Franklin Electric Co. Inc v. Lutheran Hosp. Of Ind., 02A04-0907-CV-381.
| Decision Date | 27 August 2010 |
| Docket Number | No. 02A04-0907-CV-381.,02A04-0907-CV-381. |
| Parties | FRANKLIN ELECTRIC CO., INC., Appellant/Cross-Appellee,v.LUTHERAN HOSPITAL OF INDIANA, Bluffton Regional Medical Center, Appellee/Cross-Appellant,andCity of Fort Wayne Employee Benefit Plan, Appellee. |
| Court | Indiana Appellate Court |
Daniel D. Bobilya, Andrea R. Trevino, Bobilya & Reidy LLP, Fort Wayne, IN, Attorneys for Appellant/Cross-Appellee.
Douglas Dormire Powers, Powers Law Offices, LLC, Fort Wayne, IN, Attorneys for Appellees/Cross-Appellants Lutheran Hospital of Indiana and Bluffton Regional Medical Center.
Alan Verplanck, Timothy A. Manges, James P. Fenton, Eilbacher Fletcher, LLP, Fort Wayne, IN, Attorneys for Appellee City of Fortwayne Employee Benefit Plan.
Lutheran Hospital of Indiana (“Lutheran”) and Bluffton Regional Medical Center (“Bluffton”) filed a declaratory judgment action seeking to determine whether Lori Brown's insurance, Franklin Electric Company, Inc. Medical Plan for Eligible Employees and Early Retirees (“Franklin”), or Robert Kirby's insurance, the City of Fort Wayne Employee Benefit Plan (“City”), was responsible for payment of medical expenses incurred by Lori and Robert's son, Jayden, following his birth on July 12, 2003. Franklin appeals the trial court's grant of summary judgment to the City upon finding Franklin primarily responsible for Jayden's medical expenses from the date of his birth through May 24, 2004, raising two issues: whether the trial court had jurisdiction to entertain this matter and whether the trial court properly interpreted the coordination of benefits provision. Lutheran and Bluffton cross-appeal the trial court's denial of their motion for assessment of attorney's fees against Franklin, raising the issue of whether the trial court abused its discretion in finding Franklin's conduct “substantially justified.” Concluding that the trial court erred in finding Franklin's plan primary, but properly denied the request for attorney's fees, we reverse the entry of summary judgment for the City and remand for entry of summary judgment in favor of Franklin, but affirm the trial court in all other respects.
At all times relevant to this litigation, Lori was employed by Franklin Electric Company, Inc., and covered by its employee welfare benefit plan. Robert was employed by the City of Fort Wayne and covered by its governmental plan. Lori and Robert have never been married and they have never lived together. On July 12, 2003, Lori prematurely gave birth to Jayden at Lutheran. Lutheran provided medical services attendant to the birth and Jayden's care for approximately two months thereafter in the total amount of $148,102.34. On September 15, 2003, October 16, 2003, and January 14, 2004, Bluffton provided medical services to Jayden in the total amount of $3,267.20. Lori signed an assignment of rights form with each hospital when seeking medical services. Jayden was a covered beneficiary under both Franklin's and the City's plans at all relevant times.
On August 13, 2003, Lutheran submitted an interim bill to the City in the amount of $90,425.07 for services rendered to Jayden. The City made a partial payment of $60,584.80, but subsequently informed Lutheran that under its coordination of benefits terms, Franklin was the primary plan and the City was secondary. Lutheran then submitted a final bill to Franklin in the amount of $148,102.34 (including the $90,425.07 previously billed to the City). Franklin made a partial payment of $110,542.18, and Lutheran thereafter refunded the City's earlier partial payment.
Also in August 2003, an action was instituted in Wells Circuit Court to determine Jayden's paternity. On March 16, 2004, the Wells Circuit Court entered an order in the paternity action (the “paternity order”) granting custody of Jayden to Lori granting parenting time to Robert, and ordering Robert to “provide medical, dental, and optical insurance for the minor child if available through his place of employment, and [Robert's] insurance shall be designated as the primary insurance.” Appellant's Appendix at 68. The paternity order was provided to and rejected by the City “because it is not a valid Qualified Medical Child Support Order (QMCSO) or a valid National Medical Support Notice (NMSN).” Id. at 174. In the same letter rejecting the paternity order, the City's Benefits Administrator instructed that the insurance paragraph quoted above “should be removed or restated that the Coordination of Benefits (COB) provisions of the Plans will be used to determine which Plan is primary and which Plan is secondary.” Id. Wells County subsequently issued an NMSN that was received by the City on May 24, 2004. The City accepted the NMSN as a QMSCO on May 26, 2004, noting Jayden was “currently enrolled in the [City] plan as a dependant of the participant” and “[c]overage is effective as of 7/12/03.” Id. at 179. On July 16, 2004, Donna Emshwiller of the Wells County Title IV-D Office sent a letter to the City's Benefits Administrator advising the provisions of the paternity order became effective on March 16, 2004, and “[c]ompliance of the provisions is expected to take place within 30 days of the Order.” Id. at 181.
On October 4, 2004, nearly one year after its $110,542.18 payment to Lutheran, Franklin unilaterally reallocated the payment to other plan beneficiaries' accounts with Lutheran, leaving Jayden's account again unpaid. Because “an issue has arisen as to whether [Robert's] insurance was to be designated as primary since the child's date of birth or since the date of the March 16, 2004 Order,” id. at 275, a petition to clarify or modify the paternity order was filed in Wells County on October 20, 2004, by Trent Patterson, acting as counsel for Lori. On September 6, 2005, attorney Liberty Roberts of Collier-Magar & Roberts, P.C., filed an appearance as co-counsel on behalf of Lori. Also on September 6, 2005, Kenneth Collier-Magar of Collier-Magar & Roberts, P.C., co-signed with Patterson a Memo in Support of Petition to Clarify or Modify. The paternity order was clarified on September 28, 2005 (the “clarified paternity order”), to designate Robert's insurance “as the primary insurance for Jayden Kirby from the date when coverage for Jayden Kirby began on July 12, 2003.” Id.
In early 2007,2 Lutheran resubmitted its bill to the City; the City denied the claim. Lutheran resubmitted the claim to Franklin; Franklin denied the claim on the basis that under its coordination of benefits terms, the City was the primary plan. Lutheran exhausted the administrative claims procedures under Franklin's plan and the City waived its administrative claims requirements. Bluffton encountered a similar course of events in seeking payment of the $3,276.20 owed to it for services provided to Jayden.3
Due to this wrangling over which plan was responsible for expenses from Jayden's birth and care prior to May 24 2004,4 the Hospital's bills for that period remained unpaid. The Hospital therefore filed the instant declaratory judgment action against Franklin and the City in Allen Superior Court on November 13, 2007, seeking to determine the “rights, duties and obligations of the parties with respect to the payment of benefits under the Franklin [p]lan and/or the City [p]lan.” Id. at 19. On November 26, 2007, Kenneth Collier-Magar and Liberty Roberts of Collier-Magar & Roberts, P.C., filed appearances on behalf of Franklin. Franklin responded to the Hospital's complaint by filing a motion to transfer to Wells Circuit Court because of the paternity action there. The City responded and filed a cross-claim against Franklin alleging Franklin was primary for coverage purposes. After the trial court denied Franklin's motion to transfer, all parties filed motions for summary judgment. The trial court entered the following order, in pertinent part:
JURISDICTION, VENUE AND STANDING
1. This Court has jurisdiction of [the Hospital's] claims. ERISA § 502(e)(1). Venue is properly in this Court. Indiana Rules of Trial Procedure, T.R. 75.
2. ERISA § 502(A)(1)(B) permits an assignee to enforce rights of an assignor to benefits under a welfare benefit plan.
3. At all times relevant to this dispute, Lori, as an employee of [Franklin] was eligible for reimbursement of covered claims through the Franklin Plan.
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