Lordmann Enterprises, Inc. v. Equicor, Inc.

• Decision Date: 26 September 1994
• Docket Number: No. 93-9271,93-9271
• Citation: 32 F.3d 1529
• Parties: 18 Employee Benefits Cas. 2554 LORDMANN ENTERPRISES, INC., Plaintiff-Appellant, v. EQUICOR, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1529

32 F.3d 1529

18 Employee Benefits Cas. 2554

LORDMANN ENTERPRISES, INC., Plaintiff-Appellant, v. EQUICOR, INC., Defendant-Appellee.

No. 93-9271.

United States Court of Appeals, Eleventh Circuit.

Sept. 26, 1994.

Dorothea Lynn Russell, Russell & Herrera, Decatur, GA, Shawn R. Holtzclaw, Kevin R. Armbruster, William M. Ellard, Cushing & Morris, Atlanta, GA, for appellant.

H. Sanders Carter, Jr., Anthony J. McGinley, Carter & Ansley, Atlanta, GA, for appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before COX, Circuit Judge, MORGAN, Senior Circuit Judge, and COLLIER ^*, District Judge.

COX, Circuit Judge:

Lordmann Enterprises, Inc. ("Lordmann"), a home health care provider, sued Equicor, Inc. ("Equicor"), an insurer under an ERISA ¹ plan, to recover charges for nursing care provided to an Equicor insured. Lordmann asserted four different claims, and the district court granted Equicor summary judgment on all four. The significant issue raised on appeal is whether ERISA preempts Lordmann's Georgia law claim of negligent misrepresentation. We hold that it does not. On the other claims, we affirm the district court's grant of summary judgment in favor of Equicor.

I. Background

Paula Rebecca Mitchell ("Mitchell") and her daughter Victoria were provided coverage by a group insurance plan issued by First Equicor Life Insurance Company to Mitchell's employer, Hi-Fi Buys, Inc. ("Hi-Fi"). The defendant Equicor administered the plan. The plan provided coverage for thirty days of home nursing care per calendar year. It also provided that Hi-Fi and Equicor could agree for Equicor to cover rehabilitation services not otherwise covered under the plan if an insured became totally disabled because of "severe personal injury," a category that explicitly included neonatal high-risk infants. The First Equicor policy became effective June 1, 1990, and the Mitchells were covered by a policy issued to Hi-Fi by Blue Cross/Blue Shield until that date.

Victoria was born in February 1990 with severe birth defects that required her to spend her first five months in the hospital. After she went home, she needed twelve hours of nursing care a day. Mitchell hired a nurse employed by the plaintiff, Lordmann, to care for Victoria at home. Mitchell then assigned her rights under the insurance plan to Lordmann.

The parties dispute the content of the communications that followed between Lordmann and Equicor. Lordmann contends that three weeks after it began Victoria's care, Susan Marot, Lordmann's chief executive officer, telephoned Equicor to inquire into the extent of Mitchell's coverage under the plan. (R1-18-Ex. 1, Aff. of Susan C. Marot p 9.) Marot spoke to Geri Castagno, an Equicor employee, who informed her that Hi-Fi's group insurance plan would pay 80% of the cost of home nursing. (Id.) A few days later, Castagno approved Lordmann's billing rate. (Id.)

Three months later, Marot again called Castagno to update Equicor on Victoria's condition. (Id. p 10.) Castagno told Marot that she could not find where Hi-Fi's plan provided 80% coverage for Victoria's care, but Castagno informed Marot that Equicor's case management office had authority to alter the plan, and that Castagno would arrange for 100% coverage. (Id.) Lordmann continued to provide nursing care for Victoria. (Id. p 8.)

Six weeks later, Castagno called Marot and told her there was a problem with Victoria's coverage. (Id. p 12.) Castagno did not elaborate, but when Marot asked if Lordmann should stop its care, Castagno again said that case management would alter the plan to cover the care. (Id.) Later the same day, Castagno called Marot again and informed her that Mitchell had not returned a case management form Castagno had sent. (Id.) Marot offered to have Mitchell return the form, but Castagno refused and instead told Marot that she was treating the case as if case management had never been involved. (Id.) When Marot asked if she should stop Victoria's care, Castagno again said no, assuring Marot that between Blue Cross/Blue Shield and Equicor, Lordmann's bill would be paid in full. (Id.) During this entire period Equicor monitored Lordmann's care for Victoria. (Id. p 11.) Equicor never informed Lordmann that the Hi-Fi plan covered only thirty days of home nursing care. (Id. p 13.)

Equicor agrees that Marot spoke to Castagno, but Equicor contends that Castagno informed Marot that Equicor would pay for the services only according to the terms of Hi-Fi's group insurance plan. (R1-17-Ex. 15, Defendant's Response to Plaintiff's First Interrogatories p 8.)

Lordmann finished its care for Victoria a few weeks later, in early January, 1991, and sought payment from Equicor. In December, 1991, Equicor paid Lordmann $9952, which was 80% of Lordmann's bill for thirty days of care in 1990 and four days of care (until it ceased) in 1991, less the amount owed by Blue Cross/Blue Shield for the same care. Lordmann also collected $3425 from Blue Cross/Blue Shield, leaving a balance of $59,432.

Lordmann sued Equicor in state court in Georgia, asserting two claims. Count I is a state law claim based upon alleged fraudulent misrepresentation. Count II is a state law claim based upon alleged negligent misrepresentations. Equicor removed to federal court, asserting federal question and diversity jurisdiction. After removal, Lordmann amended its complaint to add two federal claims, both asserted as Mitchell's assignee. Count III is an ERISA claim for benefits under the plan, and Count IV is an ERISA claim based upon the federal common law of equitable estoppel. Equicor moved for summary judgment on all four counts.

The district court granted Equicor's motion in full. It held that ERISA preempted the state law fraud and negligent misrepresentation claims. Lordmann Enterprises, Inc. v. Equicor, Inc., No. 1:92-CV-2000-JOF, Order at 6 (N.D.Ga. October 2, 1993). The court granted summary judgment on the claim for benefits because it found no dispute over the terms of the plan. First, the plan unambiguously provided 80% coverage for thirty days of home nursing care, and Equicor had already paid that amount. Id. at 8. Second, although the plan allowed Hi-Fi and Equicor to extend coverage for rehabilitation services to cover Victoria's care, Lordmann had presented no evidence of such an agreement. Id. at 10. Finally, the district court held that the plan provisions were unambiguous, and that under Eleventh Circuit precedent a claim based upon federal common law equitable estoppel is available only in cases in which the insurer interprets ambiguous plan provisions. Id. at 11. This appeal follows.

II. Issues and Standard of Review

In this appeal, Lordmann challenges the district court's grant of summary judgment on all four counts. We review grants of summary judgment de novo. Reserve, Ltd. v. Town of Longboat Key, 17 F.3d 1374, 1377 (11th Cir.1994). Summary judgment is appropriate when there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court reviewing the motion must consider all evidence in the light most favorable to the nonmoving party. See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962).

III. Discussion

A. State Law Claims

Lordmann contends on appeal that ERISA does not preempt Counts I and II, its state law claims of fraud and negligent misrepresentation. In response, Equicor argues that ERISA does preempt both claims, and in the alternative, that even if ERISA does not preempt them, summary judgment was appropriate because Lordmann had failed to show it could prevail under Georgia law. We agree with Equicor's state law argument that Lordmann has failed to show all the elements of the fraud claim, but we do not find state law to be dispositive on the negligent misrepresentation claim. Thus, on that claim we must reach the preemption issue, and we hold that ERISA does not preempt a third-party health care provider's negligent misrepresentation claim against an ERISA plan administrator.

1. Fraud

Equicor contends that summary judgment is appropriate on the fraud claim, even if ERISA does not preempt it, because Lordmann has failed to present any evidence of scienter, a necessary element of fraud under Georgia law. See Georgia-Pacific Corp. v. Lieberam, 959 F.2d 901, 907 (11th Cir.1992) (listing elements of fraud under Georgia law). In response, Lordmann argues that under Georgia law scienter may be inferred from surrounding circumstances. McNeil v. Cowart, 186 Ga.App. 411, 367 S.E.2d 291, 293 (1988). However, scienter is not automatically inferable from the fact that the defendant made a misrepresentation. See Shaw v. Cook County Fed. Sav. & Loan Ass'n, 139 Ga.App. 419, 228 S.E.2d 326, 328 (1976) (mere fact of savings & loan's misrepresentation to borrower that no liens existed on her house not sufficient to support fraud claim). As was the case in Shaw, Lordmann has pointed to no particular facts that could support an inference of scienter in this case. Even under Georgia's lenient standard of proof for scienter, Lordmann has failed to carry its burden on an essential element of its claim. Thus, the district court properly granted summary judgment on Count I. See Celotex Corp. v. Catrett, 477 U.S. 317, 321-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

2. Negligent Misrepresentation

Equicor argues that it is also entitled to summary judgment on the negligent misrepresentation claim because under Georgia law, statements as to the nature of insurance coverage are opinions of law and therefore not actionable for misrepresentation. See Marett Properties, Inc. v. Prudential Ins. Co., 167 Ga.App. 631, 307 S.E.2d 69, 72 (1983); Parris & Son, Inc. v. Campbell, 128 Ga.App. 165, 196 S.E.2d 334, 337 (1973). However, as Lordmann points out, Georgia courts have expressly refrained from deciding whether this principle would...