Hammer v. Johnson Senior Ctr.
| Decision Date | 30 November 2020 |
| Docket Number | CASE NO. 6:19-cv-00027 |
| Court | U.S. District Court — Western District of Virginia |
| Parties | FAITH HAMMER, Plaintiff, v. JOHNSON SENIOR CENTER, INC., et al., Defendants. |
This case involves claims under the Employee Retirement Income Security Act of 1974 ("ERISA"), claims under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), and claims under Virginia common law. Plaintiff, Faith Hammer, filed a Motion for Summary Judgment against Defendants1 Johnson Senior Center, Inc. ("Johnson"), James Dolan, and Ashley Canipe ("Defendants"). Dkt. 21.
The Court will award Hammer summary judgment on her claims against Johnson and James Dolan as to Counts I, II, and III for their breaches of ERISA's fiduciary duties. However, the Court will deny summary judgment on Hammer's ERISA claims against Johnson and James Dolan as to Counts IV and V. The Court will also deny summary judgment against Canipe as to Counts I through V. Additionally, Hammer's common law conversion and breach of fiduciary duty claims fail as a matter of law because ERISA preempts them (Counts VII and VIII). Finally, Hammer's COBRA violation claim also fails as a matter of law (Count VI).
Johnson is a senior care facility in Amherst, Virginia. Dkts. 36 ¶ 4; 22-1 ¶ 4. James Dolan and Melessa Dolan purchased Johnson in 1999 and were its sole owners. Dkts. 42-2 at 8; 51-2 at 29. James Dolan was an officer and director; he served as Johnson's president. Dkt. 22-5 ¶ 15; id. at 10. Melessa Dolan was an officer and served as vice president, secretary, and treasurer, though she was primarily responsible for coordinating patient care. Dkt. 42-2 at 9-11, 36-37. After suffering a heart attack in 2010, James Dolan ceased all involvement in the day-to-day running of the business until the events described below took place. Dkt. 42-2 at 9. Ashley Canipe, Melessa Dolan's daughter from a previous marriage, was licensed by the Department of Social Services ("DSS") as Johnson's residential care facility administrator. Dkt. 42-3 at 8. Canipe was responsible for communicating with DSS and handled human resources matters and general office management duties. Id. Kathy Massie, a friend of Canipe and Melessa Dolan, also worked in Johnson's office and assisted with administrative tasks, including paying Johnson's bills. Dkts. 42-1 at 16; 42-2 at 25-26; 42-3 at 15, 29, 31. In 2016, Faith Hammer became a full-time employee of Johnson. Dkts. 36 ¶ 8; 22-1 ¶ 8.
As an employee of Johnson, Hammer participated in the company's health insurance plan, Anthem HealthKeepers ("the Plan"). Dkts. 36 ¶ 9; 22-1 ¶ 9. The Plan was an employee welfare benefit plan subject to ERISA's provisions. Dkt. 36 ¶ 5.
Canipe was "listed as administrator for the employees' health insurance with Anthem." Dkts. 23-1 ¶¶ 1-2; 22-4 ¶ 4 (). But see Dkt. 42-3 at 9 ( ). In this role, Canipe "handled the enrollment forms" for employees to participate in the Plan. Id. at 8-9. Anthem call logs show that Canipe communicated with Anthem in January 2017 to ensure that Anthem had received Johnson's Plan premium payment for the previous December. Dkt. 51-2 at 2 ( that Canipe is "(GRP ADM)").
Johnson deducted $70 from Hammer's biweekly paycheck to cover her portion of the Plan premium. Dkts. 1-1; 1-3; 22-5 ¶¶ 16-17; 22-6 ¶¶ 8-9. Johnson did not separate the amounts it deducted from its employees' paychecks to cover the employee's portion of the Plan premiums from Johnson's general operating account. Dkts. 22-4 ¶ 6; 22-5 ¶¶ 18-19; 22-6 ¶¶ 14. Johnson was responsible for contributing the remaining two-thirds of the premium and paying the entire Plan premium to Anthem. Dkts. 36 ¶ 9; 22-1 at 2.
Massie generally paid Johnson's Plan premiums to Anthem. Dkt. 23-1 ¶ 2. She had discretion to decide the order in which bills were paid and when they should be paid. Dkt. 42-3 at 26-30. Johnson had a 31-day grace period under the Plan, Dkts. 42-4 at 3, 6, and when finances were "tight," Massie "usually" paid the health insurance premiums "on the last day." Dkts. 23-1 ¶4; 42-1 at 19-20 (). Canipe was aware of this practice. Dkts. 23 at 3; 42-1 at 20; 42-3 at 27.
On September 21, 2018, Hammer began a six-week medical leave of absence from her employment at Johnson, Dkt. 22-4 ¶ 10, after being diagnosed with lung cancer in August 2018, Dkt. 36 ¶ 12. Canipe both approved of Hammer's leave of absence and agreed that Johnson would continue to pay her 50% of her wages during her absence, compensating her for one week out of every two. Dkt. 23-1 ¶ 10.
On Monday, October 1, 2018, Melessa Dolan and Kathy Massie appeared at Johnson and encountered James Dolan. Dkts. 42-1 at 21-24; 42-2 at 29-30, 38. Canipe was on vacation. Id. James Dolan handed Melessa Dolan a letter terminating Melessa Dolan and Canipe from their employment with Johnson, including their authority to act as agents and/or officers of the company, in a letter prepared by James Dolan's attorney and dated September 27, 2018, the preceding Thursday. Dkts. 22-5 at 7; 23-1 ¶ 1; id. at 4; 42-1 at 21-24; 42-2 at 29-30. As of that date, James Dolan assumed operational control of Johnson and had the authority to transact with third parties, including remitting employee premium contributions to the Plan. Dkts. 22-5 ¶¶ 11, 13-14; id. at 7 (); 23-1 ¶ 3.
On October 1, when James Dolan gave Melessa Dolan the termination letter, Massie resigned. She told him, "There is a bill that has to be paid today." Dkts. 42-1 at 23-24 (); 42-2 at 32; 23-1 ¶ 5; 23-2 ¶ 5. James Dolan did not respond. Id. at 24; Dkt. 22-5 ¶ 23.
Johnson's September Plan premium payment was due September 1, 2018, but Anthem needed to receive that payment by October 2, 2018, or it would terminate Johnson's coverage as of that date. Dkt. 42-4 at 3. The total September Plan premium amount was $11,406.53. Dkt. 42-4 at 4.
Canipe and Massie intended to pay the Plan premium on October 1, 2018, because they expected Johnson to receive Social Security direct deposit payments into its general operating account on that date to cover the expense. Dkts. 23-1 ¶ 4; 42 at 17; 42-1 at 19-20; 42-2 at 28, 42-3 at 25-26. On October 1, 2018, Johnson's Bill Pay account—which was separate from its general operating account—showed a balance of $38,060.59. Dkts. 42 at 5-6, 17; Dkt. 42-5 at 3. However, Hammer requested that Johnson and James Dolan admit "that Johnson did not have enough money in its general operating account to pay the health insurance premiums for Johnson's employees when they were due by October 1, 2018." Dkts. 22-5 ¶ 20; 22-6 ¶ 12. They did not answer.
Neither Johnson nor any of its agents paid the September bill by the end of the grace period. Dkts. 23-1 ¶¶ 5-6; 22-5 ¶ 24; 22-6 ¶ 14-15. Hammer requested that Johnson and James Dolan admit that instead of remitting the healthcare premium amounts deducted from its employees' paychecks, Johnson used those monies to cover its operating expenses. Dkts. 22-5 ¶ 24; 22-6 ¶¶ 13-14. Again, they did not answer.
On October 8, 2018, Anthem sent Canipe and Johnson a letter stating, Dkt. 51-2 at 1. Consequently, Hammer's insurance coverage was terminated as of October 2, 2018. Dkt. 42-4 at 1, 6.
Anthem call logs show that Anthem communicated with James Dolan about the Plan on October 25, 2018. Dkt. 51-2 at 2. Anthem informed James Dolan that Johnson's group coverage was canceled for nonpayment of the September premium and that Johnson would have to pay a reinstatement fee and e-debit payment by November 9, 2018 to reinstate coverage. Id. According to the call logs, James Dolan "SAID 'ACCTS ARE FROZEN'" and "HAS REQ NO OTHER EMPLOYEE OF THE COMPANY IS AUTHORIZED TO MADE [sic] CHANGES TO THE POLICY, INCLUDING ASHLEY CANIPE AND MELESSA DOLAN." Id.
Johnson contracted with Life Care Management, Inc., ("LCM") through an agreement that became effective on November 1, 2018. Dkt. 22-5 at 12-15.
On October 11, 2018, Hammer was admitted to UVA Medical Center ("UVA") for kidney failure. Dkt. 36 ¶ 19. Upon presenting her insurance card, Dkt. 1-6, UVA staff informed her that she lacked insurance coverage. Id. Between October 11, 2018 and March 18, 2019, Hammer incurred medical expenses in excess of $286,000. Id. at ¶ 20, 22-30, 32-37.
Hammer's employment with Johnson terminated on or about January 6, 2019. Dkt. 36 at ¶ 31. Neither Johnson nor its agents informed Hammer that Johnson "failed to pay her health insurance premium" or provided Hammer with a COBRA notice or any other notice that her coverage had terminated at any time. Dkts. 22 at 7-8; 22-4 ¶ 10; 22-5 ¶ 25-26; 22-6 ¶ 16, 19; 36 ¶ 31.
Hammer filed her complaint against Defendant...
To continue reading
Request your trial