Freitas v. Geisinger Health Plan

• Court: U.S. District Court — Middle District of Pennsylvania
• Writing for the Court: Matthew W. Brann, Chief United States District Judge
• Citation: Freitas v. Geisinger Health Plan, 641 F.Supp.3d 101 (M.D. Pa. 2022)
• Docket Number: 4:20-CV-01236,No. 4:20-CV-01236
• Decision Date: 16 November 2022
• Parties: Lori FREITAS and Kaylee McWilliams, individually and on behalf of all others similarly situated, Plaintiffs, v. GEISINGER HEALTH PLAN, and Socrates, Inc., Defendants.

641 F.Supp.3d 101

Lori FREITAS and Kaylee McWilliams,individually and on behalf of all others similarly situated, Plaintiffs, v. GEISINGER HEALTH PLAN, and Socrates, Inc., Defendants.

No. 4:20-CV-01236

United States District Court, M.D. Pennsylvania

Signed November 16, 2022

Charles Kannebecker, Weinstein Schneider Kannebecker & Lokuta, Milford, PA, for Plaintiffs.

Gretchen W. Root, Buchanan Ingersoll & Rooney PC, Pittsburgh, PA, Thomas G. Collins, Buchanan Ingersoll & Rooney PC, Harrisburg, PA, Jeffrey I. Pasek, Raymond A. Kresge, Cozen O'Connor, Philadelphia, PA, for Defendants.

MEMORANDUM OPINION

Matthew W. Brann, Chief United States District Judge

Plaintiffs Lori Freitas and Kaylee McWilliams sued Defendants, Geisinger Health Plan ("GHP") and its subrogation agent, Socrates, Inc., alleging various causes of action under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. Defendants now move to dismiss several of the Counts in Plaintiffs' Second Amended Complaint ("SAC"). Plaintiffs move to strike Defendants' Motion to Dismiss, and also move to compel discovery of information regarding other plan participants. As discussed below, the Court converted Defendants' motion into a summary judgment motion. For the following reasons, that motion will be granted, and Plaintiffs' motions will be denied.

I. BACKGROUND

The Court previously detailed the facts underlying this matter in its prior opinion denying Defendants' first Motion to Dismiss.¹ Therefore, this opinion briefly discusses this matter's underlying factual background and focuses on new developments leading up to Defendants' second Motion to Dismiss.

A. Defendants' Demands for Reimbursement from Plaintiffs' Personal Injury Recoveries

Plaintiff Lori Freitas received insurance coverage from her employer, Mount Airy Casino Resort.² As did Plaintiff Kaylee McWilliams from her father's employer, Big Heart Pet Brands, a subsidiary of the J.M. Smucker Company.³ Both employers had employee welfare benefit plans that included health insurance from GHP.⁴ These plans were termed the Mount Airy Wrap Plan and the J.M. Smucker Master Health Plan (collectively, the "Employer Plans"). GHP set out its coverage of Mount Airy and J.M. Smucker employees through a document known as the Group Subscription Certificate.⁵

Both Plaintiffs were injured by third-party tortfeasors.⁶ They both sought and received compensation from GHP for their injuries.⁷ Eventually, both Plaintiffs sued and later settled with the respective tortfeasors who injured them.⁸ After the settlements, Defendants demanded reimbursement from each Plaintiff, relying on a subrogation clause in the Certificate that did not explicitly set out a right to reimbursement.⁹ Plaintiffs, under protest, paid a portion of what Defendants demanded.¹⁰ They subsequently filed a class-action complaint asserting ERISA claims for both monetary relief for benefits due to them under ERISA § 502(a)(1) as well as declaratory and injunctive relief for Defendants' alleged violations of their fiduciary duties under ERISA § 502(a)(3).¹¹

B. The Court's Prior Opinion Denying Defendants' First Motion to Dismiss

Defendants moved to dismiss Plaintiffs' complaint, claiming they had an equitable right to reimbursement even though there was no explicit right in the Certificate.¹² The Court denied their motion, largely because there was no explicit right in the Certificate and Defendants' arguments for an equitable right were unavailing.¹³

Plaintiffs premised some of their fiduciary duty claims under § 502(a)(3) on the same facts giving rise to § 502(a)(1) allegations, i.e., the improper demands for reimbursement. Relying on the duplicative nature of those claims, Defendants moved to dismiss them as well.¹⁴ The Court rejected their position, concluding that while "a beneficiary may not ultimately recover under both § 502(a)(1) and § 502(a)(3), . . . . that does not mean a plaintiff should be barred from asserting a claim under § 502(a)(3) where it is not yet clear that relief is actually available under another provision."¹⁵ In other words, the Court held that Plaintiffs could plead duplicate claims under both sections but would only recover once. But the Court noted that "it may be appropriate to rule on this issue again later in the litigation."¹⁶

Defendants also argued that Plaintiffs' fiduciary-duty claims failed as a matter of law because they were entitled to the funds under the subrogation clause, largely repeating their arguments related to Plaintiffs' § 502(a)(1) claims.¹⁷ The Court rejected those arguments because they all rested on the erroneous premise that the Certificate granted them a right to reimbursement.¹⁸

Lastly, Defendants argued that 29 C.F.R. § 2650.503-1, upon which Plaintiffs based one set of claims, did not authorize an independent cause of action.¹⁹ Although the Court did not find clear indication of a cause of action and corresponding remedy, it explained "that precedent allows Plaintiffs to raise a violation of § [2650.503-1] to request a remand for a full and fair review of their benefits claim."²⁰ The Court accordingly allowed those duplicative claims to withstand Defendants' Motion to Dismiss.

One of the Court's observations in its prior opinion is particularly relevant to the instant motion. The Court noted that, to prevail, Defendants "must point to explicit language within the plan creating a right of reimbursement and designating specific funds subject to that right."²¹ Indeed, even though the Certificate—the only plan document in the record at that point—did not contain a reimbursement clause, the Court noted that "plans often contain" such clauses.²²

C. Procedural History

Following the Court's denial of Defendants' first Motion to Dismiss, the parties began discovery. Plaintiffs filed requests for productions. After seeking and receiving several extensions from Plaintiffs, Defendants responded, producing some documents, and objecting to several of Plaintiffs' requests. Plaintiffs then moved to compel Defendants to produce the requested documents.²³ After they filed the Motion to Compel but before all briefing relevant to that motion was submitted, Plaintiffs filed the SAC.²⁴ Plaintiffs apparently did not notify Defendants that they would file the SAC, but Defendants consented to its filing.²⁵

The SAC is nearly identical to Plaintiffs' earlier complaint. Like they did in their earlier complaint, Plaintiffs bring several ERISA claims. Counts I and VII allege causes of action under § 502(a)(1) for recovery of benefits due to each Plaintiff under their ERISA plans.²⁶ Counts II through VI and VIII through XII, raised under § 502(a)(3), allege that Defendants breached their fiduciary duties in seeking reimbursement from each Plaintiff.²⁷

After Plaintiffs filed the SAC, Defendants moved to dismiss all Counts and to partially dismiss Count VII to the extent that it seeks injunctive or declaratory relief. Defendants alternatively move for summary judgment.²⁸ Plaintiffs in turn moved to strike Defendants' second Motion to Dismiss. After filing their brief in support of their Motion to Strike but before Defendants filed their response, Plaintiffs filed an amended Motion to Strike, to which Defendants then responded.²⁹

By order, the Court converted Defendant's Motion to Dismiss into a motion for summary judgment under Federal Rule of Civil Procedure 12(d) and allowed the parties to submit additional evidence.³⁰ All motions have been fully briefed and are ripe for disposition.

II. LAW

A. Motion of Strike

Pursuant to Rule 12(f), a court "may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." This rule is "designed to reinforce the requirement in Rule 8 . . . that pleadings be simple, concise, and direct."³¹ "To that end, the purpose of any motion to strike should be to 'clean up the pleadings, streamline litigation, and avoid the unnecessary forays into immaterial matters.' "³² The burden rests with the movant.³³ He or she must demonstrate that the matter falls within one of the categories listed in Rule 12(f).

B. Conversion of Motions to Dismiss to Motions for Summary Judgment and the Summary Judgment Standard

Under Rule 12(b)(6), the Court dismisses a complaint, in whole or in part, if the plaintiff fails to "state a claim upon which relief can be granted." Normally, this analysis is confined to the plaintiff's complaint and any documents attached to it. But under Rule 12(d), "[i]f, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion."³⁴

Under Rule 56, summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."³⁵ Material facts are those "that could alter the outcome" of the litigation, "and disputes are 'genuine' if evidence exists from which a rational person could conclude that the position of the person with the burden of proof on the disputed issue is correct."³⁶ A defendant "meets this standard when there is an absence of evidence that rationally supports the plaintiff's case."³⁷ Conversely, to survive summary judgment, a plaintiff must "point to admissible evidence that would be sufficient to show all elements of a prima facie case under applicable substantive law."³⁸

The party requesting summary judgment bears the initial burden of supporting its motion with evidence from the record.³⁹ When the movant properly supports its motion, the nonmoving party must then show the need for a trial by setting forth "genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party."⁴⁰ The United States Court...