(“neither the Montana Legislature nor the courts has expressly granted a private right of action under the provisions of Chapter 18,Title 33[the Montana UTPA].”).More recently, an identical conclusion was reached by a state district court, in the case of Victory Insurance Co. v. Montana State Fund, CauseNo. BDV–2011–284(Mont. First JudicialDist.2011).(Doc. 54–1.)In Victory Insurance, the state district court found that the Montana legislature did not create a private cause of action under the UTPA for either insurance companies or individual insureds, except as narrowly prescribed by § 33–18–242, MCA.(Doc. 54–1at 5–6, Victory Insurance, CauseNo. BDV –2011–284.)

Generally, Montana's Insurance Code is enforceable only by the Montana Insurance Commissioner, who supervises the insurance department, which is a criminal justice agency.§§ 33–1–301,311(6), MCA.The Insurance Commissioner creates rules for the administration of the Insurance Code.§ 33–1–313, MCA.The Insurance Commissioner is empowered to investigate violations, § 33–1–311, MCA, subpoena witnesses, compel production of records, and administer oaths or affirmations.§ 33–1–315, MCA.The Insurance Commissioner may conduct hearings in accordance with the Montana Administrative Procedures Act.§ 33–1–701, MCA.After discovery of a violation by the insurance department, a two-year statute of limitations applies to an action by the insurance department for violation of the Insurance Code.§ 33–1–707(1), MCA.Regardless of date of discovery, the insurance department may not commence an action unless it is brought within 5 years of the date of the violation.§ 33–1–707(2), MCA.After holding a hearing, the Commissioner may impose a fine not to exceed $25,000 (in addition to “all other penalties imposed by the laws of the state”) upon a person found to have violated Montana's Insurance Code or a regulation promulgated by the Commissioner.§ 33–1–317, MCA.Such penalty imposed by the Commissioner is appealable.

A person may appeal a Commissioner's order to the state district court in Lewis and Clark County(the county in which the Commissioner's office is located).§ 33–1–711(1), MCA.The Commissioner may issue temporary and permanent cease and desist orders and may bring an action in court to enforce compliance with the Insurance Code and to obtain an injunction, restraining order, or appointment of a receiver or conservator for the defendant or the defendant's assets.§ 33–1–318, MCA.

There is also a specific Commissioner's enforcement subsection codified within the Unfair Trade Practices Act (“UTPA”).Specifically as to the UTPA, the Insurance Commissioner is authorized to receive complaints, § 33–18–1001, MCA, and to examine and investigate any person engaged in the business of insurance in Montana “in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by [the UTPA].”§ 33–18–1002, MCA.

Importantly, if the Insurance Commissioner believes that a person engaged in the insurance business is engaging in an unfair method of competition or a practice that is unfair or deceptive, but that act or practice is not defined by the UTPA, the Commissioner...