Blue Cross and Blue Shield of Alabama v. Weitz

• Decision Date: 10 October 1990
• Docket Number: No. 89-7004,89-7004
• Citation: 913 F.2d 1544
• Parties: , 12 Employee Benefits Ca 2536 BLUE CROSS AND BLUE SHIELD OF ALABAMA; South Central Bell Medical Expense Plan, South Central Bell Telephone Company, Plaintiffs-Appellees, v. Lawrence J. WEITZ, Defendant-Appellant, Norma Redinger, in her capacity as Executrix of the Estate of Kathleen M. DePierri and in her individual capacity, Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1544

913 F.2d 1544

17 Fed.R.Serv.3d 1412, 12 Employee Benefits Ca 2536

BLUE CROSS AND BLUE SHIELD OF ALABAMA; South Central Bell

Medical Expense Plan, South Central Bell Telephone

Company, Plaintiffs-Appellees, v. Lawrence J. WEITZ, Defendant-Appellant, Norma Redinger, in her capacity as Executrix of the Estate

of Kathleen M. DePierri and in her individual

capacity, Defendant.

No. 89-7004.

United States Court of Appeals, Eleventh Circuit.

Oct. 10, 1990.

Richard Sterling Maxwell, Nashville, Tenn., for defendant-appellant.

Lawrence B. Clark, Duncan B. Blair, Timothy A. Palmer, Lange, Simpson, Robinson & Somerville, Birmingham, Ala., for plaintiffs-appellees.

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

Before JOHNSON and EDMONDSON, Circuit Judges, and PECKHAM ^*, Senior District Judge.

PECKHAM, Senior District Judge:

Defendant Dr. Lawrence J. Weitz appeals from a grant of summary judgment in plaintiffs' favor in an action to recover payments improperly made by the South Central Bell Medical Expense Plan to Dr. Weitz. As a threshold matter, Weitz contends that the district court lacked subject matter jurisdiction pursuant to section 502 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Sec. 1132. ¹ Weitz further contends that even if ERISA jurisdiction were proper, principles of equitable restitution, specifically the doctrine of "change of position," preclude summary judgment in the plaintiffs' favor. Finally, Weitz asserts that the district court erred in granting summary judgment because some portion of the claims are barred by the statute of limitations.

I. BACKGROUND

A. Facts.

South Central Bell sponsors the South Central Bell Medical Expense Plan ("Medical Expense Plan") for the benefit of South Central Bell's eligible employees. The Medical Expense Plan is self-insured, and is an employee welfare benefit plan as defined for purposes of ERISA, 29 U.S.C. Sec. 1001 et seq. Blue Cross and Blue Shield of Alabama ("Blue Cross") serves as the claims administrator under the Medical Expense Plan and, with respect to its activities in determining claim eligibility, making payments, and hearing administrative appeals from claim denials, acts as a fiduciary within the meaning of ERISA.

The Medical Expense Plan provides for outpatient mental care benefits equal to 50 percent of an eligible employee's covered charges, provided that the mental care is rendered by a "physician" as defined in the Medical Expense Plan. ² Defendant-appellant Lawrence J. Weitz is a licensed clinical psychologist in the State of Tennessee, thus satisfying the Medical Expense Plan's definition of "physician." From 1981 to 1986, Weitz or someone on his behalf submitted 338 claims to Blue Cross to receive payment for psychotherapy and other mental care services rendered to eligible South Central Bell employees. For the period beginning June 10, 1982 and ending April 17, 1986, Weitz admitted receiving payments totaling $176,868.94 from Blue Cross.

It is undisputed that Weitz himself never saw any of the patients for which payment was sought. Instead, the services were allegedly rendered by Kathleen DePierri, a licensed social worker, whose name did not appear on any of the claim forms. According to Weitz's declaration filed in the district court, he regularly met with Ms. DePierri to discuss her cases and supervise her treatment plans. Weitz stated in both his declaration and his deposition, which is part of the record in this case, that he retained 20 percent of all amounts received from Blue Cross and remitted the remaining amounts to DePierri. Kathleen DePierri was a licensed clinical social worker in Tennessee and, as such, did not satisfy the definition of "physician" under the Medical Expense Plan. The payments to Dr. Weitz for compensation of services provided by Ms. DePierri were therefore in violation of the terms of the Medical Expense Plan. ³

B. History of the Case.

Blue Cross and the Medical Expense Plan filed the underlying lawsuit on April 1, 1988, seeking restitution from Dr. Weitz and Norma Redinger, the executrix of Kathleen DePierri's estate. ⁴ Defendant Weitz filed a motion to dismiss, alleging lack of subject matter jurisdiction under ERISA and lack of personal jurisdiction and improper venue as to the portions of the complaint which alleged jurisdiction arising under 28 U.S.C. Sec. 1331. The district court denied that motion on May 27, 1988, holding that "[a]n equitable action to recover benefits erroneously paid ... falls within the clear grant of jurisdiction contained in 29 U.S.C. Sec. 1132(a)(3)." Order dated May 27, 1988 at 1.

Defendant Weitz subsequently filed his answer, raising the affirmative defenses of estoppel and time bar by the applicable statute of limitations. Plaintiffs filed a motion for partial summary judgment against Weitz, seeking court determination that no benefits were due Dr. Weitz under the terms of the Medical Expense Plan and that Dr. Weitz was liable for repayment to the Medical Expense Plan all payments made to him from 1981 to 1986. Defendant Weitz opposed the motion for summary judgment on the grounds that his supervision constituted a compensable service under the terms of the plan, and that plaintiffs were estopped from recovering benefits wrongfully paid because they had approved and ratified the activities. The district court found that Weitz had failed to raise a genuine issue of material fact as to either of his two arguments and therefore granted the motion for summary judgment. The district court's findings on those points is not before us in the present appeal.

II. ANALYSIS

A. ERISA Jurisdiction Pursuant to 29 U.S.C. Sec. 1132.

Dr. Weitz argues as an initial matter that the portion of the complaint alleging ERISA jurisdiction should have been dismissed by the district court for lack of subject matter jurisdiction. Title 29, U.S.C. Sec. 1132, which plaintiffs cite as the basis for ERISA subject matter jurisdiction, provides in relevant part:

A civil action may be brought--

(1) by a participant or beneficiary--

(A) for the relief provided for in subsection (c) of this section, or

(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;

(2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title;

(3) 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; (emphasis added)

* * * * * *

As we read the plain language of the statute, Sec. 1132(a)(3) is applicable to the instant case, which has been brought by a "fiduciary ... to obtain ... equitable relief ... to redress [plan] violations or ... to enforce ... the terms of the plan." It is undisputed that Blue Cross is a fiduciary seeking the equitable remedy of restitution. It likewise seems clear that reimbursement to a psychologist who was not providing outpatient mental health services, or to a licensed clinical social worker who was, would violate the terms of the plan, which allows for payments only to physician providers of outpatient mental health services. The district court found that the payments were inconsistent with the terms of the plan, and that finding is not being challenged in the present appeal.

Appellant contends, however, that he is not the sort of defendant contemplated by Congress in drafting the ERISA civil enforcement provisions, and that the language of Sec. 1132(a)(3) should be construed to allow suits by fiduciaries only for purposes of ensuring continuing compliance with either the plan itself or the Act by parties to the plan. Appellant asserts that because he is a non-fiduciary, non-party to the plan, he has no obligation governed by ERISA, and Sec. 1132(a)(3) should not apply to this case.

Appellant relies heavily on the case of N.Y.S.A.-I.L.A. G.A.I. Fund v. Poggi, 617 F.Supp. 847, 849 (S.D.N.Y.1985), amended and reaff'd, 624 F.Supp. 443 (S.D.N.Y.1985), one of only two cases which have addressed the question of whether Sec. 1132(a) allows plan fiduciaries to bring an action to recover benefits wrongfully paid out. ⁵ In Poggi, the court held that

The language of [Sec. 1132(a)(3) ] indicates that federal jurisdiction only attaches to those actions brought by fiduciaries to ensure continuing compliance with either the pension plan itself or the broader requirements of ERISA. There is no indication from the statute, nor have the Funds cited any relevant case law, which supports their argument that a pension plan fiduciary may bring a federal action under this section to recover for past damages based on breach of contractual obligations under the pension plan. Therefore, while a pension plan beneficiary clearly does have the right to bring an action in federal court to recover benefits past due, there is no symmetrical grant of jurisdiction over actions by pension plans to recover benefits wrongfully paid out.

Poggi, 617 F.Supp. at 849. The opinion in Poggi reveals nothing more than what we have quoted above as to the source of its holding limiting the types of lawsuits which may be brought by fiduciaries pursuant to Sec. 1132(a)(3). The other district court which has addressed the question specifically declined to follow Poggi. In Northern California Food Employers & Retail Clerks Unions Benefit Fund v. Dianda's Italian-American Pastries, Co., Inc., 645 F.Supp. 160 (N.D.Cal.1986), the court considered whether Sec. 1132(a)(3) authorized a civil action by fiduciaries to recoup from an employer benefits improperly paid as a result of the employer's alleged inaccurate reporting...