Mull v. Motion Picture Indus. Health Plan
| Decision Date | 25 July 2022 |
| Docket Number | 20-56315 |
| Parties | Danielle MULL, appointed Guardian Ad Litem for Carson Mull; Norman Mull; Carson Mull, Plaintiffs-Appellees, v. MOTION PICTURE INDUSTRY HEALTH PLAN ; Board of Directors of Motion Picture Industry Health Plan, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Kathryn J. Halford (argued) and Elizabeth Rosenfeld, Wohlner Kaplon Cutler Halford & Rosenfeld, Encino, California, for Defendants-Appellants.
Donald M. de Camara (argued), Law Office of Donald M. de Camara, Carlsbad, California; Daniel E. Wilcoxen and Drew M. Widders, Wilcoxen Callahan LLP, Sacramento, California; for Plaintiffs-Appellees.
Before: Richard R. Clifton, Milan D. Smith, Jr., and Paul J. Watford, Circuit Judges.
Plaintiffs brought this action against the Motion Picture Industry Health Plan (the "Plan") and the Plan's Board of Directors under § 502(a)(1)(B) and § 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiff Norman Mull ("Norman") is a participant in the Plan.1 The remaining Plaintiffs are covered dependents of Norman. Norman's daughter, Lenai Mull ("Lenai"), who is no longer a party to this action, was formerly a covered dependent of Norman.
After Lenai was injured in a car accident, the Plan paid benefits to cover a portion of her medical expenses. Under the Plan's terms, Norman was liable to the Plan for the reimbursement of these benefits if Lenai recovered money from the third party who caused her injuries. Although Lenai obtained such a recovery, she dissipated her settlement funds without reimbursing the Plan, and Norman did not pay the reimbursement amount himself. Invoking a self-help provision in the Plan's terms, the Plan stopped making benefit payments to Plaintiffs to recoup its un-reimbursed payments.
Plaintiffs brought this action to recover the benefits withheld by the Plan and to force the Plan to make benefit payments for covered services in the future. The district court ultimately granted summary judgment in favor of Plaintiffs, concluding that the Plan could not enforce its self-help remedy.
This conclusion was in error. Contrary to the district court, we conclude that contractual defenses cannot defeat the clear and unambiguous terms of the Plan, at least not in this instance. We also conclude that the Plan's self-help remedy does not violate ERISA § 502(a)(3), does not undermine ERISA's civil enforcement scheme, and is not barred by res judicata. We reverse and remand with instructions for the district court to enter summary judgment in favor of the Plan.
Norman worked for more than 21 years as a wrangler in the motion picture industry, caring for livestock used in the production of movies. Through his employment and his membership in the Teamsters Union, Norman is entitled to receive healthcare benefits as a participant in the Plan. Norman's wife, Plaintiff Danielle Mull ("Danielle"), and their younger daughter, Plaintiff Carson Mull ("Carson"), are entitled to receive benefits as covered dependents of Norman. When the events giving rise to this action occurred, Norman and Danielle's older daughter, Lenai, was also a covered dependent of Norman.2
The Plan is a self-funded, multi-employer health and welfare benefit plan as defined in ERISA. See 29 U.S.C. § 1002. A Board of Directors (the "Board") administers the Plan and determines "all questions" regarding the "nature, amount, and duration" of benefits provided under the Plan.
The terms of the Plan itself are set forth in two documents. The first document, the Motion Picture Industry Plan Agreement and Declaration of Trust (the "Trust Agreement"), outlines procedures for funding, operating, and amending the Plan. The second document, the Motion Picture Industry Health Plan Summary Plan Description for Active Participants (the "Plan Description"), sets forth the benefits available under the Plan and the conditions for receiving those benefits. The dispute in this case stems from two provisions in the Plan Description. These provisions take effect if and when the Plan pays benefits related to an injury for which a third party is legally responsible—for example, when a beneficiary is injured in a car accident caused by someone else.
The first provision (the "Reimbursement Clause") states that if a Plan participant or eligible dependent suffers such an injury, the Plan will pay benefits only if the participant agrees to reimburse the Plan from any amount he or his eligible dependent subsequently recovers from or on behalf of the third party. The Plan Description establishes several corollary requirements to ensure that the participant complies with this provision. For example, before the Plan will pay benefits related to a third-party injury, the participant must execute a lien in favor of the Plan on the amount of any potential third-party recovery. The Plan Description also requires that any such recovery be kept separate from other funds and be held in trust until conveyed to the Plan. Even if the third-party recovery was received by a dependent, the Plan Description specifies that reimbursement "is the liability of the [p]articipant."
The second provision (the "Recoupment Clause") establishes a self-help remedy that may be used if the participant fails to comply with the Reimbursement Clause. Under this provision, if the participant fails to reimburse the Plan from a third-party recovery, the amount of un-reimbursed benefit payments that were made to treat the injury "will be deducted from all future benefit payments to or on behalf of the [p]articipant and/or any dependent, until the overpayment is resolved."3 If the amount paid by the Plan is not reimbursed from the third-party recovery as required, "the [p]articipant (and eligible dependent, if applicable) shall continue to owe to the Plan such unpaid amount, up to the full amount of the [third-party] [r]ecovery."
Lenai suffered serious injuries in February 2010 after the driver of the vehicle in which she was a passenger lost control and drove the vehicle off a 20-foot embankment. As a result of the accident, Lenai had to undergo multiple surgeries. The following month, the Plan sent a letter to Norman indicating that it had received a claim for treatment of Lenai's injuries. In its letter, the Plan noted that Lenai's injury appeared to have been caused by a third party. Consistent with the terms of the Plan Description, the Plan stated that it would not pay benefits to cover Lenai's treatment unless Norman executed a lien in favor of the Plan on any potential third-party recovery. The letter also advised Norman to "take time to review" the Plan Description section pertaining to claims involving third-party liability.
To ensure the payment of benefits, Norman was required to complete and return a "Third Party Liability Statement Form" attached to the letter. Section 9 of the form, labeled "THIRD PARTY LIEN," included the following statement:
Norman and Lenai both signed the statement on April 20, 2010, and returned the form. In signing the form and accepting the Plan's payment of benefits, Norman, as the Plan participant, acknowledged responsibility for reimbursing the Plan in the event that Lenai recovered money from a third party. The Plan subsequently paid $147,948.38 in benefits to cover treatment of Lenai's injuries.
In April 2011, Lenai received a $100,000 settlement from the insurance carrier of the driver who caused her injuries. Because Lenai was over 18 at the time of her injury and subsequent settlement, the proceeds of the settlement were paid directly to her. Consistent with the Reimbursement Clause, the Plan requested that Lenai reimburse it for the benefit payments she had received.4 The Plan also stated that if Lenai failed to respond within 30 days, it would begin deducting the un-reimbursed amount from future benefit payments pursuant to the Recoupment Clause.
Through counsel, Lenai declined to pay the full amount of her recovery and instead offered to pay an "equitably apportioned share" of $8,454. The Plan rejected this offer and began to apply its recoupment procedures. Thus, as the Plan received claims for Norman and his dependents, it would verify the claimant's eligibility and process the claim. But instead of making payments to the service provider, the Plan would apply its share of covered expenses as a credit against Norman's reimbursement obligation. Although Lenai's counsel submitted an appeal to the Plan's Benefits/Appeals Committee, which is authorized to interpret Plan provisions, the Committee denied the appeal in February 2012, and the Plan continued applying its recoupment procedures.
The Mulls sued the Plan in August 2012 and filed their First Amended Complaint ("FAC") in February 2013. The FAC asserts a claim for injunctive relief under ERISA § 502(a)(3), which authorizes a "participant, beneficiary, or fiduciary" to bring a civil action "to enjoin...
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