Electric Energy Inc. v. Lambert
| Decision Date | 02 December 2010 |
| Docket Number | No. 10–2629–STA–tmp.,10–2629–STA–tmp. |
| Citation | 757 F.Supp.2d 765 |
| Parties | ELECTRIC ENERGY, INC., Plaintiff,v.Jack LAMBERT, Defendant. |
| Court | U.S. District Court — Western District of Tennessee |
OPINION TEXT STARTS HERE
Thomas H. Lawrence, Lawrence & Russell, Memphis, TN, for Plaintiff.John Womick, Womick & Associates, Chtd., Carbondale, IL, for Defendant.
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
Before the Court is Plaintiff Electric Energy, Inc.'s (“EEI”) Motion for Summary Judgment (D.E. # 23) filed on October 6, 2010. Defendant Jack Lambert (“Lambert”) has responded in opposition. For the reasons set forth below, the Motion is GRANTED.
The following facts are not in dispute for purposes of this Motion unless otherwise noted.1 At all times relevant herein, Lambert was a “Covered Person” under the Group Insurance Plan for Bargaining Unit Employees of Electric Energy, Inc. (the “Plan”), which is self-funded. (Pl.'s Statement of Undisputed Facts ¶ 1.) EEI is a fiduciary of the Plan. ( Id. ¶ 2.) As such, it is entitled to bring this action pursuant to 29 U.S.C. § 1132(a)(3). ( Id.) The Plan is covered by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (“ERISA”). ( Id. ¶ 3.)
Lambert was injured in a motor vehicle accident on May 31, 2005, and subsequently obtained settlement funds from third parties responsible for his injuries. ( Id. ¶ 4.) The Plan paid $124,185.90 in medical benefits on behalf of Lambert in connection with the injuries he sustained in the automobile accident. ( Id. ¶ 5.) Keller, Linwood Motors Co., L & K Eickholz, Inc. entered into a settlement agreement that required payment on their behalf to Lambert in the amount of $650,000.00. ( Id. ¶ 6.) Former Defendant Erie Insurance Exchange (“Erie”) placed $124,185.90 of the settlement proceeds in the registry of this Court, pending resolution of the dispute between EEI and Lambert. ( Id. ¶ 7.) The Plan contains a “Reimbursement Rights and Subrogation” provision which states as follows:
The Plan shall, to the extent of benefits paid or payable by this Plan, have a reimbursement right against any funds paid or payable by any plan, person, insurance policy, insurer or other party (collectively an “Other Party”) by reason of a Covered Person's Injury or Illness, whether or not those funds are sufficient to make whole the Covered Person for the Injury or Illness. The Plan shall not be responsible for any costs or expenses, including attorneys' fees, incurred by or on behalf of a Covered Person in connection with any efforts to recover funds from any Other Party, unless this Plan agrees in writing to pay a portion of those expenses. The characterization of any funds paid or payable to or on behalf of a Covered Person, whether under a settlement agreement or otherwise, shall not affect this Plan's reimbursement right and to receive, pursuant to such right, all or a portion of such funds.
The Plan Administrator, in its sole discretion, may obtain full satisfaction of the Plan's reimbursement right in any manner the Plan Administrator deems appropriate. Further, the Plan Administrator may apportion liability for satisfaction of the Plan's reimbursement right among the Covered Person and any other person who receives funds by reason of the Covered Person's Injury or Illness, such as the Covered Person's parent, guardian or legal counsel.
This Plan shall also, to the extent of benefits paid or payable under this Plan, be subrogated to any claim a Covered Person may have against any Other Party for the Injury or Illness which occasioned the payment of benefits under this Plan. Upon written notification to the Covered Person, the Plan Administrator may (but shall not be required to) collect the claim directly from the Other Party in any manner the Plan Administrator chooses without the Covered Person's consent or, if applicable, the consent of his or her parent, guardian or legal counsel. The Plan Administrator shall apply any funds collected from the Other Party to payments made or to be made under this Plan and to any reasonable costs and expenses (including attorneys' fees) incurred by the Plan in connection with the collection of the claim, up to the amount of the award, settlement or other form of recovery. Any balance remaining shall be paid to or on behalf of the Covered Person as soon as administratively practical.
The Plan Administrator shall determine how to pursue the Plan's reimbursement and subrogation rights and remedies. The Plan Administrator may also agree to accept less than full reimbursement if (i) the Plan Administrator has made, or caused to be made, such reasonable, diligent and systematic collection efforts as it determines are appropriate under the circumstances and (ii) the Plan Administrator, in its discretion, has determined that collection of the full amount is unlikely or that the expenses of collection would likely equal or exceed the amount to be recovered.
Where this Plan is entitled to reimbursement or subrogation under the provisions of this section, the Plan shall be permitted to or satisfy its reimbursement and subrogation rights by reducing benefits payable under the Plan to the Covered Person and/or, in the Plan Administrator's sole discretion, benefits payable under the Plan to any covered member of the Covered Person's family, for Covered Expenses then incurred but not yet paid, and for Covered Expenses incurred in the future.
Except as otherwise provided herein, if a Covered Person incurs an Injury or Illness under circumstances where funds may be payable to or on behalf of the Covered Person by some Other Party, the Plan is not required to pay benefits for treatment of the Injury or Illness (notwithstanding any other provision of this Plan to the contrary), but may agree to pay benefits for that Injury or Illness to the extent otherwise payable under the Plan. As a condition of paying such benefits, the Plan Administrator may (but is not required to) require the Covered Person or someone legally qualified and authorized to act for the Covered Person in writing, to:
• Consent to the Plan's right to reimbursement from any recovery and to its subrogation of any right of recovery the Covered Person has with respect to the Injury or Illness;
• Promise not to take any action which would prejudice the Plan's reimbursement and subrogation rights;
• Promise to reimburse the Plan for all such benefits payments to the extent that the Covered Person (or anyone else on the Covered Person's behalf, including an individual, trust or estate) receives or is entitled to receive funds from some Other Party, irrespective of how the payment of funds is made or characterized, and irrespective of whether the funds received or to be received are sufficient to make the Covered Person whole. This reimbursement must be made within 30 days after the Covered Person (or anyone else on the Covered Person's behalf, including an individual, trust or estate) receives the funds; and
• Promise to cooperate fully with the Plan in asserting its reimbursement and subrogation rights and supply the Plan with any and all information and execute any and all forms the Plan may need for this purpose. In the event the Covered Person fails, or refuses to execute whatever assignment, form, agreement or other document that is requested by the Plan Administrator in connection with the Plan's reimbursement and subrogation rights, the Plan shall be relieved of any and all legal, equitable or contractual obligation for any otherwise Covered Expense incurred by the Covered Person and each member of the Covered Person's family who is covered by the Plan, including claims not yet incurred and claims then incurred but unpaid.
In the event the Plan, pursuant to these reimbursement and subrogation provisions, is entitled under such provisions to be reimbursed for benefits it has paid or that are payable for treatment of a Covered Person's Illness or Injury, and where the Covered Person or someone (including an individual, estate or trust) on behalf of the Covered Person receives or is entitled to receive funds for such Illness or Injury from some Other Party, the Plan shall have a constructive trust on such funds to the extent of the benefits paid or payable by this Plan. Such constructive trust shall be imposed upon the person or entity then in possession of such funds.
( Id. ¶ 8.)
EEI has requested that Lambert honor the terms of the Plan, but he has refused to do so. ( Id. ¶ 9).
In its Motion for Summary Judgment, EEI argues that the plan is entitled to reimbursement of the full $124,185.90 paid on behalf of Lambert for his medical expenses. The plan is entitled to full reimbursement based on the written plan's provisions on reimbursement rights and subrogation. Plaintiff contends that this Court has exclusive jurisdiction over the interpretation of the plan documents pursuant to ERISA. Furthermore, Plaintiff argues that ERISA preempts any state law which is inconsistent with plan terms, including the make-whole rule and the common fund doctrine. According to Plaintiff the common fund doctrine should only apply to an ERISA benefits plan if the plan language states that the doctrine applies. The plan language at issue in this case provides that the plan is not responsible for costs such as attorneys fees incurred by a covered person like Lambert in connection with the recovery of funds from another party. The plan language further states that the plan may agree in writing to pay a portion of the fees. There is no evidence that the plan agreed to pay a portion of Lambert's attorneys fees from his lawsuit to recover for his injuries. As a result, Lambert is not entitled to deduct attorneys fees, and EEI is entitled to reimbursement for the full $124,185.90 the plan paid on Lambert's behalf. Therefore, the Court should grant Plaintiff...
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