Sanders v. Scheideler
| Decision Date | 23 March 1993 |
| Docket Number | No. 92-C-0477-C.,92-C-0477-C. |
| Citation | 816 F. Supp. 1338 |
| Parties | Marcus J. SANDERS and Dairyland Insurance Company, Plaintiffs, v. Rebecca J. SCHEIDELER, an adult, Jason B. Scheideler, DOB 2/25/81, Joshua D. Scheideler, DOB 9/13/79, Andrea J. Scheideler, DOB 5/22/84, Dustin Scheideler, DOB 2/4/83, Daniel G. Scheideler, an adult, and NEPCO EMBA, Defendants. |
| Court | U.S. District Court — Western District of Wisconsin |
COPYRIGHT MATERIAL OMITTED
Rebecca J. Scheideler, pro se.
Daniel G. Scheideler, pro se.
Susan C. Schill, Crowns, Midthun, Metcalf & Quinn, Wisconsin Rapids, WI, for Jason B. Scheideler, Joshua D. Scheideler, Andrea J. Scheideler, Dustin Scheideler.
Lee J. Geronime, Michael, Best & Friedrich, Milwaukee, WI, for NEPCO EMBA.
This is a civil action for a declaration of rights to the proceeds of an insurance policy. The parties asserting rights are defendants Joshua, Andrea, Dustin and Daniel Scheideler, all minors, and defendant NEPCO EMBA, a self-insured employee benefit plan established under 29 U.S.C. § 1102. The dispute concerns defendant NEPCO EMBA's entitlement to reimbursement for medical payments made on behalf of the Scheidelers.
Before the court are cross-motions for summary judgment by the Scheideler children and NEPCO EMBA. NEPCO EMBA contends that it is subrogated to the rights of the Scheideler children to the full extent of the insurance proceeds. The Scheideler children maintain that NEPCO EMBA's subrogation rights are limited to third party payments that duplicate medical benefits paid by the fund and that their interest in the proceeds concerns losses other than medical costs. Because the Plan fails to grant priority to either of the defendants, I will adopt as federal common law the "make-whole" doctrine as a default priority rule. The parties' motions for summary judgment will be denied and a hearing will be set to determine the amount of the Scheideler children's damages.
To succeed on a motion for summary judgment, the moving party must show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Indiana Grocery, Inc. v. Super Valu Stores, Inc., 864 F.2d 1409, 1412 (7th Cir. 1989). When the moving party succeeds in showing the absence of a genuine issue as to any material fact, the opposing party must set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986); Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir.1991). The opposing party cannot rest on the pleadings alone, but must designate specific facts in affidavits, depositions, answers to interrogatories or admissions that establish that there is a genuine issue for trial. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. Also, if a party fails to make a showing sufficient to establish the existence of an essential element on which that party will bear the burden of proof at trial, summary judgment for the opposing party is proper. Id. at 322, 106 S.Ct. at 2552.
The relevant facts derive from the parties' proposed findings of fact and from copies of NEPCO EMBA's Articles of Association and other documents related to its plan. For the purpose only of deciding the parties' cross-motions for summary judgment, I find the following facts to be undisputed.
Plaintiff Marcus J. Sanders is an adult resident of New Mexico. He was insured against liability for automobile accidents for up to $50,000 by plaintiff Dairyland Insurance Company, a Wisconsin corporation with its main office in Stevens Point, Wisconsin. Defendants Rebecca J. Scheideler and Daniel G. Scheideler reside in Nekoosa, Wisconsin. Their children are defendants Jason B. Scheideler, Joshua D. Scheideler, Andrea J. Scheideler and Dustin G. Scheideler, all of whom are minors.
Defendant NEPCO EMBA is a self-funded "employee welfare benefit plan" within the meaning of § 3(1) of ERISA, 29 U.S.C. § 1002(1). The plan is a voluntary health care plan available to eligible employees of the Georgia-Pacific Corporation (formerly Nekoosa Papers, Inc.).
NEPCO EMBA's Articles of Association authorize a board of directors to govern the plan's affairs (Art. III, § 1). The board is granted the power to terminate the plan (Art. XII, § 1), to amend by majority vote the terms, conditions and limitations governing benefits (Art. II, § 2), and to make final decisions with respect to proposed settlements of claims by the executive committee (Art. IX, § 8). The articles authorize an executive committee to "pass upon all claims by a member against the association" (Art. III, § 12) and "to authorize payment of benefits; accept or reject all applications for members ... and perform such other duties as may be required by the Board of Directors." (Art. III, § 10).
At all times relevant to this action, defendant Daniel Scheideler was an eligible employee and a participant in the NEPCO EMBA. His wife and children were eligible for benefits under the NEPCO EMBA group medical plan as his dependents.
On March 3, 1992, an automobile driven by defendant Rebecca J. Scheideler collided with a vehicle driven by plaintiff Sanders. Defendants Rebecca, Jason, Joshua, Andrea and Dustin Scheideler sustained injuries requiring medical treatment. The negligence of plaintiff Sanders was a substantial factor and proximate cause of the accident and injuries sustained by the Scheideler family.
As of July 1, 1992, NEPCO EMBA has paid $156,680.70 in benefits to Daniel Scheideler for treatment of the injuries sustained by his wife and children in the March 3 accident. The payments have been disbursed as follows:
Rebecca J. Scheideler .................................$ 28,664.46
Jason B. Scheideler ...................................$ 21,500.17
Joshua D. Scheideler ..................................$100,657.13
Dustin Scheideler .....................................$ 1,839.46
Andrea Scheideler .....................................$ 4,007.55
The NEPCO EMBA Articles of Association contain a subrogation clause that provides as follows:
The Articles of Association also contain the following "Coordination of Benefits" provision:
The NEPCO EMBA Group Medical Benefits Plan Summary Plan Description contains a third party liability provision that provides:
On April 13, 1991, defendants Daniel and Rebecca Scheideler executed assignment agreements pursuant to this provision on behalf of themselves and their children assigning their rights to any recovery from third parties.
Plaintiff Dairyland Insurance Company stands willing to pay the full amount of the policy limits on the policy issued to plaintiff Sanders ($50,000) as soon as it is determined which party or parties are entitled to the proceeds.
OPINIONDefendant NEPCO EMBA contends that its subrogation rights give it a priority interest in recovering the full amount of the insurance proceeds. The Scheideler children maintain that since the proceeds have never been identified as reimbursement for medical expenses, as required by the plan, NEPCO EMBA has no rights to the proceeds.
The first issue is the standard of review to be applied. NEPCO EMBA contends that under Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), a deferential standard of review is appropriate because plan fiduciaries have broad discretion to interpret terms of the plan. In Firestone, the Supreme Court held that: "a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Id. at 115, 109 S.Ct. at 956. Although this case does not involve a denial of benefits, the Court's reliance on general principles of trust law in establishing the standard of review of a trustees' plan interpretation supports the applicability of Firestone to this case. Id. at 112, 109 S.Ct. at 955; see Baxter By and Through Baxter v. Lynn, 886 F.2d 182, 187 (8th Cir.1989) (...
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