Fitch v. Am. Elec. Power Sys. Comprehensive Med. Plan
| Docket Number | 21-cv-576,2:21-cv-682 |
| Decision Date | 02 December 2021 |
| Parties | JOHN K. FITCH, Plaintiff, v. AMERICAN ELECTRIC POWER SYSTEM COMPREHENSIVE MEDICAL PLAN, Defendant. AMERICAN ELECTRIC POWER SERVICE CORPORATION as fiduciary of the AMERICAN ELECTRIC POWER SYSTEMJUDGE EDMUND A. SARGUS, JR. COMPREHENSIVE MEDICAL PLAN Plaintiff, v. JOHN K. FITCH, as administrator of the ESTATE OF JOHN D. FITCH, AND GLORI FITCH, Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
Two interrelated motions filed in the above-captioned cases are before the Court. The first motion is a Motion to Remand Fitch v. American Electric Power Systems Medical Plan, Case Number 2:21-cv-576 (“Fitch I”), to the Franklin County Probate Court. (Fitch I, No. 2:21-cv-576, ECF No. 10.) The second motion, filed by the defendants in American Electric Power Corporation v. John K. Fitch and Glori Fitch, Case Number 2:21-cv-682 (“Fitch II”), asks the Court to dismiss the complaint in Fitch II because (i) it does not fall within this Court's subject matter jurisdiction and (ii) it fails to sufficiently state a claim upon which relief can be granted (the “Motion to Dismiss”). (Fitch II, No 2:21-cv-682, ECF No. 8.) In the same motion, the Fitch II defendants alternatively ask the Court to temporarily abstain from resolving AEP's Complaint. (Id.)
For the reasons stated herein, the Court GRANTS both the Motion to Remand (Fitch I, No. 2:21-cv-576, ECF No. 10) and the Motion to Dismiss. (Fitch II, No 2:21-cv-682, ECF No. 8.)
This dispute seeks to resolve whether, under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., an employee benefit plan is entitled to reimbursement from settlement proceeds that were already allocated to various wrongful death claims by an Ohio probate court. The Court does not reach this question, as it finds that it lacks subject matter jurisdiction over both cases before it.
On October 11, 2019, John D. Fitch (“Decedent”) was critically injured in a motor vehicle accident. (Fitch II, ECF No. 8 at PageID #36.) He passed away the following day after receiving emergency medical treatment. (Id.) Decedent's mother, Glori Fitch, a named defendant in Fitch II, was employed at American Electric Power (“AEP”), the plaintiff in Fitch II. By virtue of Glori Fitch's employment at AEP, Decedent was a beneficiary of the American Electric Power System Comprehensive Medical Plan (“the AEP Plan” or “the Plan”), a self-funded employee welfare benefit plan. (Id. at PageID #35-36.)
The AEP Plan contained various subrogation and reimbursement provisions related to any “Recovery” obtained by a “covered person” (i.e., a plan participant or beneficiary) for whom the Plan had paid medical benefits after he or she suffered an injury or illness. (Fitch II, ECF No. 10-1 at PageID #200.) Under the Plan, such “Recovery” consisted of any “monies received from any person or party, any person's or party's liability insurance, uninsured/underinsured motorist proceeds . . . [and] ‘no-fault' insurance and/or automobile medical payments coverage, whether by lawsuit, settlement or otherwise.” (Id. at PageID #201.)
The AEP Plan's subrogation provision, in relevant part, stated that the Plan would have “first priority” to recover the medical benefits it paid on a covered person's behalf from any third party who agreed to compensate that person for his or her illnesses or injuries. (Id.) It further stated that the AEP Plan “has the right to take whatever legal action it sees fit against any person, party or entity to recover the benefits paid under the Plan.” (Id.)
In the event the AEP Plan failed to subrogate its claim, it reserved the right to directly pursue a covered person who, after obtaining “Recovery, ” did not reimburse the Plan for any medical “benefits the Plan paid on [their] behalf.” (Id.) The AEP Plan went on to articulate its reimbursement procedure, which required covered persons or their legal representative to “hold in trust for the Plan the proceeds of the gross Recovery.” (Id.) If the covered person refused to adhere to this policy, the AEP Plan stated that it could “deduct any of the unsatisfied portion of the amount of benefits the Plan has paid . . . from any future benefit [received by the covered person] under the Plan.” (Id.) The reach of this reimbursement provision extended to any “relatives, heirs, and/or assignees [who] make any Recovery because of injuries sustained by the covered person.” (Id. at PageID #202.)
Decedent's estate (the “Fitch Estate”) is administered by his father, John K. Fitch (“Administrator of Fitch Estate” or “the Administrator”).[1] In the year after Decedent's death, the Administrator, pursuant to his official capacity, resolved two settlement claims: One in the amount of $500, 000 from the at-fault driver's liability insurance carrier (the “At-Fault Settlement”), and another in the amount of $100, 000 from State Farm-the Administrator's automobile insurer-for medical payments made on Decedent's behalf (the “Medical Payments Settlement”) (collectively, the “Settlement Proceeds”). (Fitch II, ECF No. 8 at PageID #36.)
On May 11, 2020, the Administrator received a letter from Anthem Blue Cross and Blue Shield (“Anthem”), the AEP Plan's claim administrator, which asserted the Plan's right to enforce its subrogation and/or reimbursement provisions against the Fitch Estate to recover $110, 764.55 in medical expenses allegedly paid on Decedent's behalf after his fatal accident (the “May 11 Letter”). (Fitch I, ECF No. 14-1.) Several months later, on September 10, 2020, the Administrator allegedly received another letter referencing the same Plan provisions from Anthem. (Fitch I, ECF No. 14-2 at PageID #81.) This letter, however, asserted a $101, 582.46 lien against the Fitch Estate.[2] (Id.)
On October 12, 2020-six months after the Administrator received the May 11 Letter, and one year after Decedent's death-the Administrator applied to have the At-Fault Settlement and Medical Payments Settlement approved by the Franklin County Probate Court (the “Probate Court”). (Id. at PageID #85-87.) The application requested the court to allocate the entirety of the Settlement Proceeds to the wrongful death claims held by the Decedent's statutory heirs.
(Id.) It further specified that (i) the Settlement Proceeds represented only a “partial settlement, ” as negotiations between the Administrator and State Farm were “ongoing, ” (ii) Anthem was asserting a lien totaling $101, 582.46 against the Estate, and (iii) said lien would be disputed by the Fitch Estate under Ohio law. (Id. at PageID #87.) The Probate Court approved the application that same day without a hearing. (Id.) Accordingly, all $600, 000 of the Settlement Proceeds were designated as wrongful death proceeds to be disbursed amongst Decedent's immediate family. (Id.) The Fitch Estate remained open in the Probate Court. (Id.)
On October 22, 2020, the Administrator notified Anthem that it had requested the Probate Court to hold a hearing for, and ultimately approve, a partial settlement obtained “in connection with [Decedent's] wrongful death claim.” (Id. at PageID #81.) The Administrator's message additionally stated that, because the proceeds of this partial settlement did not constitute assets of the Fitch Estate, they were immune from the Plan's reimbursement claim. (Id. at PageID #82.) The letter further specified that the Fitch Estate had no recoverable assets at all. (Id.)
On November 4, 2020, the AEP Plan responded by reasserting its right to reimbursement under the benefit plan from any settlement proceeds arising from a survival action or wrongful death claim. (Fitch II, ECF No. 10 at PageID #59.) On November 5, 2020, the Administrator informed the AEP Plan that the Probate Court had already approved its settlement application. (Fitch I, ECF No. 14-2 at PageID #84.) Again, the Administrator asserted, the Settlement Proceeds were not part of the Fitch Estate, and, accordingly, the Fitch Estate had no assets from which the Plan could be reimbursed. (Id.)
This litigation began with the Administrator's filing of Fitch I, an action for declaratory judgment against the AEP Plan, on January 15, 2021 in the Franklin County Court of Common Pleas. (Fitch I, ECF No. 1-2 at PageID #9-11.) The complaint, in short, challenges the AEP Plan's assertion that it is “entitled to recover $101, 582.46 against the aforementioned wrongful death proceeds, ” and requests a legal declaration that the AEP Plan is “entitled to no monies as a result of Decedent's accident.” (Id. at PageID #10-11.)
On February 9, 2021, the Plan removed Fitch I to this Court on the basis that it was preempted under ERISA. (Notice of Removal, Fitch I, ECF No. 1.) One month later, the Administrator moved to remand the case to the Franklin County Probate Court.[3] (Fitch I, ECF No. 10.)
In between the AEP Plan's removal of the declaratory action and the Fitch Estate's Motion to Remand, AEP, as a fiduciary of the Plan, filed the Fitch II Complaint in this Court. (Fitch II, ECF No. 1.) The Complaint, in sum, seeks to attach equitable liens against those portions of the Settlement Proceeds that were obtained by, or are allegedly in the possession of, the Fitch Estate and/or Glori Fitch (the “Fitches”). (Id. at PageID #6-7.) AEP also seeks to enjoin the Fitches from “transferring or disposing of” the Settlement Proceeds. (Fitch II, ECF No. 1 at PageID #6-7.)
Soon after AEP filed its Complaint, the Fitches moved the Court (i) to dismiss it for lack of subject...
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