Forsyth v. Humana, Inc.
| Decision Date | 21 July 1993 |
| Docket Number | No. CV-S-89-249-PMP (LRL).,CV-S-89-249-PMP (LRL). |
| Citation | 827 F. Supp. 1498 |
| Parties | Mary FORSYTH; Marrietta Cade; Willie Andrews; Mary Lou Buehler; Helen Staves; Randolph Bratton; and Searle Auto Glass, Inc., doing business as Best Glass Company, Plaintiffs, v. HUMANA, INC., a Delaware corporation; Humana Health Insurance of Nevada, Inc., a Nevada corporation; and Does I through X, inclusive, Defendants. |
| Court | U.S. District Court — District of Nevada |
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J. Randall Jones, John Field, Jones, Jones, Close & Brown, Will Kemp, Harrison Kemp, Chartered, Las Vegas, NV, Stanley M. Chesley, Waite, Schneider, Bayless & Chelley, L.P.A., Cincinnati, OH, John J. Cummings, Richard M. Martin, Jr., W.B. Markovitis, Cummings, Cummings & Dudenhefer, New Orleans, LA, Wendell H. Gauthier, Gauthier & Murphy, Metairie, LA, G. Robert Blakey, Notre Dame Law School, Notre Dame, IN, for plaintiffs.
Dennis Kennedy, Louis Garfinkel, Lionel Sawyer & Collins, Las Vegas, NV, Mark Biros, Joseph E. Casson, Michael F. Moses, Thomas H. Brock, Burton J. Fishman, Lisolette Mitz, Proskauer Rose Goetz & Mendelson, Robert Eccles, O'Nelveny & Myers, Washington, DC, for defendants.
Plaintiffs are employers and employees who contracted for health insurance, through employee benefit plans, with Defendant Humana Health Insurance of Nevada, Inc. ("Humana Insurance"), during the period 1985 to 1988. One group of Plaintiffs used the health care services of Humana Hospital-Sunrise ("Sunrise Hospital"), an acute care facility located in Las Vegas, Nevada, which is owned and operated by Defendant Humana, Inc. ("Humana"), and a Participating Hospital under the insurance agreements. The insurance agreements required those insured with Humana Insurance to pay all expenses up to the designated deductible amount, and 20% of the expenses beyond that, with the insurance company to pay the other 80%. The liability of an insured had a cap called a "personal expense limit" which was the maximum the insured would have to pay in any given year, regardless of the total health care expenses.
In 1984, Humana Insurance and Sunrise Hospital entered into an agreement whereby Humana Insurance would pay Sunrise Hospital a discounted amount for that portion of the hospital charges for which it was responsible. However, the portion of the charges paid by the insureds was not discounted but was still based on the usual and customary rates. Plaintiffs assert that Humana Insurance failed to pass along the discounts it had arranged for itself to its insureds either in the form of reduced premiums or reduced co-payments.
Previous Orders of this Court have granted Plaintiffs' Motions for Class Certification, thereby permitting both a Premium Payor Class and a Co-Payor Class to maintain this action. By their Second Amended Complaint (# 370), filed August 12, 1991, Plaintiffs assert three claims for relief. Plaintiffs' First Claim for Relief is brought by the Co-Payor Class which consists of employees who obtained health insurance benefits under an employee benefit plan as defined under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. There Plaintiffs allege that Defendants breached fiduciary duties owed to the Co-Payor Class under ERISA; engaged in transactions prohibited by ERISA; and retained excessive compensation. Plaintiffs' Second Claim for Relief alleges a violation of Section 2 of the Sherman Act, 15 U.S.C. § 2 and is brought on behalf of the Co-Payor Class and Premium Payor Class, which consists of individuals or entities paying all or a portion of the Humana-Insurance premiums during the period 1985 to 1988. Plaintiffs' Third Claim for Relief, brought on behalf of both the Co-Payor Class and Premium Payor Class, alleges that Defendants engaged in a scheme to defraud in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968.
Before the Court is a Motion for Summary Judgment (# 804), filed on June 22, 1993, by Defendants Humana and Humana Insurance. On July 7, 1992, Defendants filed a Correction (# 808). Plaintiffs filed their Opposition (# 820) on August 7, 1992, which was followed by an Errata (# 822) filed on August 12, 1992. Defendants filed their Reply (# 841) accompanied by a Supplemental Affidavit (# 842) on October 19, 1992.
Additionally, the parties have filed the following supplementary motions:
On July 7, 1993, this Court heard oral argument on Defendants' Motion for Summary Judgment and its progeny.
Pursuant to Federal Rule of Civil Procedure 56, summary judgment is proper "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 a judgment as a matter of law."
The party moving for summary judgment has the initial burden of showing the absence of a genuine issue of material fact. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir.1982). Once the movant's burden is met by presenting evidence which, if uncontroverted, would entitle the movant to a directed verdict at trial, the burden then shifts to the respondent to set forth specific facts demonstrating that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). If the factual context makes the respondent's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986); California Arch. Bldg. Prod. v. Franciscan Ceramics, 818 F.2d 1466, 1468 (9th Cir.1987), cert. denied, 484 U.S. 1006, 108 S.Ct. 698, 98 L.Ed.2d 650 (1988).
If the party seeking summary judgment meets this burden, then summary judgment will be granted unless there is significant probative evidence tending to support the opponent's legal theory. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968); Commodity Futures Trading Commission v. Savage, 611 F.2d 270 (9th Cir.1979). Parties seeking to defeat summary judgment cannot stand on their pleadings once the movant has submitted affidavits or other similar materials. Affidavits that do not affirmatively demonstrate personal knowledge are insufficient. British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979). Likewise, "legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise valid motion for summary judgment." Id.
A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the differing versions of the truth. See Admiralty Fund v. Hugh Johnson & Co., 677 F.2d 1301, 1305-06 (9th Cir. 1982); Admiralty Fund v. Jones, 677 F.2d 1289, 1293 (9th Cir.1982).
All facts and inferences drawn must be viewed in the light most favorable to the responding party when determining whether a genuine issue of material fact exists for summary judgment purposes. Poller v. CBS, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). After drawing inferences favorable to the respondent, summary judgment will be granted only if all reasonable inferences defeat the respondent's claims. Admiralty Fund v. Tabor, 677 F.2d 1297, 1298 (9th Cir.1982).
The trilogy of Supreme Court cases cited above establishes that "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp., 477 U.S. at 327, 106 S.Ct. at 2554, quoting Fed.R.Civ.P. 1. See also Avia Group Int'l, Inc. v. L.A. Gear Cal., 853 F.2d 1557, 1560 (Fed.Cir.1988).
In their First Claim for Relief, Plaintiffs' Co-Payor Class seeks approximately $85 million in damages against Defendant Humana Insurance for violation of its fiduciary duties under ERISA.
At the heart of this entire case is a provision within the Humana Care Plus Policy under which members of the Co-Payor Class were insured. This provision states that the employee/insured would pay 20% of all covered charges incurred while in a hospital up to a certain amount (usually $5,000), and that Humana Insurance would be responsible for the remaining 80%. See Opposition...
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