Ashley Healthcare Plan v. Dillard (In re Guardianship of O.D.)

• Citation: 177 So.3d 175
• Decision Date: 06 August 2015
• Docket Number: No. 2014–CA–00322–SCT.,2014–CA–00322–SCT.
• Parties: In the Matter of the GUARDIANSHIP of O.D., A Minor: Ashley Healthcare Plan v. Michael DILLARD and Kimberly Dillard, as Biological Parents and Next Friends of O.D., A Minor.
• Court: United States State Supreme Court of Mississippi

177 So.3d 175

In the Matter of the GUARDIANSHIP of O.D., A Minor: Ashley Healthcare Plan

v.Michael DILLARD and Kimberly Dillard, as Biological Parents and Next Friends of O.D., A Minor.

No. 2014–CA–00322–SCT.

Supreme Court of Mississippi.

Aug. 6, 2015.

Rehearing Denied Nov. 12, 2015.

Mark Nolan Halbert, attorney for appellant.

James Gregory Brown, attorney for appellees.

Before RANDOLPH, P.J., LAMAR and KITCHENS, JJ.

KITCHENS, Justice, for the Court:

¶ 1. O.D., a minor child, filed a petition in Pontotoc County Chancery Court for approval of a settlement her parents had negotiated with car insurance companies for injuries she had suffered in a car accident. On the day of the hearing, Ashley Healthcare Plan, O.D.'s health insurance coverage provider, which had a subrogation lien against the proceeds of O.D.'s claim, removed the case to federal court, arguing that the Mississippi law which required the chancery court's approval of O.D.'s settlement claims, Mississippi Code Section 93–13–59, was preempted by the federal Employment Retirement Income Security Act of 1974 ("ERISA"). The United States District Court for the Northern District of Mississippi held that ERISA did not preempt the state law and remanded the case to the chancery court without awarding attorney's fees to O.D. On motion from O.D.'s parents, the Pontotoc County Chancery Court awarded O.D. attorney's fees, holding that Ashley Healthcare Plan's removal to federal court was contrary to clearly established law and that it was done for the purpose of delaying litigation. Although O.D. could have sought recovery of attorney's fees under Rule 54 of the Federal Rules of Civil Procedure, frivolous removals to federal court also are subject to the Mississippi Litigation Accountability Act. Miss.Code Ann. §§ 11–55–1 to 11–51–15 (Rev.2012). Furthermore, Ashley Healthcare Plan's removal to federal court was contrary to two decades of case law which uniformly held that Mississippi's law requiring chancery court approval of minors' settlements is not preempted by ERISA and that Ashley Healthcare Plan was seeking a remedy in federal court that was unavailable to it under the ERISA Civil Enforcement Clause. We therefore affirm the judgment of the chancery court because its award of attorney's fees on this basis was not an abuse of discretion.

FACTS AND PROCEDURAL HISTORY

¶ 2. On March 6, 2011, Mercedes Navarette failed to yield the right-of-way to oncoming traffic on Highway 278 in Pontotoc County and struck a car driven by Kimberly Dillard. Dillard's three-year-old daughter, O.D., was in the back seat. As a result of the collision, O.D. suffered significant injuries. Her right leg was fractured, and she had bruises on her face, scalp, neck, and thigh. O.D. was airlifted to Le Bonheur Children's Hospital in Memphis. For the treatment of her leg, O.D. spent three nights in the hospital and had two separate surgeries.

¶ 3. Later that summer, on August 21, 2011, O.D.'s parents, Kimberly Dillard and Michael Dillard, petitioned the Pontotoc County Chancery Court for appointment as O.D.'s general guardians.¹ The Chancery Court granted that petition. The purpose of the Dillards' guardianship over O.D. was to pursue a claim for the child's personal injuries and medical care. As the court-appointed general guardians for O.D., the Dillards engaged in settlement negotiations with Allstate Insurance Company, Navarette's insurance carrier. The Dillards submitted, for the Pontotoc County Chancery Court's approval, a compromise settlement of $25,000, Naverette's liability insurance policy's maximum limit of applicable coverage. The Dillards also made an uninsured/underinsured claim against their own automobile insurance carrier, State Farm Insurance Company. The Dillards obtained a settlement offer from State Farm for $50,000, its policy limit.

¶ 4. In accordance with Mississippi law regarding minors' legal settlements,² on October 13, 2011, the Dillards filed a Petition for Authority to Settle and Compromise Doubtful Claim of Minor. The Dillards sought approval from the Pontotoc County Chancery Court of the settlement of O.D.'s claims against both State Farm Insurance and Allstate Insurance for a total of $75,000, which was all of the available liability insurance coverage.

¶ 5. In addition to informing the chancery court of the settlement offers, the petition averred that Ashley Furniture Industries maintained an employer-funded healthcare plan and that the plan was established under the Employee Retirement Income Security Act of 1974 (ERISA). Because O.D. was a minor child and dependent of her father, Michael Dillard, an employee of Ashley Furniture Industries at its Ecru factory, O.D. was a covered beneficiary of the plan. During the course of O.D.'s car-wreck-related medical treatment, the Ashley Healthcare Plan ("the plan") had paid $33,683.58 toward O.D.'s medical bills. The plan previously had asserted its intention to enforce a subrogation lien, contained within the language of the plan, for the amount of all of O.D.'s medical bills against all sums O.D. might receive from the automobile insurance companies. The Dillards requested of the chancery court that the car insurance settlement proceeds be distributed for the minor's exclusive benefit, i.e., paid to the minor. To this end, the Dillards also sought denial of reimbursement to the plan for the medical expenses paid on her behalf on account of the accident.

¶ 6. On October 14, 2011, the Dillards served on the plan a summons under Rule 81 of the Mississippi Rules of Civil Procedure, along with their Petition for Authority to Settle and Compromise Doubtful Claim of Minor. The summons directed Ashley Healthcare Plan to appear at a hearing at 9:30 a.m. on November 14, 2011, at the Pontotoc County Chancery Court to assert its claimed subrogation lien against O.D.'s settlement.

¶ 7. On November 14, 2011, the day that the Pontotoc County Chancery Court was to conduct the hearing on settlement of O.D.'s insurance claims, the plan removed the case to the United States District Court for the Northern District of Mississippi, asserting that O.D.'s "claim against [Ashley Healthcare Plan] falls within the scope of ERISA's civil enforcement statute ... and is completely preempted and is therefore removable."

¶ 8. On November 17, 2011, the Dillards filed a Motion to Remand the case, arguing that the United States District Court for the Northern District of Mississippi has "held that the Employment Retirement Income Security Act of 1974 (‘ERISA’) does not preempt Mississippi law, which requires chancery court approval for the administration of a minor's estate. Therefore this case must be remanded to state court for lack of subject matter jurisdiction." The Dillards further alleged that "this case was removed for the improper purpose of avoiding or delaying the finality of the administration of the minor's estate currently pending in the Chancery Court of Pontotoc County, Mississippi." The Dillards also moved under 28 U.S.C. § 1447 for attorney's fees incurred by them as a result of Ashley's removal of the case to federal court.

¶ 9. On December 12, 2011, the plan filed a Response to the Dillards' Motion to Remand, arguing that "[t]he only question before the Court is whether or not Plaintiffs' well-pleaded complaint filed in state court raises a claim within the federal subject matter jurisdiction of this Court." Again, the plan averred that O.D.'s claim in chancery court fell squarely within ERISA's enforcement provisions and that her claims were completely preempted by federal law.

¶ 10. Nearly two years after the plan had removed the case to federal court, on September 27, 2013, the United States District Court for the Northern District of Mississippi remanded the case to Pontotoc County Chancery Court. The Memorandum Opinion held that "the administration of a minor's estate is entirely a matter of state law, and is law of general application which affects a broad range of matters entirely unrelated to ERISA." The district court held that the Dillards' claim for approval of the minor's settlement was not preempted by ERISA and found that Ashley Healthcare Plan's claim for reimbursement did not constitute a cognizable claim under the ERISA civil enforcement statute. Although the Dillards had asserted a claim for attorney's fees incurred during the course of the remand pursuant to 28 U.S.C. § 1447, they did not renew their request for fees by filing a Federal Rule of Civil Procedure 54(d) motion in federal court.

¶ 11. Instead, on October 29, 2013, the Dillards filed a motion for attorney's fees under the Mississippi Litigation Accountability Act of 1988 (Miss.Code Ann. §§ 11–55–1 to 11–51–15 (Rev.2012)) in Pontotoc County Chancery Court, arguing that the plan's removal of O.D.'s case to federal district court had been "frivolous, filed for the purpose of harassment and delay, and did not have support in law or fact."

¶ 12. On December 4, 2013, the chancery court conducted a hearing to address the Dillards' motion for attorney's fees and to settle O.D.'s insurance claims. During the course of the hearing, the chancery court allowed O.D.'s parents, as her general guardians, to settle her claims with both automobile insurers for $75,000. The chancery court also refused to enforce the plan's subrogation lien; the plan was not reimbursed for the moneys it had paid for O.D.'s accident-related health care.

¶ 13. On February 6, 2014, the chancery court awarded attorney's fees to the Dillards in accordance with the Litigation Accountability Act for Ashley Healthcare Plan's improper removal of the case to federal court. In his thirteen-page written order, the chancellor reasoned that the issue of attorney's fees was properly before the court because "there was no determination made by the federal court concerning attorney's fees nor was the issue of attorney's fees considered by the federal court." The court further held that "[t]he only purpose for...