John Deere Health Benefit Plan v. Chubb

• Decision Date: 17 February 1999
• Docket Number: Civil Action No. 97-1266-MLB.
• Citation: 45 F.Supp.2d 1131
• Parties: JOHN DEERE HEALTH BENEFIT PLAN FOR SALARIED EMPLOYEES, and John Deere Health Care, Inc., Plaintiffs, v. Jeffrey A. CHUBB, Administrator of the Estate of Patricia Ann Franklin, Deceased, Defendant.
• Court: U.S. District Court — District of Kansas

Page 1131

45 F.Supp.2d 1131

JOHN DEERE HEALTH BENEFIT PLAN FOR SALARIED EMPLOYEES, and John Deere Health Care, Inc., Plaintiffs, v. Jeffrey A. CHUBB, Administrator of the Estate of Patricia Ann Franklin, Deceased, Defendant.

Civil Action No. 97-1266-MLB.

United States District Court, D. Kansas.

February 17, 1999.

Jeffrey A. Chubb, Independence, KS, pro se.

Douglas G. Ott, Hall, Levy, Devore, Bell, Ott & Kritz, Coffeyville, KS, pro se.

Thomas L. Theis, Sloan, Listrom, Eisenbarth, Sloan & Glassman, Topeka, KS, pro se.

MEMORANDUM AND ORDER

BELOT, District Judge.

This matter is before the court pursuant to John Deere Health Care, Incorporated's (John Deere) motion and memorandum in support of summary judgment (Doc. 23). John Deere is the administrator of the John Deere Health Benefit Plan for Salaried Employees (the "Plan"). In deciding the motion, the court has considered all relevant documents including, but not limited to, plaintiffs' motion and memorandum (Doc. 23), defendant's response (Doc. 25) and John Deere's reply (Doc. 26). For the reasons discussed in this memorandum, John Deere's motion (Doc. 23) is denied.

I. NATURE OF THE CASE

This is an action involving the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461. John Deere seeks to enforce the Plan's alleged subrogation rights against the estate of Patricia Ann Franklin (Franklin), represented by its administrator, Jeffrey A. Chubb (defendant). Franklin was an employee of Funk Manufacturing (Funk), which provides benefits for its employees and their dependents through the Plan.

Franklin, as the result of negligent medical treatment, sustained serious injuries which ultimately resulted in her death. Franklin's husband, individually and on behalf of Franklin's estate, filed suit against various medical providers who treated his wife. The malpractice suit resulted in a settlement. John Deere claims the Plan has a right of subrogation against Franklin's estate for any recovery obtained from the settlement to the extent the Plan provided medical benefits for Franklin's treatment.

II. SUMMARY JUDGMENT STANDARDS

The usual and primary purpose "of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Fed.R.Civ.P. 56(c) directs the entry of summary judgment in favor of a party who "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." An issue is "genuine" if sufficient evidence exists on each side "so that a rational trier of fact could resolve the issue either way" and "[a]n issue is `material' if under the substantive law it is essential to the proper disposition of the claim." Adler v. WalMart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998) (citations omitted).

The moving party must initially show both an absence of a genuine issue of material fact, as well as entitlement to judgment as a matter of law. Id. at 670. The nature of the showing depends upon whether the movant bears the burden of proof at trial with the particular claim or defense at issue in the motion. If the nonmoving party bears the burden of proof, the movant need not "support its motion with affidavits or other similar materials negating the opponent's" claims or defenses. Celotex, 477 U.S. at 323, 106 S.Ct. 2548 (emphasis in original). Rather, the movant can satisfy its obligation simply by pointing out the absence of evidence on an essential element of the nonmovant's claim. Adler, 144 F.3d at 671 (citing Celotex, 477 U.S. at 325, 106 S.Ct. 2548). On the other hand, if the movant has the burden of proof on a claim or defense raised in a summary judgment motion, it must show that the undisputed facts establish every element of the claim or defense. E.g., United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir. 1991) (en banc).¹

Once the moving party properly supports its motion, the burden shifts to the nonmoving party, "who may not rest upon the mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Muck v. United States, 3 F.3d 1378, 1380 (10th Cir.1993). In setting forward these specific facts, the nonmovant must identify the facts "by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Adler, 144 F.3d at 671. If the evidence offered in opposition to summary judgment is merely colorable or is not significantly probative, summary judgment may be granted. Cone v. Longmont United Hosp. Ass'n, 14 F.3d 526, 533 (10th Cir.1994). A party opposing summary judgment "cannot rely on ignorance of facts, on speculation, or on suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial." Conaway v. Smith, 853 F.2d 789, 793 (10th Cir.1988). Put simply, the nonmoving party must "do more than simply show there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

In the end, the court must determine "whether there is the need for a trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Accordingly, the court must review the "factual record and reasonable inferences therefrom in the light most favorable to the nonmoving/opposing party." Kidd v. Taos Ski Valley, Inc., 88 F.3d 848, 851 (10th Cir.1996); see also Anderson, 477 U.S. at 255, 106 S.Ct. at 2514. If sufficient evidence exists on which a trier of fact could reasonably find for the non-moving party, summary judgment is inappropriate. Prenalta Corp. v. Colorado Interstate Gas Co., 944 F.2d 677, 684 (1991).

III. STATEMENT OF FACTS

The Plan is a self-funded employee welfare benefit plan within the meaning of ERISA, 29 U.S.C. § 1002(1). (Doc. 23 at ¶ 1; Doc. 25 at ¶ 1). The Plan provides benefits to Funk employees and their dependents. As an employee of Funk, Franklin was a participant in the Plan.

In January 1992, Franklin was seriously injured during an unspecified medical procedure at Coffeyville Regional Medical Center (CRMC). Following the procedure, Franklin lapsed into a comatose state and remained unconscious until her death on August 10, 1996. (Doc. 27 at ¶ 3). As a result of her injuries, Franklin's husband, both individually and as conservator of Franklin's estate, filed a medical malpractice suit against CRMC, David Slayton (Slayton), C.R.N.A., and Stephen Miller (Miller), M.D. (Doc. 27 at ¶ 4). During the course of Franklin's care and treatment the Plan paid medical benefits in the amount of $265,926.39. (Doc. 27 at ¶ 3).

Franklin's husband entered into a settlement agreement in November 1992 with Slayton, Miller and the Kansas Health Care Stabilization Fund releasing them from the suit in return for a cash payment of $25,000 and a lifetime annuity of $3250 per month.² (Doc. 27 at ¶ 5). Similarly, in April 1993, Franklin's husband entered into a settlement agreement with CRMC and its insurer releasing CRMC in return for $10,000. (Doc. 27 at ¶ 6).³

The plan agreement⁴ contains a section addressing the Plan's right of subrogation to any right of recovery a plan participant or beneficiary may have for injuries caused by third party tort-feasors. The section provides:

Section 5. Subrogation

In the event of any payment of benefits under the plan for which an employee or employee's dependent has a claim or cause of action against any person or organization, the Company⁵ shall be subrogated to all right of recovery by the employee or employee's dependent with respect to any settlement or judgment for personal injury. The employee and the employee's dependent agree as follows:

A. To fully cooperate with the Company in obtaining information about the loss and its cause;

B. To notify the Company of any claim for damages made on behalf of the employee or employee's dependent in connection with the loss;

C. To include the amount of the benefits paid by the Company on behalf of the employee or employee's dependent in claims for damages against other parties;

D. To provide the Company with a lien, to the extent of the cash value of the services and supplies provided. Such lien may be filed with the person whose act caused the injuries, his or her agent, or a court having jurisdiction in the matter;

E. To reimburse the Company from any damages collected to the extent of the cash value of the services and supplies immediately upon collection of damages, whether by settlement or judgement. The Company shall be reimbursed first from any settlement or judgement and, if any balance then remains, it shall be given to the employee or the employee's dependent;

F. To pay the Company all costs and expenses, including attorney's fees, which shall be incurred or expended by the Company in obtaining or attempting to obtain payment from the employee or the employee's dependent if the employee or employee's dependent fails or refuses to reimburse the Company pursuant to this provision; and

G. To permit the Company to file a lawsuit in the name of the employee or employee's dependent against the person whose act caused the injuries.

(Doc. 23 at ¶ 7 and Ex. A at 144-144.1; Doc. 25 at ¶ 1).

In addition to the subrogation provision in the plan agreement, a summary plan description (SPD) contains a section entitled "Subrogation." The SPD subrogation section provides:

Suppose you or your dependent is involved in an accident which is determined to be the responsibility of a third party. Then if this plan has paid expenses associated with the accident, the Company reserves the right...