Gates v. Dematic Corp.
| Decision Date | 30 September 2022 |
| Docket Number | 20-cv-08475 (KSH) (CLW) |
| Parties | ROGER C. GATES, Plaintiff, v. DEMATIC CORPORATION and COUNTY OF PASSAIC, Defendants. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
In this declaratory judgment action, the Court is asked to determine the enforceability of an ERISA lien asserted by defendant Dematic Corporation (“Dematic”) in connection with a jury award of $2,645.00.00 to plaintiff Roger Gates (“Gates”) in his state court personal injury lawsuit against defendant County of Passaic (the “County”). After the verdict, Gates sought to amend the judgment to add $756,180.80-the amount of the lien asserted by Blue Cross Blue Shield of Michigan (“BCBSM”), Dematic's healthcare plan claims administrator. In signing the judgment to reflect the jury award (less certain medical expenses), the trial judge added:
[T]he right to assert the claim against the County [] shall not be foreclosed by the entry of this judgment. At the point that a claim is asserted against [Gates], in the appropriate forum, to enforce the lien, the County may be joined as a party, and the right to payment of the lien may be fully litigated by all necessary parties.
The trial judge then denied Gates's post-judgment motion to file an amended complaint, reasoning as follows:
This court recognizes that the issue of the ERISA lien must be adjudicated. However, this case is not the proper forum to adjudicate that claim. The court agrees that the cause of action to enforce the lien did not accrue until the final judgment was entered. [Gates] can now litigate that issue in whatever forum [he] deems appropriate.
(Id. at Ex. E.)
This declaratory judgment lawsuit followed, which the Court construes as Gates's response to the trial court's directive-i.e., he seeks a declaration as to the enforceability of BCBSM's lien. The County has been added as a party, consistent with the expectation by Gates and in the trial court that the County will be responsible for payment of the lien.[1] Presently before the Court is Dematic's motion for summary judgment (D.E. 54) arguing that the lien is enforceable as a matter of law, which the County opposes on grounds that there exists a genuine dispute as to the lien's validity. The motion is fully briefed, and the Court decides it without oral argument pursuant to L. Civ. R. 78.1.
On April 14, 2016, Gates was in a motorcycle accident in West Milford, Passaic County, New Jersey.[2] , .) At the time of the accident, Gates was employed by Dematic and a participant in the Dematic Corporation Salaried Employees Health and Welfare Plan (the “Plan”), an employee welfare benefit plan governed by the Employee Retirement Security Act of 1974, 29 U.S.C. § 1001, et. seq. (“ERISA”). (Dematic Stmt. ¶ 2.) Gates sustained injuries that required medical attention, and the Plan paid $756,180.80 in accident-related medical benefits through its administrator, BCBSM. (Id. ¶ 3; County Stmt. ¶ 5.)
Gates sent the County a timely notice of tort claim and filed a negligence suit in Passaic County Superior Court on September 1, 2017, alleging improper road maintenance and repair. (Compl. ¶¶ 2-3; see Gates v. County of Passaic, PAS-L-2925-17.) During discovery, BCBSM sent Gates a letter through counsel indicating that BCBSM was “seeking reimbursement for medical expenses . . . paid out to date [in] the sum of $756,180.80” pursuant to the Plan's “right to reimbursement and subrogration” provision, which provides in pertinent part as follows:
(Id. ¶ 8, Ex. B; see D.E. 54-3, Plan Doc. at DEMATIC 39.) In response, Gates took the position that BCBSM's lien is unenforceable under New Jersey law because the Plan is not fully self-funded. (D.E. 55-7, Hunt Decl. Ex. K at BCBSM 120-21.)
The matter proceeded to trial and, on January 31, 2020, a jury returned a verdict in Gates's favor in the amount of $2,645,000.[3] ) Gates petitioned the trial court to add BCBSM's lien to the judgment against the County, which was denied on March 17, 2020 on grounds that there was “insufficient evidence before the court to determine the validity of the lien.” (Id. ¶ 9, Ex. C.) The trial court added the following:
[T]he right to assert the claim against the County [] shall not be foreclosed by the entry of this judgment. At the point that a claim is asserted against [Gates], in the appropriate forum, to enforce the lien, the County may be joined as a party, and the right to payment of the lien may be fully litigated by all necessary parties.
(Id. at Ex. C.) After Gates unsuccessfully moved for reconsideration of that ruling, he sought leave to file a post-judgment amended complaint “naming Dematic [] as a defendant [and] seeking a declaration of rights under the [Plan].” (Id. ¶¶ 10, 12, Ex. D.) The trial court denied that request, reasoning as follows:
This court recognizes that the issue of the ERISA lien must be adjudicated. However, this case is not the proper forum to adjudicate that claim. The court agrees that the cause of action to enforce the lien did not accrue until the final judgment was entered. [Gates] can now litigate that issue in whatever forum [he] deems appropriate.
(Id. ¶ 13, Ex. E.)
The instant lawsuit followed. On June 8, 2020, Gates filed a declaratory judgment complaint against Dematic and the County in Passaic County Superior Court seeking “to determine whether the subject Plan is within its rights to recover its purported lien”; specifically, whether the Plan “is due reimbursement from the County[.]” Dematic removed the matter to this Court on July 8, 2020 pursuant to 28 U.S.C. §§ 1331 and 1441, and answered the complaint on July 29. (Rem Not. ¶ 10; D.E. 6.) Although the County initially failed to appear, it filed its answer on February 12, 2021. (D.E. 38.)
Dematic has now moved for summary judgment seeking a declaratory judgment as to the enforceability of BCBSM's lien, which the County has opposed.[4] The motion as framed by the parties rises or falls on whether the Plan is self-funded or insured for ERISA preemption purposes.[5] If the Plan is self-funded, applicable state insurance regulations-which, as explained infra, render BCBSM's lien unenforceable-are preempted by ERISA. If, on the other hand, the Plan is insured, New Jersey law is saved from ERISA preemption, and BCBSM's lien is unenforceable.
In its moving brief, Dematic argues that the undisputed evidence in the record demonstrates that benefits under the Plan are provided on a self-funded basis and not through BCBSM, its administrator. (D.E. 54, Mov. Br. at 10-15.) The County opposes on grounds that the Plan's participation in an inter-arrangement program known as the “BlueCard Program” casts doubt on whether any Blue Cross Blue Shield (“BCBS”) entities other than BCBSM insure the Plan. (D.E. 55, Opp. Br. at 10-13.) In reply, Dematic urges the Court to find that the Plan's participation in the BlueCard Program in no way impacts its self-funded status.[6] (D.E. 57, Reply Br. at 6-8.)
The Court may grant summary judgment “if 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.” Fed.R.Civ.P. 56(a). On a summary judgment motion, the movant must first show that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). This burden can be satisfied either by “produc[ing] evidence showing the absence of a genuine issue of material fact” or by “‘showing'-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party's case.” Id. at 325.
If the moving party meets its burden, it is the nonmoving party's burden to “make a showing sufficient to establish the existence of [every] element essential to that party's case.” Id. at 322. The...
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