New England Health Care Emps. Welfare Fund v. iCare Mgmt., LLC

• Decision Date: 21 August 2012
• Docket Number: No. 3:10–cv–00894 (CSH).,3:10–cv–00894 (CSH).
• Citation: 886 F.Supp.2d 82
• Parties: NEW ENGLAND HEALTH CARE EMPLOYEES WELFARE FUND, and New England Health Care Employees Pension Fund, Plaintiffs, v. iCARE MANAGEMENT, LLC; Chelsea Place Care Center, LLC; Trinity Hill Care Center, LLC; Wintonbury Care Center, LLC; Farmington Care Center, LLC; Meriden Care Center, LLC, a/k/a Silver Springs Care Center; Westside Care Center, LLC; Bidwell Care Center, LLC; and Kettle Brook Care Center, LLC, Defendants.
• Court: U.S. District Court — District of Connecticut

886 F.Supp.2d 82

NEW ENGLAND HEALTH CARE EMPLOYEES WELFARE FUND, and New England Health Care Employees Pension Fund, Plaintiffs,

v.iCARE MANAGEMENT, LLC; Chelsea Place Care Center, LLC; Trinity Hill Care Center, LLC; Wintonbury Care Center, LLC; Farmington Care Center, LLC; Meriden Care Center, LLC, a/k/a Silver Springs Care Center; Westside Care Center, LLC; Bidwell Care Center, LLC; and Kettle Brook Care Center, LLC, Defendants.

No. 3:10–cv–00894 (CSH).

United States District Court, D. Connecticut.

Aug. 21, 2012.

John M. Creane, Michael E. Passero, Law Offices of John M. Creane, Milford, CT, for Plaintiffs.

Jonathan M. Starble, Starble & Harris, Avon, CT, for Defendants.

RULING ON CROSS–MOTIONS FOR SUMMARY JUDGMENT AND OTHER PENDING MOTIONS

HAIGHT, Senior District Judge:

I. Introduction and Relevant Facts

In this action, plaintiffs New England Health Care Employees Welfare Fund and New England Health Care Employees Pension Fund (the “Funds”) seek to collect allegedly delinquent employee benefits from Defendants, who consist of one healthcare management company and eight operators of nursing facilities (collectively the “Employers”). The Funds bring only one claim, under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1145. The Employers and the Funds have each filed a Motion for Summary Judgment [Docs. 65 and 69 respectively] on that claim. In addition, the Funds have filed a Motion for Disclosure of Property and Assets [Doc. 81] and a Motion for Modification of Prejudgment Remedy [Doc. 82]. This Ruling disposes of each of these Motions.

The Funds are multiemployer trust funds which provide benefits to members of the New England Health Care Employees Union, District 1199 (the “Union”). The Employers employ members of the Union, and once each month they contribute to the Funds under the terms of two trust agreements and various collective bargaining agreements (the “CBAs”). Three generations of CBAs between the Employers and the Union are here at issue: (1) those entered into during 2005 (“the 2005 CBAs”), (2) those entered into in September 2009 (the “2009 CBAs”), and (3) those entered into in August 2011 (the “2011 CBAs”).¹

The fundamental issue between the parties is the interpretation of a single phrase that appears in all of the CBAs. Under each CBA, the amount that each Employer contributes is based on a rate of 8% of its “gross payroll” for “[e]mployees in the bargaining unit who regularly work an average of twenty (20) or more hours per week who have completed ninety (90) days of employment.” Each CBA further provides that “[s]aid contributions shall be calculated in accordance with the Fund's contribution policies which are available to all contributing employers.” See, e.g., Collective Bargaining Agreement [Doc. 70–2] § 28(C).

The question that has occupied the parties through two federal actions and three years of litigation is which employees to count in determining “gross payroll.” The Funds assert that the correct interpretation of the “gross payroll” language includes all employees who were paid for working twenty hours or more per week, while the Employers assert that the correct interpretation includes only those employees who actually worked more than twenty hours per week. In other words, the parties disagree about whether to include in the calculation those employees who exceed the twenty-hour minimum only if one includes paid time off ( e.g., vacation, sick, and personal time).

As noted supra, the CBAs direct that contributions be calculated in accordance with the Funds' contribution policies. The Contributions/Collection Policies issued by the Funds' trustees for each of the Funds (the “Policies”) clearly adopt the Funds' interpretation: “If the contract calls for contributions on behalf of all employees who regularly work an average of twenty (20) or more hours per week, then in a four (4) week reporting period, all employees that had at least eighty (80) paid hours for that period ... must be included for payment.” See, e.g., New England Health Care Employees Welfare Fund Contribution/Collection Policies and Procedures [Doc. 70–5 Ex. F] § III(c) (emphasis added).²

The Funds' interpretation of the “gross payroll” language was the one used by the Employers until spring 2008, and used by other employers who contribute to the Funds. In November 2008, however, the Employers decided to count only employees who actually worked more than twenty hours a week regularly. They asserted, then and afterwards, that this interpretation constitutes the “plain meaning” of the “gross payroll” language. The new method of calculating gross payroll reduced the Employers' contributions to the funds by approximately $30,000 per month.

In December 2008, very soon after the Employers announced the change, the Funds filed an action in this Court challenging the new practice. New England Health Care Emps. Welfare Fund v. iCare Mgmt., LLC, No. 3:09CV 1863 (the “Underlying Action”). The parties consented to a trial before Magistrate Judge Margolis, which was held on June 9, 2009. Judge Margolis ruled that the Funds' position is correct. Id., 2009 WL 3571311 (D.Conn. Oct. 26, 2009) (the “Memorandum of Decision”).³ She held that the “gross payroll” language in the CBAs was ambiguous, but found that the past practices of both parties, the universal practice among the other employers who are parties to the same CBA, internal consistency, and the contribution policies adopted by the Trustees of the Funds establish that the Funds' interpretation is correct. Id. at *19–*29.

In the Memorandum of Decision, Judge Margolis instructed the Funds to file a damages analysis on or before November 13, 2009. New England Healthcare, 2009 WL 3571311 at *46. The Funds complied by filing a Damages Analysis and Documentation of Attorney's Fees and Costs (the “Damages Analysis”).⁴ Relying on that and other submissions from both parties, Judge Margolis issued a Supplemental Memorandum of Decision (the “Supplemental Decision”) on January 13, 2010, making an award of damages.⁵ Judge Margolis awarded the Funds a total of $295,433.74, including compensation for delinquencies in monthly contributions, interest, liquidated damages, attorney's fees and costs. The award covered the Employers' delinquencies up to May 18, 2009, i.e., up to payroll month March 2009.

In the Damages Analysis, the Funds also made a claim based on the Employers' delinquency for the payroll months from April 2009 to September 2009. Judge Margolis, however, found their submission inadequate, because they submitted only unsworn spreadsheets, and consequently made no award for that period. Supplemental Decision at 3. After judgment in the Underlying Action was entered on January 19, 2010, the Funds filed a motion asking Judge Margolis to alter the judgment and grant them damages for the April–September 2009 period. ⁶ She denied their motion in a ruling issued on April 5, 2010, stating that the Court “did not issue its Supplemental Decision without prejudice to the renewal of these belated submissions.” Ruling on Plaintiff's [sic.] Motion for Amended or Additional Findings (Dkt. # 51) and on Defendants' Motion to Alter or Amend Judgment (Dkt. # 53), dated April 5, 2010 (the “April 2010 Ruling”) at 4.⁷

The Employers filed an appeal; the Funds did not. On April 6, 2011, the Second Circuit affirmed Judge Margolis's ruling in a summary order. Welfare Fund, New England Health Care Emps. v. Bidwell Care Ctr., LLC., 419 Fed.Appx. 55 (2d Cir.2011). The Court, at a length and a level of detail not usually found in summary orders, quoted the 2005 CBAs' contribution provisions, recited the arguments that the parties had previously addressed to Judge Margolis, and affirmed Judge Margolis's ruling in all respects. Although the Employers stated in earlier proceedings in the present action that they were in the process of filing a Petition for an En Banc Hearing to overturn the summary order, they instead satisfied the judgment. See Defendants' Memorandum in Support of Motion for Summary Judgment (“Def. Supp. Memo.”) [Doc. 66] at 17.

On June 8, 2010, the Funds filed the present action against the Employers. They alleged that the Employers have continued to use the method of calculating gross payroll that Judge Margolis disapproved, and consequently claimed that the Employers' liability to the Funds grows with each month. Complaint (“Comp.”) [Doc. 1] ¶¶ 16–21. The Funds request, inter alia, payment of the delinquency for the payroll months from April 2009 onwards. Id. ¶¶ 17–19. When the Funds filed this action, Judge Margolis had ruled in their favor but the Employers' appeal to the Second Circuit was pending. The court of appeals having affirmed Judge Margolis's ruling, the Funds now press the same theory of the case and resulting claims, with a vigor of advocacy fueled by appellate success.

Shortly after they filed the Complaint, the Funds filed a Motion for Prejudgment Remedy [Doc. 7]. This Court granted that Motion on May 2, 2011, 792 F.Supp.2d 269 (D.Conn.2011), after the Second Circuit's ruling. This Court instructed the parties to file written submissions calculating the proper damages. Ruling on Plaintiffs' Motion for Prejudgment Remedy and Defendants' Motion to Stay Proceeding (“First PJR Ruling”) [Doc. 48] at 23. On June 29, 2011, the Court granted the Funds a prejudgment remedy (PJR) of $594,940.39. Ruling on Pending Motions (“Second PJR Ruling”) [Doc. 57] at 8. In early October 2011, the parties filed the present Motions for Summary Judgment.

On June 27, 2012, the Funds filed the Motion for Disclosure of Property and Assets, asserting that the Employers have not satisfied the PJR and seeking disclosure of property or debts sufficient to satisfy the PJR. At the same time, they filed the Motion for Modification of Prejudgment Remedy. They assert that since the PJR was granted, the Employers' delinquency, plus interest, has increased by...