McWilliams v. Geisinger Health Plan
| Decision Date | 08 February 2023 |
| Docket Number | 4:20-CV-01236 |
| Parties | KAYLEE MCWILLIAMS, individually and on behalf of all others similarly situated, Plaintiff, v. GEISINGER HEALTH PLAN, and SOCRATES, INC., Defendants. |
| Court | U.S. District Court — Middle District of Pennsylvania |
Plaintiff Kaylee McWilliams sues Defendants, Geisinger Health Plan (“GHP”) and its subrogation agent, Socrates Inc., alleging one cause of action under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. Defendants now move for summary judgment on McWilliams' claim. As both parties recognize, McWilliams' claim is virtually identical to a claim that the Court previously rejected with respect to another plaintiff in this litigation. Therefore, the Court will grant Defendants' motion.
McWilliams was injured by a third-party tortfeasor.[2] She sought and received compensation from GHP for her injuries through her father's insurance plan.[3]McWilliams was insured through her father's employer, Big Heart Pet Brands, a subsidiary of the J.M. Smucker Company.[4] The J.M. Smucker Company had an employee welfare benefit plan-termed the J.M. Smucker Master Health Plan-that included a health insurance plan from GHP.[5] GHP set out its coverage of J.M. Smucker employees and their dependents-including McWilliams-through a document known as the Group Subscription Certificate (the “Certificate”).[6]
Eventually, McWilliams sued and later settled with the tortfeasor who injured her.[7] After the settlement, Defendants demanded that McWilliams reimburse them for the payments they made pursuant to her insurance policy, relying on a subrogation clause in the Certificate that did not explicitly set out a right to reimbursement.[8] They also obtained a lien against McWilliams' personal injury recovery.[9] McWilliams later negotiated with Socrates to reduce the lien amount by thirty percent.[10] She then paid Defendants the reduced sum, under protest.[11]
McWilliams' Second Amended Complaint (“SAC”) alleged several ERISA causes of action.[12] Defendants previously moved to dismiss all claims in the SAC save McWilliams' demand that they return the money she reimbursed them (Count VII).[13] The Court converted that motion into one for summary judgment and granted it, dismissing all claims except McWilliams' demand for monetary damages contained in Count VII.[14] Defendants now move for summary judgment on Count VII.[15] Their motion has been fully briefed and is ripe for disposition.
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” As the Supreme Court of the United States expressed in Celotex Corp. v. Catrett, summary judgment is required where a party “fails to make a showing sufficient to establish the existence of an element essential to that party's case” on an issue that the “party will bear the burden of proof at trial.”[16]
Material facts are those “that could alter the outcome” of the litigation, “and disputes are ‘genuine' if evidence exists from which a rational person could conclude that the position of the person with the burden of proof on the disputed issue is correct.”[17] A defendant “meets this standard when there is an absence of evidence that rationally supports the plaintiff's case.”[18] Conversely, to survive summary judgment, a plaintiff must “point to admissible evidence that would be sufficient to show all elements of a prima facie case under applicable substantive law.”[19]
The party requesting summary judgment bears the initial burden of supporting its motion with evidence from the record.[20] When the movant properly supports its motion, the nonmoving party must then show the need for a trial by setting forth “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.”[21] The United States Court of Appeals for the Third Circuit explains that the nonmoving party will not withstand summary judgment if all it has are “assertions, conclusory allegations, or mere suspicions.”[22] Instead, it must “identify those facts of record which would contradict the facts identified by the movant.”[23]
In assessing “whether there is evidence upon which a jury can properly proceed to find a verdict for the [nonmoving] party,”[24] the Court “must view the facts and evidence presented on the motion in the light most favorable to the nonmoving party.”[25] Moreover, “[i]f a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c),” the Court may “consider the fact undisputed for purposes of the motion.”[26]Finally, although “the court need consider only the cited materials, . . . it may consider other materials in the record.”[27]
Both parties appear to agree that the Court's legal analysis in its November 16, 2022, opinion disposes of Count VII as well.[28] However, McWilliams raises several arguments “to ensure a clear record and that her arguments are preserved on appeal.”[29] The Court will address those arguments here.
McWilliams makes two arguments. First, she argues the Court erred by not applying the common-fund doctrine.[30] Second, she argues Defendants violated ERISA by failing to identify the J.M. Smucker Master Health Plan as the basis for their reimbursement demand.[31] The Court disagrees and therefore grants Defendants' motion.
McWilliams argues that the common-fund doctrine applies differently in cases involving liens as opposed to class action cases, citing to the Supreme Court's opinion in US Airways v. McCutchen.[32] She explains that the Court applied the class-action approach to the common-fund doctrine, which allows courts to award fees to attorneys who obtain money on behalf of a class.[33] She argues that, in the lien context, the doctrine instead “involves the insurer having to reduce its lien by the proportionate share of fees/costs the insured incurred.”[34] Therefore, “reduction of [Defendants'] lien by the attorney fees Freitas incurred is not a matter of discretion (as is the amount to pay an attorney in the class context), but is instead a matter of equity and matter of law.”[35] Preliminarily, McWilliams cannot raise that argument with respect to Count VII. As the McCutchen Court noted, the common-fund doctrine is an “equitable doctrine.”[36] The McCutchen Court then held that equitable rules cannot “override the clear terms of [an ERISA] plan.”[37] Here, the J.M. Smucker Master Health Plan explicitly abrogates the common-fund doctrine.[38] Therefore, McCutchen-the very decision McWilliams cites to in support-forecloses applying the common-fund doctrine to her ERISA claim.
The Court takes McWilliams' argument as an attempt to relitigate the Court's decision to not apply the common-fund doctrine to former plaintiff Lori Freitas' identical ERISA § 502(a)(1)(B) claim.[39] Freitas was a plaintiff in this matter represented by the same counsel.[40] As counsel is aware, after the Court dismissed all of Freitas' claims, it dismissed her from this matter.[41] Therefore, Freitas' § 502(a)(1)(B) claim is not before the Court on this motion. Accordingly, McWilliams' attempt to raise arguments relevant to Freitas' claim but not her own is procedurally improper.[42]
Nevertheless, for the sake of completeness, the Court will put aside that procedural flaw and address McWilliams' argument. The Court disagrees with her distinction on how the common-fund doctrine applies in the class-action context as opposed to the lien context. The doctrine is a way to compensate attorneys for recovering money for third parties who did not financially contribute to the attorneys' efforts to litigate the case.[43] That can be accomplished through awarding fees from a class recovery or by reducing a lien on a plaintiff's recovery in favor of a third party who did not financially contribute to obtaining the recovery. Indeed, both Brytus v. Spang & Co., the case the Court relied upon, and McCutchen cite to the same line of cases discussing the common-fund doctrine, which has long been part of the American legal tradition.[44]
In either the lien or class-action context, the common-fund doctrine is an equitable tool of interpretation based on principles of unjust enrichment, which itself is an equitable doctrine.[45] Equitable remedies such as these are matters of discretion, not legal commands, as McWilliams would have it.[46] In its prior opinion, the Court refused to apply the doctrine because Defendants had already reduced their lien on Freitas' recovery by twenty-five percent.[47] That appears to be precisely what McWilliams seeks: a “reduction [of GHP's] lien by its share of Plaintiff's counsel's fees.”[48] She fails to explain why the twenty-five percent reduction Defendants already agreed to is insufficient to satisfy the common-fund doctrine. Therefore, the Court will not reconsider its prior decision not to apply to the common-fund doctrine to Freitas' ERISA claim.
McWilliams next renews her argument that the Certificate's terms control this matter as opposed to the combined terms of the Certificate and J.M. Smucker Master Health Plan.[49] She makes two arguments. First, she argues that the express terms of the J.M. Smucker Master Health Plan indicate that the Certificate's terms control this matter.[50] Second, McWilliams argues Defendants violated ERISA because t...
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