Lutheran Hosp. v. Business Men's Assur. Co.

• Decision Date: 20 June 1994
• Docket Number: No. 1:92-CV-153.,1:92-CV-153.
• Citation: 845 F. Supp. 1275
• Parties: LUTHERAN HOSPITAL OF INDIANA, INC., Mary Lou Isch, and William A. Isch, Plaintiff, v. BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA, Teamsters Local 135 Welfare Fund, Acordia Local Government Benefits, Inc., Associated Insurance Companies, Inc., d/b/a Blue Cross/Blue Shield of Indiana and Community and Family Service, Inc., Defendants.
• Court: U.S. District Court — Northern District of Indiana

845 F. Supp. 1275

LUTHERAN HOSPITAL OF INDIANA, INC., Mary Lou Isch, and William A. Isch, Plaintiff, v. BUSINESS MEN'S ASSURANCE COMPANY OF AMERICA, Teamsters Local 135 Welfare Fund, Acordia Local Government Benefits, Inc., Associated Insurance Companies, Inc., d/b/a Blue Cross/Blue Shield of Indiana and Community and Family Service, Inc., Defendants.

No. 1:92-CV-153.

United States District Court, N.D. Indiana, Fort Wayne Division.

June 20, 1994.

COPYRIGHT MATERIAL OMITTED

Thomas J. Galanis, James A. Federoff & Frank J. Gray, Beckman, Lawson, Sandler & Snyder, Fort Wayne, IN, for Lutheran Hosp. of Indiana, Mary Lou Isch and William A. Isch.

Vincent J. Heiny, Haller and Colvin, Fort Wayne, IN, for St. Joseph's Medical Center of Fort Wayne, Inc.

D. Randall Brown & Mark A. Garvin, Barnes and Thronburg, Fort Wayne, IN, for Business Men's Assur. Co. of America.

Frederick W. Dennerline & Stephen J. Lerch, Fort Wayne, IN, for Teamsters Local 135 Welfare Fund.

T. Jeffrey Hannah & Margaret A. Jones, Indianapolis, IN, for Acordia Local Government & Associated Ins. Companies, Inc.

George N. Bewley, Fort Wayne, IN, William W. Hinkle, Hinkle, Racster & Lopez, Portland, IN, for Community and Family Services.

MEMORANDUM OF DECISION AND ORDER

COSBEY, United States Magistrate Judge.

I. INTRODUCTION

Plaintiffs, Mary Lou Isch, William Isch and Lutheran Hospital (collectively, "Plaintiffs") brought this Declaratory Judgement action on June 17, 1992, seeking a determination of who, among the various named Defendants, is responsible for the medical bills incurred by Mary Lou Isch after June 1, 1991. On June 4, 1993 St. Joseph's Medical Center of Fort Wayne, Inc. was permitted by this court to intervene as a Plaintiff. This matter is now before the Court¹ on the parties' respective cross motions for summary judgment, all filed July 17, 1993. This case arises under 29 U.S.C. ? 1001, et seq., The Employee Retirement Income Security Act ("ERISA"). Federal subject matter jurisdiction is based on 28 U.S.C. section 1331.

For the reasons stated below the Plaintiffs' motion for summary judgment against the Teamsters is GRANTED and Plaintiffs' motion for summary judgment against all other Defendants is DENIED, Plaintiffs' motion for summary judgment against St. Joseph's Medical Center is DENIED; Intervening Plaintiff's, St. Joseph's Medical Center of Fort Wayne's motion for summary judgment against the Defendants is DENIED, St. Joseph's Motion for Summary Judgement against Mary Lou Isch and William Isch is DENIED. Defendants', Associated's and Acordia's motion for summary judgment is GRANTED, Defendant's, Community's, motion for summary judgment is GRANTED, Defendant's Teamsters motion is DENIED.

II. FACTS

The parties have submitted stipulated facts and agreed exhibits.² The Court now adopts those facts and incorporates them into this order. They are as follows:

2. Definitions:

2.1 "Acordia". Acordia Local Government Benefits, Inc.

2.2 "AE". Agreed Exhibit. The identification designation given to a document which was submitted by the parties as an agreed exhibit. The Agreed Exhibits were filed with the Court on June 28, 1993.

2.3 "Associated". Defendant, Associated Insurance Companies, Inc., d/b/a Blue Cross/Blue Shield of Indiana.

2.4 "BMA". Defendant, Business Men's Assurance Company of America.

2.5 "Cobra". Consolidated Omnibus Budget Reconciliation Act, Part 6 of Subtitle B of Subchapter I of the Employee Retirement Income Security Act at 29 USC ? 1161 et seq.

2.6 "Community". Defendant, Community and Family Services, Inc.

2.7 "Horton". Gina Horton.

2.8 "IMS". Insurance Marketing Services, Inc.

2.9 "Lutheran". Plaintiff, Lutheran Hospital of Indiana, Inc.

2.10 "Patient". Plaintiff, Mary Lou Isch.

2.11 "Mikel". Katrina Mikel.

2.12 "St. Joe". Plaintiff, St. Joseph Medical Center of Fort Wayne, Inc.

2.13 "Teamsters". Defendant, Teamsters Local 135 Welfare Fund.

2.14 "Mr. Isch". Plaintiff, William A. Isch.

3. Stipulations of Fact:

3.1 Patient was admitted to Wells Community Hospital of Bluffton, Indiana on April 28, 1991.

3.2 On April 30, 1991, Patient was transferred to Lutheran.

3.3 Patient was discharged from Lutheran on September 26, 1991, and transferred to St. Joe.

3.4 Patient was discharged from St. Joe on December 27, 1991.

3.5 Since her discharge from St. Joe, the Patient has received rehabilitative therapy on an outpatient basis at Ball Memorial Hospital.

3.6 At the time of Patient's initial hospitalization at Lutheran, Patient was employed by Community as a teacher and received group health insurance coverage under Community's group health insurance plan, underwritten by BMA.

3.7 Community terminated its group health insurance contract with BMA effective May 31, 1991.

3.8 Patient's premiums were paid by Community to BMA through May 31, 1991.

3.9 BMA paid contract benefits on behalf of Patient through May 31, 1991.

3.10 Plaintiffs have made no claim for damages against BMA relating to medical expenses of Patient incurred prior to June 1, 1991.

3.11 On May 22, 1991, Mr. Isch completed AE-19 BMA's application for COBRA continuation coverage and forwarded it to BMA.

3.12 On May 22, 1991 Mr. Isch completed AE-20 BMA's Application for information about a conversion of group insurance and forwarded it to BMA.

3.13 Mr. Isch handled all insurance matters for Patient during her illness.

3.14 On June 17, 1991, Mr. Isch executed AE-28 entitled "Application for Continuation of Group Coverage as Allowed by Federal Law", and sent it along with a check for COBRA continuation coverage to BMA.

3.15 Mr. Isch knew that Community had terminated its coverage with BMA at the time he submitted the form and check.

3.16 By letter dated July 1, 1991, BMA refused to honor the request for COBRA continuation coverage, declined to provide benefits for medical services provided to Patient after May 31, 1991, and returned the check submitted by Mr. Isch to Mr. Isch.

3.17 Prior to her hospitalization and continuing until the present time, Patient has had health care coverage as a dependant under the Teamsters group plan provided through Mr. Isch's employer, Hi-Way Dispatch.

3.18 Teamsters provides medical and disability benefits to its participants and their dependents through collective bargaining agreements between employers such as Hi-Way Dispatch and Teamsters Local Union No. 135.

3.19 Patient has been continuously covered by the Teamsters plan since 1985.

3.20 The Teamsters plan does not contain any pre-existing condition exclusion or limitation.

3.21 Teamsters has not limited or denied Patients claims on the basis of any pre-existing condition.

3.22 Patient filed a claim for benefits under the Teamsters plan.

3.23 The Teamsters plan has declined to provide benefits for certain medical services provided to Patient after May 31, 1991, based, in part, on the contention that Patient is entitled to COBRA continuation coverage from either BMA or Associated and one of these policies should have primary responsibility for the expenses.

3.24 Community contracted with Associated to provide group health benefits to its employees effective June 1, 1991.

3.25 In March or April of 1991, following notice from BMA that premiums would be increased, Community sought quotes for its group plan from other insurance companies.

3.26 At the time Community sought quotes, no Community employees were hospitalized and no former employees or other persons were receiving COBRA coverage.

3.27 In early April of 1991, Acordia, a third-party administrator under contract with Associated, learned through IMS that Community was requesting quotes for group health insurance coverage to be effective June 1, 1991.

3.28 In response, Acordia Submitted a proposal to IMS on April 16, 1991 to be forwarded to Community.

3.29 Community accepted Associated's proposal and notified Acordia of this fact before Patient was hospitalized.

3.30 On May 17, 1991, Gina Horton, who is a sales representative from Acordia, met with Mikel, Community's Chief Officer, and Larry Braden, Executive Director of Community, and Tim Mock of IMS. At that meeting, Community completed and submitted all applications and submitted other paperwork (including employee membership applications) for group health insurance coverage to be underwritten by Associated. All identified as AE-11, AE-13 through AE-17 (inclusive), AE-22 and AE-39.

3.31 On May 17, 1991, Mikel informed Horton that Patient was presently in the hospital.

3.32 Horton informed Community on May 17, 1991 that Patient would not be eligible for any insurance coverage under the Associated policy unless she was actively at work on June 1, 1991.

3.33 At Horton's request, Mikel wrote the word "COBRA" on the top of Patient's application.

3.34 On May 17, 1991, Horton informed Mikel that Patient would probably not be eligible for COBRA.

3.35 Patient was in the hospital on June 1, 1991.

3.36 When administrative personnel from Acordia reviewed the applications from Community, they saw the word "COBRA" and assumed Patient eligible for Cobra continuation coverage.

3.37 Acordia administrative personnel ordered an identification card and premium payment coupon book on June 4, 1991, which were mailed to the address on the Patient's application.

3.38 In early June 1991, Horton told Mikel that patient would not be eligible for COBRA as she had coverage under the Teamster's plan.

3.39 Associated never received any premium payments from Patient.

3.40 Associated had no communication or contact with Patient or Mr. Isch regarding COBRA continuation coverage other than the identification card and premium payment coupon booklets, which were mailed to the address on the application.

3.41 During the solicitation process, Associated learned that Community employed teachers who were off work for the summer.

3.42 Associated was unaware as to the date the teachers would be laid off.

3.43 Pursuant to its personnel policy, Community pays the teachers' group health insurance

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