Home Health Care Affil. v. North American Indem.
| Decision Date | 12 January 2004 |
| Docket Number | No. 1:01 CV 489-D-A.,1:01 CV 489-D-A. |
| Citation | 299 F.Supp.2d 645 |
| Parties | HOME HEALTH CARE AFFILIATES OF MISSISSIPPI, INC. & Gilbert's Home Health Agency, Inc. Plaintiffs v. NORTH AMERICAN INDEMNITY N.V., et al. Defendants |
| Court | U.S. District Court — Northern District of Mississippi |
S. Craig Panter, Panter Harris & Clifford, PLLC, Jackson, MS, for Home Health Care Affiliates of Mississippi, Inc., Gilbert's Home Health Agency, Inc., plaintiffs.
Dewitt T. Hicks, Jr., Gholson, Hicks & Nichols, Columbus, MS, John A. Claro, Lawrence & Ellis, Oklahoma City, OK, for American Heartland Health Administrators, Inc.
Robert H. Faulks, Pogue & Faulks, Aberdeen, MS, Allan G. Levine, Christian & Smith, LLP, Houston, TX, for Managed Healthcare, Inc., defendants.
OPINION GRANTING IN PART AND DENYING IN PART MOTIONS FOR SUMMARY JUDGMENT
Presently before the Court are four motions for summary judgment and/or partial summary judgment including, Defendant W.J. "Andy" Andrews' motion for partial summary judgment, Plaintiffs' motion for partial summary judgment, third party Defendant Alan Nunnelee's motion for summary judgment, and Defendant Managed Healthcare's motion for summary judgment. Upon due consideration, the Court finds that Defendant Andrews' motion for partial summary judgment shall be denied, Plaintiffs' motion for partial summary judgment shall be granted, Defendant Nunnelee's motion for summary judgment shall be granted, and Defendant Managed Healthcare's motion for summary judgment is granted in part and denied in part.
The Court has previously addressed a summary judgment motion in this matter. The factual recitation has been updated but the substance has not been altered. Plaintiff Home Health Care Affiliates of Mississippi, Inc. ("HHCA") is a Mississippi corporation that maintains its principal place of business in Mississippi. Plaintiff Gilbert's Home Health Agency, Inc. ("Gilbert's") is also a Mississippi corporation that maintains its principal place of business in Mississippi. Plaintiffs are both in the business of providing home health services. Plaintiffs are affiliated entities and share management. The essence of the Plaintiffs' complaint is that Defendants illegally sold insurance in Mississippi under the artifice of encouraging employers to set up plans to provide health care benefits for their employees, and claiming that the Employee Retirement Security Act of 1974 ("ERISA") shielded their insurance or re-insurance products from state laws.
Prior to 2000, Plaintiffs provided healthcare benefits to their employees under a group health insurance policy. Sometime around the fall of 1999, Plaintiffs began reevaluating their group healthcare policy. Curtis Bray is the Director of Operations at Gilbert's and also provides management services to HHCA. Bray was personally involved in the negotiations which led Gilbert's and HHCA to enter into business relationships with the Defendants in this lawsuit. Bray dealt with insurance agent Alan Nunnelee of Tupelo, Mississippi, who apparently told Bray he would get a quote from Defendant American Heartland Health Administrators ("AHHA") through Andy Andrews, an insurance agent in Georgia.1 Plaintiffs assert that the "agent and other representatives of AHHA explained to Plaintiffs" that they could enter into an arrangement which would involve (1) Plaintiffs treating their benefit plan for their employees as a "self-insured plan," (2) Plaintiffs hiring AHHA to act as a third party administrator to determine whether employee claims were covered by the Plan, and (3) Plaintiffs entering into a so-called "reinsurance agreement" with a company to be recommended by AHHA.
Both of the Plaintiffs executed an "Administrative Contract" with AHHA that went into effect on April 1, 2000. Plaintiffs were to pay premiums to AHHA, which received approximately 30% for its administrative fee, and payed the remaining 70% of those premiums over to an insurance company. Also, Plaintiffs executed "Reinsurance Agreements" with United Fidelity, the insurance company or carrier, responsible for paying claims. The Plaintiffs dispute the characterization that the plan was actually "reinsurance" because AHHA agreed to find a company that would issue a policy covering 100% of the covered health claims, which they ultimately did.
Sometime in the fall of 2000, United Fidelity ceased to be the insurance carrier and Defendant North American Indemnity became the new insurance carrier.2 Plaintiffs state that they did not discover that United Fidelity's "book of business" was acquired by North American, an undercapitalized Belgium company, until after the fact. In any event, apparently things went relatively smoothly for a while as the Defendant insurance carriers (United Fidelity, and then later, North American) were paying the claims that AHHA determined were covered and submitted to them.
Around July of 2001, North American began delaying paying claims submitted to them by AHHA. Thereafter, disputes began between North American and AHHA. North American alleged that AHHA failed to properly administer and adjudicate claims. North American reevaluated or re-audited several claims submitted to them. AHHA has stated that they only submitted claims that were covered, and that North American is merely stalling due to cash flow problems. In September of 2001, North American sent a letter stating that they were going to withhold all of the August claims and perform an audit. AHHA sent letters to various employers voicing concern about the reinsurer's desire to fund legitimate claims.
The consequence of this is that many claims went unpaid. Also, this led to a falling out between North American and AHHA. North American wanted a new company to work with them to administer the claims. North American selected Managed Healthcare, Inc., ("MHI") as the new administrator. Faced with a decision, Plaintiffs ultimately chose to remain with North American, and have MHI act as their new administrator. Bray instructed AHHA to forward all premiums paid by Plaintiffs and their employees to North American. Since that time, Plaintiffs have submitted premiums to MHI.
Between April 1, 2000, and November 2001, Plaintiffs assert that they sent Defendants $979,402.72. This sum represents both employee and employer contributions for the health coverage. As of April 2002, Plaintiffs claimed that according to two of the Defendants' calculations, the amount of payable claims is at least as high as $341,413.49, and by Plaintiffs' calculations, it could be as much as $600,000 or greater.
On December 26, 2001, Plaintiffs filed this suit naming as Defendants: (1) American can Heartland Health Administrators, Inc., ("AHHA") (2) North American Indemnity N.V., ("North American") (3) Managed Healthcare, Inc., ("MHI") and (4) United Fidelity Corporation. All of the Defendants are foreign corporations and none of them are certified to do business in Mississippi. Plaintiffs subsequently voluntarily dismissed United Fidelity Corp. Thereafter, Plaintiffs filed their consolidated motion for summary judgment and preliminary injunction. Plaintiffs also filed an amended complaint and then a second amended complaint. Plaintiffs' second amended complaint asserts causes of action for, inter alia, breach of contract; negligence; misrepresentation and/or fraud; restitution/unjust enrichment/implied contract; violation of Mississippi insurance laws; as well breach of fiduciary duties under ERISA. While the motion was pending, the Court entered a default judgment against North American. Additionally, Defendant AHHA was dismissed by order of the Court due to pending bankruptcy.
A party is entitled to summary judgment "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 judgment as a matter of law." Fed.R.Civ.P. 56(c). On a motion for summary judgment, the movant has the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Under Rule 56(e) of the Federal Rules of Civil Procedure, the burden then shifts to the non-movant to go beyond the pleadings and "by ... affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548. That burden is not discharged by mere allegations or denials. Fed. R.Civ.P. 56(e).
While all legitimate factual inferences must be viewed in the light most favorable to the non-movant, Rule 56(c) mandates the entry of summary judgment "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986); Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548. Before finding that no genuine issue for trial exists, the court must first be satisfied that no reasonable trier of fact could find for the non-movant. Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).
The Plaintiffs' claim against Andrews is based upon his alleged involvement, as an agent, in selling insurance policies on behalf of an unauthorized carrier which has resulted in damages of an unspecified amount.3 Andrews contends that summary judgment is appropriate for three of the Plaintiffs' claims.4 Each argument and/or theory will be addressed in turn.
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