Buchman v. WAYNE TRACE SCHOOL DIST. BD. OF EDUC.

• Decision Date: 17 May 1991
• Docket Number: Civ. No. 90-CV-7170.
• Citation: 763 F. Supp. 1405
• Parties: Donald A. BUCHMAN, et al., Plaintiffs, v. WAYNE TRACE LOCAL SCHOOL DISTRICT BOARD OF EDUCATION, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

763 F. Supp. 1405

Donald A. BUCHMAN, et al., Plaintiffs, v. WAYNE TRACE LOCAL SCHOOL DISTRICT BOARD OF EDUCATION, et al., Defendants.

Civ. No. 90-CV-7170.

United States District Court, N.D. Ohio.

May 17, 1991.

Craig L. Roth, Gretick, Bish, Lowe & Roth, Bryan, Ohio, for plaintiffs.

Stephen F. Korhn, Clemens, Korhn, Palmer & Liming, Defiance, Ohio, Stephen F. Ahern, Manahan, Pietrykowski, Bamman & Delaney, Toledo, Ohio, Robert M. Riffle, Keck, Mahin & Cate, Peoria, Ill., for defendants.

Robert A. Koenig, Shumaker, Loop & Kendrick, Toledo, Ohio, for Great-West Life Assur. Co. third-party defendant.

MEMORANDUM AND ORDER

WALINSKI, Senior District Judge.

This action is before the Court on the plaintiff's second motion for summary judgment on the fifth claim for relief of the second amended complaint. Defendants, Morton Buildings, Inc., Jefferson Trust and Savings Bank, Kepple & Company, Jim Cochran, Health and Welfare Plan for Employees of Trustees of Morton Buldings, Inc., Voluntary Employee Benefit Association, (collectively "plan defendants") and Great-West Life Assurance Co., ("plan defendant Great-West") oppose and file a cross motion for summary judgment. Defendant, Board of Education of the Wayne Trace Local School District ("Board") opposes both plaintiffs' second motion for summary judgment and plan defendants' cross-motions for summary judgment. This Court has jurisdiction pursuant to 28 U.S.C. § 1331.

Background

As a result of the accident which occurred on September 1, 1989, plaintiff has incurred certain medical bills and expenses which according to plaintiff are covered under plaintiff's employee benefit plan. The motions for summary judgment before this Court deal with plaintiffs' contention, as stated in their fifth claim for relief, that plan defendants are required to make payment of these expenses to plaintiff immediately. Plaintiffs insist that plan defendants have wrongfully withheld benefits under the plan to which they are entitled, regardless of whether plan defendants will be able to exercise subrogation rights against the tortfeasor. Plaintiffs also contend that such payment must be made without requiring plaintiffs to sign a lien and reimbursement agreement, as required by the terms of the plan. Plan defendants maintain their absolute right, under the terms of a contract, to subrogate their claims against the actual tortfeasor and to require plaintiff to comply with the execution of certain documents before payment of benefits.

Discussion

The Court's function in ruling on a motion for summary judgment is to determine if any genuine issue exists for trial, not to resolve any factual issues, and to deny summary judgment if material facts are in dispute. United States v. Articles of Device, etc., 527 F.2d 1008, 1011 (6th Cir. 1976); Tee-Pak, Inc. v. St. Regis Paper Co., 491 F.2d 1193, 1195 (6th Cir.1974). Further, "in ruling on a motion for summary judgment, the evidence must be viewed in a light most favorable to the party opposing the motion." Bouldis v. U.S. Suzuki Motor Corp., 711 F.2d 1319, 1324 (6th Cir.1983). To summarize, summary judgment is only appropriate when no genuine issue of material fact remains to be decided, and when the undisputed facts, viewed in a light most favorable to the non-moving party, entitle the movant to judgment as a matter of law. Smith v. Pan Am World Airways, 706 F.2d 771, 773 (6th Cir.1983).

A principal purpose of summary judgment "is to isolate and dispose of factually unsupported claims or defenses." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Rule 56(e) places responsibility on the party against whom summary judgment is sought to demonstrate that summary judgment is improper, either by showing the existence of a material question of fact or that the underlying substantive law does not permit such a decision. In relevant part, the provision states:

When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.

Rule 56(e), Fed.R.Civ.P. Rule 56(e) requires the non-moving party to go beyond the pleadings, and by affidavits, depositions, answers to interrogatories, or admissions on file, designate specific facts showing a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. at 324, 106 S.Ct. at 2553.

Before proceeding with the primary issues in these motions for summary judgment, this Court must first dispense with defendant Board's motion to strike the opposition of plan defendants to plaintiffs' second motion for summary judgment. Defendant would have this Court ignore this opposition on the grounds that plan defendants' brief contains factual assertions not supported by affidavit or other evidence, as is required under Rule 56(e) of the Federal Rules of Civil Procedure.

It is clear from this Court's perusal of the record, however, that the plan defendants' contentions are supported by facts contained therein. Therefore, the motion to strike is not well taken. In this motion to strike, defendant Board also asks for leave to pursue discovery on the issue of the manner in which the benefit plan at issue is funded. As no trial date has yet been set, there is no impediment to such discovery. However, all applicable policies and handbooks have been submitted to the Court as supplements to the parties' motions for summary judgment. Thus, the Court is in possession of everything necessary to reach a conclusion in this case.

Plaintiff's primary argument in support of his motion for summary judgment hinges on an Ohio statute. In pertinent part, that statute provides:

If a claimant receives or is entitled to receive benefits for injuries or loss allegedly incurred from a policy or policies of insurance or any other source, the benefits shall be disclosed to the court, and the amount of the benefits shall be deducted from any award against a political subdivision recovered by that claimant. No insurer or other person is entitled to bring an action under a subrogation provision in an insurance or other contract against a political subdivision with respect to such benefits.

Ohio Rev.Code § 2744.05(B). At the time of the accident which is the basis for this suit, plaintiff was employed by Morton Buildings, Inc. and as such was covered by the terms of an employee benefit plan. Thus, under the terms of the above statute, this Court would be required to deduct from the amount of any verdict rendered in favor of plaintiff any benefits received by him under this plan. To date, the plan in question has paid nothing toward plaintiffs' medical expenses. Those expenses totalled approximately $237,000 as of September of 1990.

The instant dispute is focused on certain conditions under which plan defendants are obligated to make payments under an employee benefit plan for injuries sustained as the result of an alleged third-party tortfeasor. Plaintiff contends that they are entitled to immediate payment of all outstanding medical bills under the plan. Indeed, plaintiffs argue that the issues under their Fifth Claim for Relief of the First Amended Complaint need to be decided before trial on the remaining portions of this case in order to comply with the above statute.

Plan defendants argue that any order by this Court requiring such action by them would result in an improper modification of and interference with their rights under a contract. Most importantly, plan defendants argue that the Ohio Rev.Code statute on which plaintiffs rely to establish liability on the part of the plan is preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq. For the following reasons, this Court is in agreement with plan defendants on the issues now before it.

Two separate health and welfare plans apply to the claims made by plaintiffs in this case. The first plan ("Plan 1") and its accompanying handbook ("Handbook 1") was in effect through the month of September (in which the accident occurred) of 1989. The second plan ("Plan 2") and its accompanying handbook ("Handbook 2") became effective October 1, 1989 and remains in effect to this day. Each of these plans is similar with respect to the benefits available to covered employees. Each plan contains subrogation provisions allowing the plan to recoup benefits paid out under the plan from a third-party tortfeasor. Each plan contains a provision requiring the employee to execute certain documents before benefits are paid out.¹

As an initial matter, plaintiffs urge this Court to declare Ohio Rev.Code § 2744.05(B) constitutional.² However, this Court is bound to consider non-constitutional grounds for decision before passing on such constitutional questions. See Gulf Oil Co. v. Bernard, 452 U.S. 89, 99, 101 S.Ct. 2193, 2199, 68 L.Ed.2d 693 (1981) and Jean v. Nelson, 472 U.S. 846, 854, 105 S.Ct. 2992, 2996, 86 L.Ed.2d 664 (1985). The Court is able to reach a decision without passing on the constitutionality of the above statute. Therefore, the well-settled policy of judicial restraint precludes this Court from considering that issue. Id.

The applicability of the above statute to plaintiffs' fifth claim for relief must be considered, however. This Court's decision on this issue is made easier by the recent ruling of the United States Supreme Court in FMC Corp. v. Holliday, ___ U.S. ___, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990). The Court in Holliday concluded that ERISA preempts the application of state antisubrogation laws to self-funded health care plans. Essentially, the Court reasoned that the state statute at issue there, Pennsylvania's Motor Vehicle Financial Responsibility Law, 75...