Santana v. Deluxe Corp.

• Decision Date: 04 June 1998
• Docket Number: No. CIV.A. 94-30111-FHF.,CIV.A. 94-30111-FHF.
• Parties: Mariano SANTANA, Plaintiff, v. DELUXE CORPORATION and John Hancock Mutual Life Insurance Company, Defendants.
• Court: U.S. District Court — District of Massachusetts

12 F.Supp.2d 162

Mariano SANTANA, Plaintiff, v. DELUXE CORPORATION and John Hancock Mutual Life Insurance Company, Defendants.

No. CIV.A. 94-30111-FHF.

United States District Court, D. Massachusetts.

June 4, 1998.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Dina E. Fein, Fein, Pearson, Emond & Fein, Springfield, MA, for Mariano Santana, and all others similarly situated, Plaintiffs.

James W. Nagle, Robert M. Hale, Goodwin, Procter & Hoar, Joseph A. Piacquad, Goodwin, Procter & Hoar, Boston, MA, for Deluxe Check Printers, Inc., Defendants.

MEMORANDUM AND ORDER

FREEDMAN, Senior District Judge.

I. INTRODUCTION

Looking to compel his former employer to change its allegedly evil ways, plaintiff Mariano Santana ("Santana") brought a nine-count complaint against defendants Deluxe Corporation ("Deluxe") and John Hancock Mutual Life Insurance Company ("John Hancock") claiming that Deluxe and John Hancock have denied certain health care benefits to participants of a Deluxe employee health insurance benefit plan. Having granted summary judgment to John Hancock on all counts, see Santana v. Deluxe Corp., 920 F.Supp. 249 (D.Mass.1996), the Court now considers motions for summary judgment from both Santana and Deluxe.

II. FACTS

Santana was employed by Deluxe, a company in the business of printing checks and forms for financial institutions, between November 28, 1977 and November 2, 1988, at its facility in Springfield. Santana became disabled in an industrial accident in April 1988. Under Deluxe's six-month salary continuation plan, he continued to receive weekly salary benefits until November 2, 1988.

In October 1988, he received a letter from Deluxe explaining that he would be terminated if he could not return to work by November 2, 1988. Because Santana could not return, he was terminated. In January 1989, Santana moved from Massachusetts to Puerto Rico. After termination, Santana applied for disability benefits under Deluxe's Long Term Disability ("LTD") Plan. On April 11, 1990, Santana received notification that his disability benefits were approved retroactive to January 1, 1989. Accordingly, he received a lump sum payment covering that period, with no federal income tax withheld from it. He has received health care benefits under the LTD Plan ever since, remitting a premium to Deluxe.

Deluxe requires participants in the LTD Plan to apply for Social Security Disability Benefits ("SSDI") from the federal government to offset weekly salary plan benefits and LTD Plan benefits paid for the same period. In May 1991, the Social Security Administration awarded Santana SSDI benefits, retroactive to the date of his disability in October 1988. At the same time, he was notified that he was entitled to Medicare health insurance starting from October 1990, two years after the date he qualified for SSDI. As a Social Security recipient, Santana was automatically enrolled in Medicare Part A coverage, which provides insurance for hospital treatment, but not in Medicare Part B, which requires recipients to enroll and pay premiums for physician expenses.

When Santana began to collect benefits under the LTD Plan in April 1990, Deluxe notified him that he and his family were enrolled as participants in Deluxe's John Hancock/HMO plan ("the Indemnity Plan" or "Plan"), a health benefit plan funded by employer and participant contributions and managed by John Hancock. In June 1991, Deluxe sent Santana a copy of its 1991 employee handbook, entitled "Checking In with Deluxe," that described the terms of the Indemnity Plan. The terms of the 1991 handbook form the basis of this dispute. Specifically, the handbook contained the following statement under the heading "Submitting a Claim for a Deluxe Retiree Eligible for Medicare":

NOTE: The benefits provided by the Deluxe Employee Health Care Plan shall be reduced by an amount equal to the benefits you are entitled to receive under the Medicare Program. As a retiree, when you qualify for Medicare, Medicare then becomes your first line of coverage. It pays first, and the Deluxe Employee Health Care Plan then considers the charges that Medicare didn't cover. The Deluxe plan will pay the difference between what Medicare pays and what the Deluxe plan would have paid alone. So it is very important to enroll for Medicare coverage, both Part A, hospital, and Part B, supplemental, when you become eligible for it in order to have adequate medical coverage. This also applies to former Deluxe employees who become eligible for Medicare due to disability (after two years of disability).

Beginning in November 1991, Santana incurred medical expenses from treatment by physicians and other medical providers, amounting to roughly $1,600. Santana applied to Medicare to cover the expenses but was informed that he could not receive Medicare Part B benefits because he was not enrolled. Deluxe also denied his claim for the expenses under its Indemnity Plan because, according to its interpretation of the handbook language, it considered the services covered by Medicare Part B. Santana did not file a formal written appeal through the Indemnity Plan's process.

In January 1992, Santana applied for Medicare Part B coverage, and became enrolled in July 1992. Deluxe has paid for all other expenses Santana incurred after October 1990 that were not covered by Medicare.

In February 1994, Santana's counsel requested from Deluxe its employee benefit plans in which Santana participated. In response, Deluxe sent plaintiff's counsel portions of its "Checking in with Deluxe" booklets from 1988 to 1993 describing the Indemnity Plan and LTD Plan.

In May 1994, Santana filed a nine-count complaint against Deluxe and John Hancock, alleging an improper denial of benefits (Count Two), failure to provide an adequate summary plan description ("SPD") under 29 U.S.C. § 1022(b) (Count Three), breach of contract (Count Four), violation of the Medicare As Secondary Payer ("MSP") statute, 42 U.S.C. § 1395y(b) (Counts Five and Six), and requesting certification of a class action (Count One), injunctive relief (Count Seven), attorney's fees (Count Eight) and double damages (Count Nine).

In March 1996, the Court granted summary judgment to John Hancock on all counts. The Court now turns to the summary judgment motions before it.

III. STANDARD OF REVIEW

Under Rule 56 of the Federal Rules of Civil Procedure, the essential purpose of summary judgment is "to pierce the boilerplate of the pleadings" and appraise the proof to determine whether a trial is necessary. See Wynne v. Tufts Univ. Sch. of Med., 976 F.2d 791, 794 (1st Cir.1992), cert. denied, 507 U.S. 1030, 113 S.Ct. 1845, 123 L.Ed.2d 470 (1993). When summary judgment is at stake, the Court must scrutinize the record in the light most favorable to the nonmoving party, "indulging all reasonable inferences in that party's favor," Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir. 1990), yet disregarding unsupported allegations, unreasonable inferences, and conclusory speculation. See Smith v. F.W. Morse & Co., 76 F.3d 413, 428 (1st Cir.1996); Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990). If no genuine issue of material fact percolates through the record and the movant is entitled to judgment as a matter of law, then summary judgment is proper because a trial would serve no useful purpose. See Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Wynne, 976 F.2d at 794.

In this case, the Court considers each parties' cross motions for summary judgment on their merits. See Bellino v. Schlumberger Tech., Inc., 944 F.2d 26, 33 (1st Cir.1991). Cross motions for summary judgment do not alter the basic Rule 56 standard; they require a determination of whether either party deserves judgment as a matter of law based on facts that are not disputed. See Wightman v. Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir.1996); Wiley v. American Greetings Corp., 762 F.2d 139, 141 (1st Cir.1985). As such, cross motions simply demand that all factual disputes and any competing rational inferences be resolved in the light most favorable to the party opposing summary judgment. See Den Norske Bank v. First Nat'l Bank of Boston, 75 F.3d 49, 53 (1st Cir.1996); United States v. City of North Adams, 777 F.Supp. 61, 66 (D.Mass. 1991).

IV. DISCUSSION

With no material facts in dispute, this case involves statutory construction and contractual interpretation. The pivotal issue is whether the Deluxe Indemnity Plan violates the MSP statute, 42 U.S.C. § 1395y(b). Counts Five and Six allege that the Indemnity Plan's payment of benefits to him only for expenses not covered by Medicare violates the MSP Act. Deluxe contests this claim, arguing that Santana is not covered by the MSP statute's reach. The determination of this dispute is crucial to the entire suit because Santana's ERISA claims derive from the alleged MSP statutory violations.

A. Medicare As Second Payer

Passed as an amendment to the Social Security Act in 1980, the MSP statute embodies the Congressional objective of reducing the cost of the federal Medicare program by preventing private health insurers from shifting primary health insurance coverage for certain employees from their private benefit plans to the Medicare program. See United States v. Rhode Island Insurers' Insolvency Fund, 80 F.3d 616, 622 (1st Cir. 1996) ("The MSP provision, and its implementing regulations, explicitly prohibit private insurers from negotiating or enforcing any insurance-contract term which purports to make Medicare the primary-insurance obligor in lieu of a private insurance carrier, even though authorized by state law."); Colonial Penn Ins. Co. v. Heckler, 721 F.2d 431, 435 (3d Cir.1983) (stating that as a "cost reduction measure," the MSP statute mandates that an "insurer is responsible for primary coverage and cannot limit itself to secondary liability because...