Clancy v. Employers Health Ins. Co.

• Decision Date: 24 November 1999
• Docket Number: No. Civ.A. 99-0381.,Civ.A. 99-0381.
• Parties: Shawn S. CLANCY v. EMPLOYERS HEALTH INSURANCE COMPANY
• Court: U.S. District Court — Eastern District of Louisiana

82 F.Supp.2d 589

Shawn S. CLANCY v. EMPLOYERS HEALTH INSURANCE COMPANY

No. Civ.A. 99-0381.

United States District Court, E.D. Louisiana.

November 24, 1999.

COPYRIGHT MATERIAL OMITTED

Kyle R. Covert, Sean Duvall Fagan, Baton Rouge, LA, for Plaintiff.

Kyle Liney Gideon, Lafayette, LA, Brian P. Brooks, Washington, DC, for Defendant.

ORDER AND REASONS

CLEMENT, District Judge.

Before the Court are five motions, all of which have been decided on memoranda: Defendant's Motion for Summary Judgment; Defendant's Motion for Relief Pursuant to Rule 23(d)(4); Defendant's Motion for Protective Order and/or Alternatively Motion to Stay Class Discovery Pending Decision on Class Certification and Issuance of Case Management Orders; Defendant's Motion to Dismiss its Counterclaim; and Plaintiff's Motion for Class Certification. For the following reasons, Defendant's Motions for Summary Judgment and to Dismiss its Counterclaim are GRANTED and Plaintiff's claims are DISMISSED. Plaintiff's Motion for Class Certification, Defendant's Motion for Relief Pursuant to Rule 23(d)(4), and Defendant's Motion for Protective Order and/or Alternatively Motion to Stay Class Discovery are DENIED.

I. BACKGROUND.

This case stems from Plaintiff Shawn Clancy's unsuccessful attempt to receive certain benefits from Defendant Employer's Health Insurance Company ("EHIC") under the terms of a group health insurance policy financed by Ms. Clancy's employer, Leake & Andersson, LLP ("Leake & Andersson"). Ms. Clancy claims that EHIC improperly withheld benefits in violation of Louisiana Revised Statute 22:663 and claims entitlement to these funds and to state-law penalties available under Louisiana Revised Statute 22:657 for improper processing of her claims. Ms. Clancy further requests that she be made representative of a class of similarly-aggrieved policyholders. In addition to opposing Ms. Clancy's motion for class certification, EHIC contends that Ms. Clancy's claims are preempted by ERISA, 29 U.S.C. §§ 1001-1461, and therefore should be dismissed.

On September 28, 1995, Shawn Clancy was injured in an automobile accident, which required medical treatment and services. Petition ¶ 5. At the time of the accident, Ms. Clancy was insured under two separate policies. The first policy was an individual policy from State Farm Auto Insurance, which provided uninsured and underinsured motorist coverage and medical pay coverage. Petition ¶ 4. The second policy was a group health insurance policy issued by EHIC, which provided medical coverage to eligible employees of Leake and Andersson. Leake & Andersson paid 100% of the premium for the EHIC policy. Defendant's Statement of Uncontested Material Facts ¶ 6.

Ms. Clancy attempted to recover benefits under both policies. The record indicates that she successfully recovered benefits from State Farm under both the medical pay coverage and the uninsured motorist coverage. Petition ¶¶ 8-9. Ms. Clancy also recovered benefits from EHIC, although not in the amount to which she claims she is entitled. EHIC informed Ms. Clancy that it considered the State Farm policy to be her primary policy, subject to the coordination of benefits provision of her EHIC policy, and therefore made no payments for any medical treatment or services until after State Farm's medical pay coverage ($5000) had been exhausted. Petition ¶¶ 7-8. EHIC also claimed the right to obtain reimbursement or subrogation for $19,328 in payments EHIC made on behalf of Ms. Clancy. This amount was to come out of a settlement between Ms. Clancy and State Farm in connection with her uninsured motorist coverage. Petition ¶ 9.

Ms. Clancy objects to both EHIC's coordination of benefits and EHIC's request for reimbursement or subrogation. According to Ms. Clancy,

Under the plain meaning of the Employers Health policy and Louisiana law, Employers Health should not have coordinated any benefits available under the individually underwritten Med Pay coverage under the State Farm policy and should not have requested reimbursement or subrogation from or against any recovery received by Shawn S. Clancy from the State Farm Uninsured Motorist coverage.

Petition ¶ 12. Instead, she contends that EHIC "should have paid and processed [her] claims without regard to any coverage afforded by the State Farm policy." Id. Rather than availing herself of the appeal policy contained within the EHIC policy to redress her grievance, Ms. Clancy filed suit in state court, seeking to recover the $5000 in coordinated benefits, as well as penalties and attorney's fees under state law, and to receive a declaratory judgment that she is not liable for $19,328 in reimbursement or subrogation. Ms. Clancy also requests that she be made representative of a class of similarly situated individuals who allegedly have been injured by EHIC's coordination and subrogation/reimbursement practices.

EHIC responded to Ms. Clancy's state suit by removing it to federal court on the basis that Ms. Clancy's complaint "challenges a claim decision under an employee benefit plan as ... defined by" the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1002, and because Ms. Clancy's demanded relief is governed by ERISA, 29 U.S.C. § 1001, et seq. Notice of Removal ¶ 6.

II. LAW AND ANALYSIS.

The parties have now asked the Court to rule on several motions. Three motions decided here concern Ms. Clancy's request for class certification¹ and one concerns EHIC's request for dismissal of its counterclaim. However, because EHIC's Motion for Summary Judgment is the keystone to the entire dispute, the analysis will begin there.

A. DEFENDANT'S MOTION FOR SUMMARY JUDGMENT.

EHIC moves the Court to render summary judgment on three grounds. First, EHIC contends that Ms. Clancy's EHIC policy is an employee welfare benefit plan governed by ERISA and that Ms. Clancy was a participant in that plan. Second, EHIC contends that ERISA preempts Ms. Clancy's state law claims and so does not permit extra-contractual, compensatory, or punitive damages. Third, EHIC contends that Ms. Clancy's remaining claims should be dismissed because she failed to exhaust the administrative remedies provided by the EHIC policy. Ms. Clancy contests all three grounds.²

1. Standard of Review.

Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). In determining whether summary judgment is appropriate, the Court must draw all justifiable inferences in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986); Oliver Resources PLC v. International Finance Corp., 62 F.3d 128, 130 (5th Cir.1995). To oppose a motion for summary judgment, the non-movant cannot rest on mere allegations or denials but must set forth specific facts showing that there is a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 321-22, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Floors Unlimited, Inc. v. Fieldcrest Cannon, Inc., 55 F.3d 181, 184 (5th Cir.1995); FED. R. CIV. P. 56(e).

2. Was the EHIC Policy an ERISA Plan?

The parties' first, and most fundamental dispute, is whether the EHIC policy is part of an employee welfare benefit plan governed by ERISA. For the reasons set forth below, the Court finds, as a matter of law, that the EHIC policy is part of an ERISA plan.³

ERISA defines an employee welfare benefit plan in pertinent part as:

any plan, fund, or program which was ... established or maintained by the employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise ... medical, surgical or hospital care or benefits.

ERISA § 3(1).⁴

Whether an ERISA plan exists is a question of fact. McDonald v. Provident Indem., Life Ins., Co., 60 F.3d 234, 235 (5th Cir.1995). Courts in the Fifth Circuit apply a three-part, comprehensive test for determining whether a particular plan qualifies as an "employee welfare benefit plan". Meredith v. Time Ins. Co., 980 F.2d 352, 355 (5th Cir.1993). The Court must ask whether a plan (1) exists; (2) falls within the safe-harbor provision established by the Department of Labor; and (3) satisfies the primary elements of an ERISA "employee benefit plan", i.e. establishment or maintenance by an employer intending to benefit employees. Id.; McDonald, 60 F.3d at 236. If the Court finds that there is no genuine issue of fact as to the establishment of all three of these factors, then EHIC is entitled to judgment as a matter of law that an ERISA plan exists.

The Court's first task in applying the Meredith test is to determine whether a plan exists by inquiring whether "from the surrounding circumstances a reasonable person [could] ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits." Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 240-41 (5th Cir.1990) (adopting test from Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir.1982) (en banc)); McDonald, 60 F.3d at 236; Meredith, 980 F.2d at 355; Hansen v. Continental Ins. Co., 940 F.2d 971, 977 (5th Cir.1991). The Court finds that any rational juror would find that such a plan exists: the benefits provided are described in the EHIC policy; the beneficiaries are Leake & Andersson employees; Leake & Andersson paid 100% of the premiums for enrolled employees; and the procedures for recovering the benefits are explained in the materials given to the employees.⁵

The second task is to determine whether the plan is exempt from ERISA because it falls within the ...