I.V. Services v. Inn Development & Management, Civil Action No. 96-30144-MAP.

• Decision Date: 13 May 1998
• Docket Number: Civil Action No. 96-30144-MAP.
• Citation: 7 F.Supp.2d 79
• Parties: I.V. SERVICES OF AMERICA, INC., Plaintiff, v. INN DEVELOPMENT & MANAGEMENT, INC., et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

7 F.Supp.2d 79

I.V. SERVICES OF AMERICA, INC., Plaintiff, v. INN DEVELOPMENT & MANAGEMENT, INC., et al., Defendants.

Civil Action No. 96-30144-MAP.

United States District Court, D. Massachusetts.

May 13, 1998.

Francis A. Miniter, Joseph D. Uradnik, Miniter & Associates, Hartford, CT, for I.V. Services of America, Inc.

Patrick J. Riley, Eric P. Finamore, Riley, Burke & Donahue Danvers, MA, for Inn Development & Management, Inc.

Edward S. Rooney, Jr., Lyne, Woodworth & Evarts, Boston, MA, for ReliaStar.

MEMORANDUM REGARDING REPORT & RECOMMENDATION OF APRIL 16, 1998 ON DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT

(Docket Nos. 27 & 30)

PONSOR, District Judge.

Upon de novo review, this court hereby adopts the Report and Recommendation of Judge Neiman dated April 16, 1998. The Motion for Summary Judgment of the defendant Inn Development & Management, Inc. (Docket No. 27) is hereby allowed and the portion of the Motion for Summary Judgment of the defendant ReliaStar seeking judgment against the plaintiff (Docket No. 30) is also allowed. The portion of ReliaStar's motion seeking summary judgment as to the cross-claim of IDM is hereby denied as moot.

As the well-reasoned memorandum of Magistrate Judge Neiman demonstrates, the undisputed facts confirm that plaintiff was on notice of the defendant's denial of benefits no later than May of 1991. Despite a three-year limitation period clearly set forth in the applicable contract, and by the most analogous law, plaintiff waited until 1995 before even attempting to obtain a copy of the Plan and until August of 1996 before bringing this lawsuit. This was simply too late. Plaintiff's counsel's vigorous and resourceful efforts to overcome the hurdle established in the limitations provision are unavailing.

A separate order will issue.

REPORT AND RECOMMENDATION REGARDING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT (Docket Nos. 27 and 30) and DEFENDANT RELIASTAR'S MOTION FOR SUMMARY JUDGMENT ON IDM'S CROSS CLAIM (Docket No. 30)

NEIMAN, United States Magistrate Judge.

I.V. Services of America, Inc. ("Plaintiff"), has sued both Inn Development Management Inc. ("IDM") and ReliaStar Insurance Co. ("ReliaStar") (collectively "Defendants") pursuant to the Employee Retirement Income Security Act of 1974, ("ERISA"), 29 U.S.C. § 1001 et seq. In essence, Plaintiff, a provider of intravenous services, seeks payment for services rendered to Sheila Daly ("Daly"), a former IDM employee and beneficiary of its health plan. Daly herself is not a party to this action. Plaintiff alleges that it is owed $120,947.30 and pursues its claim based on an assignment of benefits executed in its favor by Daly.

IDM and ReliaStar have filed separate motions for summary judgment against Plaintiff. ReliaStar has also filed its own motion for summary judgment against IDM seeking a declaration that it is entitled to contractual indemnification in the event liability is found. All three motions have been referred to the court for a report and recommendation. See 28 U.S.C. § 636(b)(1)(B). For the reasons which follow, the court recommends that both Defendants' motions for summary judgment against Plaintiff be allowed and, as a result, that ReliaStar's motion for summary judgment against IDM be denied as moot.

I. SUMMARY JUDGMENT STANDARD

In accord with Fed.R.Civ.P. 56(c), summary judgment will be granted if "there is no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." Magee v. United States, 121 F.3d 1, 3 (1st Cir.1997). Once the moving party has demonstrated that no genuine issue of material fact exists, the burden is on the opposing party to contradict the demonstration by coming "forward with specific provable facts which establish that there is a triable issue." Aponte Matos v. Toledo Davila, 135 F.3d 182, 186 (1st Cir.1998). A genuine issue is one which a reasonable fact finder could resolve in favor of the nonmoving party. Id.

Not every genuine factual conflict, however, necessitates a trial. "It is only when a disputed fact has the potential to change the outcome of the suit under the governing law if found favorably to the nonmovant that the materiality hurdle is cleared." Parrilla-Burgos v. Hernandez-Rivera, 108 F.3d 445, 448 (1st Cir.1997) (internal quotations omitted). The facts are to be viewed in a light most favorable to the non-movant. See Dykes v. Depuy, Inc., 140 F.3d 31, 36 (1st Cir. 1998).

II. FACTUAL BACKGROUND

In 1990, Plaintiff provided intravenous services to Daly, as ordered by her physician, for Lyme disease. (ReliaStar Exhibit I.) At the time, Daly worked at the Sheraton Hotel in Mansfield, Massachusetts, which was owned and managed by IDM. (Complaint ¶¶ 7, 16.) Prior to providing services, Plaintiff received a "Benefits Assignment Form" from Daly, the specifics of which are described below. On May 14, 1990, Plaintiff made its initial claim for benefits under the IDM medical plan ("Plan") that covered Daly. (ReliaStar Exhibit I; Finamore Aff. I, Attach. A.)

IDM's self-funded Plan provided medical benefits to all qualified IDM employees. (Gilley Aff., Attach. A.) The Plan paid benefits if the treatment or service was "medically necessary," that is, "required for the diagnosis or treatment for the sickness or accidental injury and commonly and customarily recognized as appropriate throughout the doctor's profession." (Gilley Aff., Attach. A.) Pursuant to the Plan, if benefits were denied, the claimant had to request an appeal "at any time during the 60 day period following receipt of the notice of the denial of the claim." (Id.) Moreover, "[l]egal action must be taken within 3 years after the date proof of loss must be submitted. If the Planholder's state requires longer time limits than these, the Plan will comply with the state time limits." (Id.)

IDM's health benefit Plan was administered by ReliaStar pursuant to an Administrative Services Only agreement ("ASO") executed on May 1, 1988.(Id.) The ASO provided that IDM was the Plan Sponsor for purposes of ERISA. As Plan Sponsor, IDM was responsible for all interim and final claim denials. ReliaStar would not be liable for payments made under the Plan and was to be held harmless and indemnified for all such claims. ReliaStar could be liable for a breach of due care in performance of its administrative duties. Those duties included such functions as investigating and processing claims. The ASO provided that IDM was to be copied on all correspondence, including claim denials.

Daly's treatment consisted of intravenous antibiotic treatments which, according to her treating physician, were to last six to eight weeks. Instead, the treatment spanned April through August of 1990, (Finamore Aff. II, Attach. E, G.), even when Daly repeatedly tested negative for Lyme disease. (ReliaStar Exhibit J.) Claiming that Daly's treatments were not "medically necessary," ReliaStar requested information regarding Daly's ongoing medical treatment on May 31, July 25, August 15 and October 15, 1990. (Finamore Aff. I, Attach. D.) Information was sent in response to these requests on June 8, August 27 and November 6. (Id., Attach. B, E, G.) ReliaStar claims, however, that the documentation was incomplete and, in any case, was ambiguous and at times contradictory regarding Plaintiff's diagnosis. (See ReliaStar Exhibit J.)

In letters sent both to Daly and Plaintiff's president, Maureen Teachman ("Teachman"), on April 19 and May 13, 1991, ReliaStar acknowledged that it had paid Plaintiff $9,246.66, for the first four weeks of therapy, but refused to pay the rest. (Finamore Aff. I, Attach. C.) Teachman later testified that she was aware of the denial of benefits based, at least, upon the letter of May 13, 1991. (Teachman Dep. (Pl.Exhibit B.) at 76.)

Several telephone calls were made by Daly and Teachman to ReliaStar at the time of the denial in May of 1991. However, no formal appeals process pursuant to the Plan was undertaken by either one. (Daly Dep. (Pl.Exhibit A) at 69-70; Teachman Dep. (Pl.Exhibit B) at 76-77.) Plaintiff claims it was unaware of the appeals process. In turn, Teachman asserts that she requested copies of the health care policy from ReliaStar on August 10, 1995, but was refused a copy. (Teachman Dep. at 79.) Teachman never requested a copy of the policy at any prior time. (Id.) Plaintiff also claims to have requested a copy of the Plan from IDM, which request was allegedly ignored. (Id.) At some time after the denial, Daly filed a complaint with the Massachusetts Commissioner of Insurance, whose investigation was inconclusive.

One final set of facts: at the time that ReliaStar and IDM entered into the ASO, the two parties also entered into an Aggregate Excess Risk Insurance Policy. (Gilley Aff., Attach. B.) Pursuant to that policy, IDM was insured against excess claims made against its self-funded plan. (Id.) ReliaStar would pay IDM benefits, subject to a deductible, for claims which exceeded a certain amount for each calendar year. (Id.) IDM was not informed of the dispute over Daly's claim until after the time limit for presentation of a claim under the Aggregate Excess Risk policy had expired. (Gilley Aff. ¶¶ 7, 12.) According to IDM's president, IDM may have chosen to submit Plaintiff's claim under the Aggregate Excess Risk Policy if it had been so advised. (Id. at ¶ 11.) IDM also maintains that the only correspondence it received regarding the instant claim was a copy of the May 13, 1991, denial letter sent to Daly. (Gilley Aff. ¶ 6.)

III. DISCUSSION

The Employee Retirement Income Security Act governs employee benefit plans and has a comprehensive enforcement scheme. In pertinent part, the enforcement provisions provide that a "participant" or "beneficiary" may bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29...