Kllm Emp. Health Protect. Plan v. Ontario Com. Hosp., Civil Action No. 3:96CV387 (L) (N).

• Decision Date: 28 October 1996
• Docket Number: Civil Action No. 3:96CV387 (L) (N).
• Citation: 947 F.Supp. 262
• Parties: KLLM, INC. EMPLOYEE HEALTH PROTECTION PLAN, Plaintiff, v. ONTARIO COMMUNITY HOSPITAL.
• Court: U.S. District Court — Southern District of Mississippi

947 F.Supp. 262

KLLM, INC. EMPLOYEE HEALTH PROTECTION PLAN, Plaintiff, v. ONTARIO COMMUNITY HOSPITAL.

Civil Action No. 3:96CV387 (L) (N).

United States District Court, Southern District of Mississippi, Jackson Division.

October 28, 1996.

COPYRIGHT MATERIAL OMITTED

Robert P. Thompson, W. Shan Thompson, Copeland, Cook, Taylor & Bush, Jackson, MS, for plaintiff.

John H. Henley, Henley, Lotterhos & Henley, Jackson, MS, for defendant.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, Chief Judge.

This cause is before the court on the motion of defendant Ontario Community Hospital (Ontario), a California corporation, to dismiss under Rule 12(b)(1) and (2) for lack of subject matter and personal jurisdiction. Ontario moves alternatively for a change in venue, presumably pursuant to 28 U.S.C. § 1404(a). Plaintiff KLLM, Inc. Employee Health Plan (the Plan), organized by KLLM, Inc., a Mississippi-based company, opposes the motion, and the court, having considered the memoranda and submissions of the parties, now concludes that the motions should be denied.

The Plan seeks a judicial declaration pursuant to Rule 57 of the Federal Rules of Civil Procedure that because the treatment rendered by Ontario to a Plan beneficiary, Larry Meysenburg,¹ is not a covered expense under the plan due to the plan's pre-existing condition limitation, Ontario is not entitled recover any benefits under the plan. Additionally, the Plan has requested that all costs be assessed against Ontario. Ontario filed this motion to dismiss contesting both subject matter and personal jurisdiction and alternatively moving for a change of venue. Subsequent to filing this motion, Ontario amended its answer to include a counterclaim against the Plan.² The counterclaim alleges pendent jurisdiction and claims Ontario is entitled to payment on the basis that the Plan "is and was the health care insurer for said Larry Meysenburg and as such became indebted to [Ontario's predecessor in interest] for the indebtedness of Larry Meysenburg for such treatment."

The following facts give rise to the present dispute. On October 27, 1993, Meysenburg, an employee of KLLM, Inc. who was enrolled in the plan, was admitted to Ontario for treatment of legionnaire's pneumonia. While at Ontario, Meysenburg's condition deteriorated and on November 30, 1993, he was transferred to another hospital. After the Plan denied his claims, Meysenburg employed an attorney who sent letters to the Plan demanding payment of the claims. In response, on September 8, 1995, the Plan sought a declaratory judgment in this court to the effect that under the terms of the plan no benefits were owed and thus Meysenburg was entitled to no relief. Meysenburg responded to neither the Plan's request for admissions, nor its motion for summary judgment. Accordingly, on May 31, 1995, having deemed as true all allegations contained in the Plan's request for admissions and having considered the Plan's memorandum in sup port of its motion and the record, this court granted summary judgment to the Plan.

Meanwhile, Meysenburg's account at Ontario was assigned to Syndicated Office Systems (Syndicated), a wholly owned subsidiary of Tenet Healthcare Corporation, and on October 25, 1995 and January 8, 1996, a representative from Syndicated's legal department wrote KLLM and Fox-Everett, Inc.³ requesting payment of the balance due and advising that if payment was not tendered, an outside counsel would be retained to pursue the matter. In response to these letters, the Plan filed a declaratory judgment suit against Ontario on November, 28, 1995 in the Southern District of Mississippi. On three occasions, Magistrate Judge James C. Sumner issued a summons for Ontario Community Hospital,⁴ two of which were returned unexecuted and a third which, based on court records, apparently was never returned. As the Plan failed to serve Ontario with process, it requested and was granted an order dismissing its action against Ontario without prejudice.

Prior to this court's entering summary judgment against Meysenburg in May 1996, Ontario retained Edward Butaky, a Louisiana attorney, to collect the debt it alleged to be owed by the Plan. Though both parties agree that in late April 1996, Butaky and Shan Thompson (Thompson), an attorney for the Plan, had a telephone conversation regarding the alleged debt and Ontario's efforts to collect said debt, from affidavits submitted by both attorneys, it is clear that they disagree sharply as to the substance of the conversation. Thompson alleges that Butaky expressed Ontario's desire to intervene in the then pending action against Meysenburg. Moreover, Thompson states that Butaky, on Ontario's behalf, not only consented to personal jurisdiction in the Southern District of Mississippi, but also agreed to accept service of process. Butaky, although admitting he agreed to accept service of process, denies that he waived subject matter or personal jurisdiction, or that he consented to suit in this venue. This suit was thereafter filed on May 24, 1996. The court will now in turn consider Ontario's arguments as to lack of subject matter and personal jurisdiction and its alternative motion for a change of venue.

The Plan alleges jurisdiction exists pursuant to 29 U.S.C. § 1132(e), 28 U.S.C. § 1331 and 28 U.S.C. § 2201, the Declaratory Judgment Act.⁵ Ontario, in both its brief in support of its motion and its rebuttal brief, argues that as the Plan is a fiduciary, rather than a beneficiary or participant, under ERISA, it may not bring an action for declaratory relief under § 1132(a)(3) and thus, may not avail itself of § 1132(e)(2) which provides for nationwide service of process and for venue where the plan is administered or where the breach occurred. This being the case, Ontario concludes that this court lacks both subject matter and personal jurisdiction and that venue necessarily is not proper. As to the Plan's contention that federal question jurisdiction exists under 28 U.S.C. § 1331, Ontario argues that because there is no right to a declaratory judgment under ERISA, no federal question exists. Finally on the issue of subject matter jurisdiction, Ontario maintains that the Plan should not be allowed to use the Declaratory Judgment Act to circumvent the intent of ERISA, which precludes a direct action by the Plan in this instance. It thus urges the court not to find subject matter jurisdiction under the Act.⁶

The court agrees with Ontario that 29 U.S.C. § 1132(e)(1) does not confer subject matter jurisdiction. That section states

Except for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, or fiduciary. State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under subsection (a)(1)(B) of this section.

Subsection (a) of § 1132 designates those who are empowered to bring civil actions. The Plan contends that subsection (a)(3)(B) allows it to bring this action. This section states that "[a] civil action may be brought by a participant, beneficiary, or fiduciary to ... (B) obtain other appropriate equitable relief ... (ii) to enforce any provisions of this subchapter or terms of the plan." Essentially, the Plan's argument is that by seeking a declaratory judgment as to the application of the plan's pre-existing condition exclusion, it is pursuing equitable relief in an effort to enforce the terms of the plan so that jurisdiction under ERISA is entirely appropriate. The court, having examined the language of the statute, disagrees.

"An action for declaratory relief can be either legal or equitable, depending upon whether the action is simply an inverted lawsuit for legal relief or the counterpart of a suit in equity." Chevron, U.S.A., Inc. v. Oubre, 93 F.R.D. 622, 623 (M.D.La.1982). Thus, in determining whether the Plan's declaratory judgment action is legal or equitable, the court must "examine[] the basic nature of the issues involved to determine how they would have arisen had Congress not enacted the Declaratory Judgment Act." Wallace v. Norman Indus., Inc., 467 F.2d 824, 827 (5th Cir.1972). See Connecticut General Life Ins. Co. v. Cole, 821 F.Supp. 193, 197 (S.D.N.Y.1993) (stating that "[i]f the underlying controversy is `legal' rather than `equitable', a declaratory judgment will be considered a form of legal relief"). In the instant case, it is apparent from Ontario's counterclaim that its claim to benefits is based on the contractual relationship between Meysenburg and the Plan, the court therefore concludes, as did the Connecticut General court, that "[s]ince a contractual claim to benefits is a legal claim, the declaratory judgment [the Plan] seeks is a form of legal, [not equitable], relief." 821 F.Supp. at 197.

Furthermore, the Plan has not persuaded the court that this declaratory judgment action, equitable or not, is one to "enforce" provisions of the plan so as to bring it within the purview of § 1132(a)(3)(B)(ii). On this point, the court agrees with the reasoning of the court in Transamerica Occidental Life Insurance Company v. DiGregorio, 811 F.2d 1249, 1252 (9th Cir.1987). There the court found two instances in which "a declaratory judgment may be said to `enforce'... the terms of an ERISA plan" — first if the action attempts to establish "the primacy of an ERISA obligation over some independent, potentially conflicting state law duty," and secondly, if the action seeks to establish "that the party against whom it is brought" has an obligation under ERISA which it is allegedly disregarding. Id. The instant case is likened to neither of these categories. As in Transamerica, "the truth of the matter is that [the Plan] seeks a federal forum to interpret its contract." Id. This being the case, what the Plan desires is more in the...