Humana, Inc. v. Shrader & Assocs., LLP

• Decision Date: 16 March 2018
• Docket Number: CIVIL ACTION NO. G–16–0354
• Citation: 584 B.R. 658
• Parties: HUMANA, INC.; United Healthcare Services, Inc.; and Aetna Inc., Plaintiffs, v. SHRADER & ASSOCIATES, LLP, Defendant.
• Court: U.S. District Court — Southern District of Texas

584 B.R. 658

HUMANA, INC.; United Healthcare Services, Inc.; and Aetna Inc., Plaintiffs,

v.SHRADER & ASSOCIATES, LLP, Defendant.

CIVIL ACTION NO. G–16–0354

United States District Court, S.D. Texas, Galveston Division.

Signed March 16, 2018

Abbie G. Sprague, John Bryant Thomas, Hicks Thomas LLP, Houston, TX, Gerald Lawrence, Lowey Dannenberg Cohen & Hart PC, West Conshohocken, PA, Mark D. Fischer, Robert Griffith, Rawlings & Associates PLLC, LaGrange, KY, for Plaintiffs.

Justin McKenzie Waggoner, Smyser Kaplan et al., Houston, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

SIM LAKE, UNITED STATES DISTRICT JUDGE

Plaintiffs, Humana, Inc., United Healthcare Services, Inc., and Aetna Inc. ("Plaintiffs"), bring suit against defendant Shrader & Associates, LLP ("Defendant" or "Shrader") asserting claims for Equitable Lien, Constructive Trust, and Equitable Restitution (All ERISA¹ Plans) (Count I), Private Cause of Action Under 42 U.S.C. § 1395y(b)(3)(A) (All Medicare Plans) (Count II), Declaratory Judgment as to Shrader's Obligation to Reimburse Medicare Benefits (All Medicare Plans) (Count III), Unjust Enrichment/Money Had and Received (All Health Plans) (Count IV), and Request for Declaratory Relief (All Health Plans) (Count V).² Pending before the court is Defendant Shrader & Associates, LLP's Motion to Dismiss, for a More Definite Statement, and to Sever ("Motion to Dismiss") (Docket Entry No. 63); Defendant Shrader & Associates LLP's Memorandum of Law in Support of Its Motion to Dismiss, for a More Definite Statement, and to Sever ("Defendant's Memorandum") (Docket Entry No. 64), Plaintiffs' Response to Defendant's Motion to Dismiss, for a More Definite Statement, and to Sever ( (Docket Entry No. 68) ("Plaintiffs' Response"); Defendant's Reply in Support of Its Motion to Dismiss, for a More Definite Statement, and to Sever ("Defendant's Reply") (Docket Entry No. 69); and the Joint Motion for Continuance (Docket Entry No. 92). For the reasons stated below, Defendant's Motion to Dismiss (Docket Entry No. 63) will be granted in part and denied in part, the Amended Docket Control Order (Docket Entry No. 91) will be vacated, and the Joint Motion for Continuance (Docket Entry No. 92) will be denied as moot.

I. Plaintiffs' Allegations

Plaintiffs allege that they are "all non-governmental insurers, sponsors, and administrators of health benefit plans, under which they provide or have provided health benefits to treat injuries, including Asbestos Injuries, suffered by Plan Members,"³ including at least fifteen Matched Claimants who are or have been represented by Shrader.⁴ Plaintiffs allege that all of the Matched Claimants received healthcare coverage from one or more of their ERISA or Medicare Advantage ("MA") plans, the Health Plans paid to treat the Matched Claimants' asbestos-related medical conditions, and that plan documents and/or federal law obligate Shrader and the Matched Claimants to compensate the Health Plans from settlement funds held by Shrader.⁵ Plaintiffs seek

all available relief, including equitable relief under § 502(a)(3) of the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 – 1461 ("ERISA") and as Medicare Advantage Plan providers, as defined in the Balanced Budget Act of 1997, the Medicare Prescription Drug Improvement and Modernization Act of 2003, as well as the federal regulations promulgated under those laws.⁶

Plaintiffs also seek

equitable relief in the form of restitution of the amounts they paid for treatment of Matched Claimants' Asbestos Injuries[;] ... imposition of a constructive trust over a portion of the total Asbestos Recoveries made by each Matched Claimant equal to the amount necessary to fully reimburse the Health Plans for all health benefits provided to or on behalf of that Matched Claimant [; and] ... imposition of an equitable lien to enforce their contractual rights to reimbursement pursuant to the terms of the health benefit plans under which they provided health benefits to Matched Claimants.⁷

II. Motion to Dismiss

Shrader moves the court to dismiss Plaintiff's Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction, Rule 12(b)(6) for failure to state a claim for which relief may be granted, and Rule 12(b)(7) for absence of indispensable parties. Alternatively, Shrader seeks an order requiring Plaintiffs to submit a more definite statement pursuant to Rule 12(e), and an order to sever pursuant to Federal Rule of Civil Procedure 20. When faced with a Rule 12(b)(1) jurisdictional challenge to subject matter jurisdiction and other challenges on the merits, courts must consider the jurisdictional challenge before addressing challenges based on the merits. Alabama–Coushatta Tribe of Texas v. United States, 757 F.3d 484, 487 (5th Cir. 2014).

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

Shrader argues that Plaintiffs' Amended Complaint should be dismissed for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) because

(i) their claims implicate recoveries from asbestos bankruptcy trusts and are thus within the exclusive jurisdiction of the courts establishing the trusts and (ii) any claims the Insurers assert based on FEHBA plans sound in state law, and the Court lacks any basis for supplemental jurisdiction over them.⁸

Plaintiffs respond that they are not asserting FEHBA-related claims, and that "Shrader's Motion should be denied as moot to the extent it seeks such relief."⁹ Plaintiffs respond that the relationship of their claims to asbestos bankruptcy trusts does not deprive this court of jurisdiction because they

seek reimbursement from any asbestos-related recoveries held by Shrader on behalf of its clients, both identified and as-yet unidentified. This includes recoveries made from asbestos trusts; but it also includes recoveries from settlements or judgments against solvent asbestos defendants in litigation, and recoveries from any other sources.¹⁰

Plaintiffs argue that "[n]ot even Shrader contends that this Court lacks subject matter jurisdiction over the Health Plans' claims relating to recoveries obtained through sources other than asbestos trusts. Such claims cannot be dismissed [for lack of subject matter jurisdiction]."¹¹

1. Standard of Review

Federal Rule of Civil Procedure 12(b)(1) governs challenges to the court's subject matter jurisdiction. "A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case." Home Builders Association of Mississippi, Inc. v. City of Madison, Mississippi, 143 F.3d 1006, 1010 (5th Cir. 1998). Rule 12(b)(1) challenges to subject matter jurisdiction come in two forms: "facial" attacks and "factual" attacks. See Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981). A facial attack consists of a Rule 12(b)(1) motion unaccompanied by supporting evidence that challenges the court's jurisdiction based solely on the pleadings. Id. A factual attack challenges the existence of subject matter jurisdiction in fact and matters outside the pleadings such as testimony and affidavits are considered. Id. Because Shrader has not submitted evidence outside the pleadings in support of its Rule 12(b)(1) Motion to Dismiss, the motion is a facial attack; and the court's review is limited to whether the complaint sufficiently alleges jurisdiction. As the parties asserting federal jurisdiction, Plaintiffs bear the burden of establishing the sufficiency of their jurisdictional allegations. Alabama–Coushatta Tribe, 757 F.3d at 487.

2. Analysis

Citing 11 U.S.C. § 524(g), Shrader argues that the court lacks subject matter jurisdiction because Plaintiffs seek recovery from asbestos bankruptcy trusts, exclusive jurisdiction over which resides in the courts that created them. Asserting that

§ 524(g)(1)(B) injunctions "enjoin entities from taking legal action for the purpose of directly or indirectly collecting, recovering, or receiving payment or recovery with respect to any claim or demand that, under a plan of reorganization, is to be paid in whole or in part by a[n abestos] trust,"¹²

Shrader argues that Plaintiffs "are attempting to receive indirect payment for medical expense claims that they expressly allege were ‘paid in whole or in part by a[n asbestos] trust.’ "¹³ Asserting that "[s]uch an action necessarily violates the various § 524(g) injunctions the [plaintiffs] acknowledge were established in connection with the asbestos trusts that made (or will make) payments from which the [plaintiffs] seek to recover,"¹⁴ Shrader argues that "resolving the parties' competing positions on this issue will necessarily entail construing and applying the terms of the particular § 524(g) injunction—a task reserved to the exclusive jurisdiction of the court ordering it."¹⁵

Plaintiffs argue that the court has subject matter jurisdiction because to the extent that their claims relate to recoveries from asbestos trusts, they do not involve the validity, application, construction, or modification of any injunction issued in connection with the creation of an asbestos trust,¹⁶ and that "any 524(g) Injunctions that were implemented in connection with creation of the Asbestos Trusts that have paid or will pay Asbestos Recoveries to Shrader on behalf of its clients have no bearing on this action."¹⁷ Citing Quigley Co., Inc. v. Angelos (In re Quigley Co., Inc. ), 676 F.3d 45, 60–62 (2d Cir. 2012), and Johns–Manville Corp. v. Chubb Indemnity Insurance Co. (In re Johns–Manville Corp.), 600 F.3d 135 (2d Cir. 2010) (per curiam), Plaintiffs argue that § 524(g) does not deprive the court of jurisdiction because the funds that they seek "have in fact already been paid, and are now in Shrader's possession, putting them outside of the scope of [§] 524(g),"¹⁸ and because the claims asserted in this action "arise out of Shrader's independent, direct obligation to properly handle the funds...