Cent. States, Se. & Sw. Areas Health & Welfare Fund v. Haynes, 17 C 6275

• Decision Date: 19 July 2019
• Docket Number: No. 17 C 6275,17 C 6275
• Citation: 397 F.Supp.3d 1149
• Parties: CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND, and Charles A. Whobrey, Trustee, Plaintiffs, v. Shelby L. HAYNES, an Individual, N. Gerald DiCuccio, Esq., an Individual, and Butler, Cincione & DiCuccio, an Ohio Partnership, Defendants.
• Court: U.S. District Court — Northern District of Illinois

397 F.Supp.3d 1149

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS HEALTH AND WELFARE FUND, and Charles A. Whobrey, Trustee, Plaintiffs,

v.Shelby L. HAYNES, an Individual, N. Gerald DiCuccio, Esq., an Individual, and Butler, Cincione & DiCuccio, an Ohio Partnership, Defendants.

No. 17 C 6275

United States District Court, N.D. Illinois, Eastern Division.

Signed July 19, 2019

Rebecca Kate McMahon, Central States Funds, Illinois, IL, Timothy Craig Reuter, Central States Funds, Lois J. Yu, Robert Anthony Coco, Central States Law Department, Matthew Wesley, Chicago, IL, for Plaintiffs.

John A. Yaklevich, Pro Hac Vice, Moore & Yaklevich, Nicholas Gerald DiCuccio, Pro Hac Vice, Butler Cincione & Dicuccio, Columbus, OH, Xiaoyin Cao, Carmen D. Caruso Law Firm, Chicago, IL, for Defendants.

Carmen David Caruso, Mario Michael Bosone, Carmen D. Caruso Law Firm, Chicago, IL, for Defendant Shelby L. Haynes.

MEMORANDUM OPINION AND ORDER

Virginia M. Kendall, United States District Judge

In 2013, doctors performing a gallbladder removal surgery on Shelby Haynes injured her, necessitating a second surgery three days later. Haynes incurred $312,286.50 in medical expenses as a result, and her insurer—Central States, Southeast and Southwest Areas Health and Welfare Fund (together with its trustee, Charles Whobrey, "Central States")—footed the bill. Haynes, represented by Butler, Cincione & DiCuccio, subsequently sued the doctors that performed the first surgery and the hospital where they performed it. In 2017, the parties settled that lawsuit for $1,500,000 and Haynes's law firm accepted a mailed check on her behalf.

After the settlement, Haynes and her counsel refused to reimburse Central States the amount it previously covered for her, so Central States sued them under the Employee Retirement Income Security Act of 1974 (ERISA) alleging it had an equitable lien on the settlement fund held by the firm and seeking to impose a constructive trust on it. The parties cross-moved for summary judgment in early 2019 arguing the material facts are undisputed therefore entitling them to judgment as a matter of law. (Dkt. 96, 102.) Because the terms of the health insurance contract—including the reimbursement provision—bind Haynes, and neither she nor her attorneys can assert any equitable defense consistent with the contract, the Court grants Central States' motion (Dkt. 96), denies the defendants' cross-motion (Dkt. 102), and enters summary judgment for Central States.

BACKGROUND

On December 11, 2013, 18-year-old Shelby Haynes underwent surgery at Bon Secours Kentucky Health Systems in Ashland, Kentucky to remove her gallbladder. (Dkt. 108 ¶ 11; Dkt. 113 ¶ 8.) During that surgery, Haynes sustained an injury to her common bile duct (a tube that connects to the gallbladder). (Dkt. 113 ¶ 9.) On December 14, 2013, Haynes had a second surgery performed on her at the University of Kentucky Medical Center to repair the damage to her common bile duct. (Dkt. 108 ¶ 12; Dkt. 113 ¶ 10.) Haynes incurred $312,286.50 in medical expenses because the first surgery went wrong. (Dkt. 108 ¶ 13.) Central States paid out health insurance benefits for this treatment because Haynes was a covered beneficiary under her father's ERISA-governed employee welfare plan. (Dkt. 108 ¶¶ 14, 29, 32; Dkt. 110 ¶ 2; Dkt. 113 ¶ 4.)

The Fund and the Plan Documents

Central States annually provides every participant in the Plan—including Haynes and her father—with a Summary of Benefits and Coverage (SBC) because federal law requires it to. (Dkt. 121 ¶ 2.) The SBC describes the participants' coverage and gives them information on how to obtain a copy of the Plan, which is readily available online and can also be supplied in writing. Id.

Central States also sends all new enrollees a copy of the Summary Plan Description (SPD) along with their enrollment form. Id. ¶ 3. With respect to the enrollment form, Central States received a version signed by Haynes's father in August 2008, in which he elected coverage for himself and his family, including Haynes. Id. ¶ 5. In addition to sending the SPD upon enrollment, Central States periodically distributes copies of the SPD as the law requires it to. Id.

Both Shelby Haynes and her father do not dispute receiving the SPD, although they never received a copy of the Plan. Id. Central States' records indicate that it sent Haynes's father a copy of the SPD in June 2008 and then again in November 2013. Id. ¶ 4. The SPD states that " ‘[a]ll information in this booklet ... is subject to the terms of the actual Health and Welfare Plan document.’ " Id. ¶ 10. It also asserts that "[t]he Plan has a full right of subrogation and/or reimbursement each time you and/or one or more of your covered dependents receive benefit payments by the Plan for any physical or mental condition or injury that was or may have been caused by any person." Id. ¶ 11. The SPD continues, declaring: "The Plan is entitled to full reimbursement, from your settlement or other recovery, of all of its benefit payments for care and treatment of injuries. That full reimbursement is not reduced by any attorneys' fees or other costs you incur in obtaining your settlement or other recovery." Id.

For its part, the Plan itself states the following regarding subrogation and reimbursement:

The Fund, whenever it makes any payment for any benefits on behalf of a Covered Individual or other person related to any illness, injury or disability (collectively and separately "Disability") of the person, is immediately subrogated and vested with subrogation rights ("Subrogation Rights") to all present and future rights of recovery ("Loss Recovery Rights") arising out of the Disability which that person ... may have. The Fund's Subrogation Rights extend to all Loss Recovery Rights of the Covered Individual. The Loss Recovery Rights of the Covered Individual include, without limitation, all rights based upon one or more of the following:

(1) Any act or omission by any person or entity ...

(2) Any policy ... for any insurance, indemnity or reimbursement ... and also including every other form of no-fault liability insurance, personal-injury protection insurance, financial responsibility insurance, uninsured and/or underinsured motorist insurance and any casualty liability insurance or medical payments coverage ...

*

The right, at any time after the Fund becomes vested with Subrogation Rights, to prosecute a civil action against the Covered Individual and/or against any person and/or other entity (including any insurance company) which the Fund claims to be responsible, in whole or in part, to provide payment or reimbursement to the Fund of the unrecovered amount of the Fund's Subrogation Rights.

*

The Covered Individual shall fully cooperate with the Fund in enforcement of the Fund's Subrogation Rights, shall make prompt, full, accurate and continuous disclosures to the Fund's representatives of all information about all circumstances of his/her Disability and about all other specifics of his/her Loss Recovery Rights ... and shall refrain from any act or omission that would to any extent prejudice or impair the Fund's Subrogation Rights or seek to prejudice or impair the Fund's Subrogation Rights.

*

The payment by the Fund for any benefits on behalf of a Covered Individual related to his/her Disability, and the simultaneous creation of the Fund's Subrogation Rights to the full extent of present and future payments, shall by itself (without any documentation from, or any act by, the Covered Individual) result in an immediate assignment to the Fund of all right, title and interest of the Covered Individual to and in any and all of his/her Loss Recovery Rights to the extent of such payments, and said payment by the Fund on behalf of a Covered Individual shall be deemed to constitute the Covered Individual's direction to his/her attorneys and other representatives to reimburse the full amount of the Fund's Subrogation Rights, from any settlement proceeds or other proceeds (collectively "Proceeds") which are paid to the attorneys or representatives for or on behalf of the Covered Individual, before the Covered Individual receives any Proceeds in full or partial satisfaction of his/her Loss Recovery Rights, and before any fees or expenses are paid, including attorneys' fees.

*

The Fund is authorized but not required to bring actions in enforcement of the Fund's Subrogation Rights, including direct actions (as subrogee or otherwise) against any person, entity, or Responsible Person which the Fund claims to be responsible, in whole or part, to provide payment or compensation or reimbursement to the Fund of the unrecovered amount of the Fund's Subrogation Rights, and including actions against any person, entity, or Responsible Person to enjoin any act or practice which violates any terms of the Plan, the Fund's Subrogation Rights and/or to obtain other appropriate equitable relief to redress such violations and/or to enforce the Fund's Subrogation Rights. A responsible Person is any person or entity, including attorneys or other representatives of a Covered Individual in any claim for damages for a Disability suffered by the Covered Individual, resulting from any act or omission of another person or entity, and who received any Proceeds, by way of settlement or award from such claim for damages. If such an action is filed by the Fund and the Fund prevails in any amount on any of its claims, all persons, entitles and Responsible Person(s) against whom such action is filed shall jointly and severally be responsible for all costs and expenses, including attorneys' fees, incurred by the Fund in connection with or related to such civil action.

*

The Fund is entitled to receive payment and reimbursement in the full amount of the Fund's Subrogation Rights before the Covered Individual receives any Proceeds in full or partial satisfaction of his/her Loss Recovery Rights and before any fees or expenses are paid, including attorneys' fees. If

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