Candies Shipbuilders, LLC v. Westport Ins. Corp.
| Decision Date | 16 February 2016 |
| Docket Number | CIVIL ACTION NO. 15-1798 |
| Parties | CANDIES SHIPBUILDERS, LLC v. WESTPORT INS. CORP. |
| Court | U.S. District Court — Eastern District of Louisiana |
This case presents the question whether the Employee Retirement Income Security Act of 1974 ("ERISA") preempts claims for damages, penalties and attorneys fees under Louisiana state law brought by an insured, plaintiff, Candies Shipbuilders, LLC, against its insurer, defendant Westport Insurance Corporation. Candies seeks reimbursement under a stop-loss policy of amounts that Candies paid to cover the medical expenses of a beneficiary under its self-insured employee benefit plan. Defendant filed a Motion for Summary Judgment and to Strike Jury Trial Demand. Record Doc. No. 38. Westport seeks summary judgment on grounds that (1) Candies has no cause of action against defendant for damages, penalties and attorney's fees under La. Rev. Stat. §§ 22:1892 and 22:1973; (2) plaintiff's claims for damages, penalties and attorney's fees under La. Rev. Stat. § 22:1821 are preempted by ERISA; and (3) since plaintiff's claims fall exclusively under ERISA, Candies has no right to a jury trial.
Candies filed a timely opposition memorandum. Record Doc. No. 52. Westport received leave to file a reply memorandum. Record Doc. Nos. 53, 57, 58. Candies received leave to file a surreply memorandum. Record Doc. Nos. 55, 59, 60.
Having considered the complaint, the record, the submissions of the parties and the applicable law, IT IS ORDERED that defendant's motion is GRANTED IN PART AND DENIED IN PART as follows.
The following material facts are accepted as undisputed, solely for purposes of the pending motion. Westport issued a stop-loss Excess Medical Benefits Policy (the "Policy"), to the named insured, Candies. In the Policy, Westport agreed to reimburse Candies for medical benefit claims paid by Candies under its Employee Benefit Plan (the "Plan") during the policy period. Policy, Record Doc. No. 38-6, Defendant's Exh. 2 to Defendant's Exh. A, declaration of Julie Johansen.
The Plan is a self-funded group health plan administered by Southern Benefit Services, LLC ("Southern"). The Plan is administered under the provisions of ERISA.
The Policy states:
We [Westport] are the Insurer under this Policy and you [Candies] are the Insured. Employees and their dependents are not parties to this Policy. We do not insure or pay Benefits to your Employees or their dependents under the Plan. We are limited under the Policy to reimbursing you [Candies] for Losses under this Policy that are Incurred and Paid by you [Candies] as self-insurer of the Plan.
Id. at p. 19, § 9, ¶ 7. The Policy was delivered in Louisiana and is governed by the laws of the state of delivery. Id. at p. 1.
The Policy has a "retention limit" of $50,000 for each person covered by the Plan. Thus, the Policy provided reimbursement coverage to Candies for medical expenses it paid in excess of $50,000 for medical treatment of its employees and their dependents who are beneficiaries of the Plan. The Policy only insures Candies, and does not provide coverage for the Plan, Southern, Candies' employees or their dependents.
A prematurely born baby who was covered under the Plan was hospitalized for several months after birth and incurred huge medical bills. Candies paid the hospital for its charges, then sought reimbursement from Westport pursuant to the Policy for the amounts that plaintiff had paid in excess of $50,000.
Westport denied a portion of Candies's claim for reimbursement. Candies alleges in this lawsuit that Westport breached its obligations under the Policy and its statutory duties as an insurer under Louisiana law. Plaintiff's complaint seeks contractual damages from Westport under the Policy for the unpaid portion of plaintiff's claim and extra-contractual statutory damages, penalties and attorney's fees under three Louisiana statutes: La. Rev. Stat. §§ 22:1892, 22:1973 and 22:1821.
Rule 56, as revised effective December 1, 2010, establishes new procedures for supporting factual positions:
Thus, the moving party bears the initial burden of identifying those materials in the record that it believes demonstrate the absence of a genuinely disputed material fact, but it is not required to negate elements of the nonmoving party's case. Capitol Indem. Corp. v. United States, 452 F.3d 428, 430 (5th Cir. 2006) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). "[A] party who does not have the trial burden of production may rely on a showing that a party who does have the trial burden cannot produce admissible evidence to carry its burden as to [a particular material] fact." Advisory Committee Notes, at 261.
A fact is "material" if its resolution in favor of one party might affect the outcome of the action under governing law. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). No genuine dispute of material fact exists if a rational trier of fact could not find for the nonmoving party based on the evidence presented. Nat'l Ass'n of Gov't Employees v. City Pub. Serv. Bd., 40 F.3d 698, 712 (5th Cir. 1994).
To withstand a properly supported motion, the nonmoving party who bears the burden of proof at trial must cite to particular evidence in the record to support the essential elements of its claim. Id. (citing Celotex, 477 U.S. at 321-23); accord U.S. ex rel. Patton v. Shaw Servs., L.L.C., 418 F. App'x 366, 371 (5th Cir. 2011). "[A] complete failure of proof concerning an essential element of the nonmoving party's case renders all other facts immaterial." Celotex, 477 U.S. at 323; accord U.S. ex rel. Patton, 418 F. App'x at 371.
"Factual controversies are construed in the light most favorable to the nonmovant, but only if both parties have introduced evidence showing that an actual controversy exists." Edwards v. Your Credit, Inc., 148 F.3d 427, 432 (5th Cir. 1998); accord Murray v. Earle, 405 F.3d 278, 284 (5th Cir. 2005). "We do not, however, in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts." Badon v. R J R Nabisco Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quotation omitted) (emphasis in original). "Conclusory allegations unsupported by specific facts . . . will not prevent the award of summary judgment; 'the plaintiff [can]not rest on his allegations . . . to get to a jury without any "significant probative evidence tending to support the complaint."'" Nat'l Ass'n of Gov't Employees, 40 F.3d at 713 (quoting Anderson, 477 U.S. at 249).
"Moreover, the nonmoving party's burden is not affected by the type of case; summary judgment is appropriate in any case where critical evidence is so weak or tenuous on an essential fact that it could not support a judgment in favor of the nonmovant." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (quotation omitted) (emphasis in original); accord Duron v. Albertson's LLC, 560 F.3d 288, 291 (5th Cir. 2009).
Plaintiff's complaint cites three statutes in Louisiana's Insurance Code, La. Rev. Stat. §§ 22:1892, 22:1973 and 22:1821, in support of its demands for penalties andattorney's fees based on defendant's alleged failure to pay or settle plaintiff's claim under the stop-loss Policy timely or in good faith. Westport argues that neither Section 1892 nor 1973 provides a cause of action. Candies does not respond to this argument in its opposition memorandum. I find that defendant's legal argument is well-founded.
Stop-loss or excess insurance is "insurance covering the loss of an insured above a specific amount or a self-insurer for losses over a stated amount." La. Rev. Stat. § 22:883(A).
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