Sellers v. Anthem Life Ins. Co.
| Decision Date | 22 February 2022 |
| Docket Number | Civil Action 16-2428 (TJK) |
| Parties | JOSEPH SELLERS, JR., et al., Plaintiffs, v. ANTHEM LIFE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Columbia |
This case is a cautionary tale about contract negotiations and a monument to Murphy's Law. Plaintiffs Joseph Sellers, Jr. and Richard McClees, the trustees of a disability-benefits plan-the Plan, for short-sued Defendant Anthem Life Insurance Company. They alleged (among other things) that Anthem either breached two January 2015 contracts by failing to pay the Plan money owed or-if those contracts are not enforceable-unjustly enriched itself at the Plan's expense. Anthem argues that the contracts governing the parties' dealings were not created until over a year later in 2016, that under those contracts Anthem has paid the Plan all it is owed, and that Plaintiffs' claims fail even if those contracts are unenforceable. On these grounds, Anthem moves for summary judgment on both counts. Plaintiffs cross-move for partial summary judgment on the enforceability of the 2016 contracts. And they oppose Anthem's motion, arguing that the Court cannot resolve on summary judgment whether the purported January 2015 contracts are enforceable or whether their unjust-enrichment claim is viable.
In summary, the Court finds that there is no genuine dispute of material fact as to whether the alleged January 2015 contracts are enforceable. They are not. But genuine disputes of material fact prevent the Court from deciding whether the 2016 contracts are enforceable. For that reason the Court cannot conclude that Plaintiffs' unjust-enrichment claim fails as a matter of law. Thus, for all the below reasons, the Court will grant in part and deny in part Anthem's motion for summary judgment and deny Plaintiffs' cross-motion for partial summary judgment.
At all times relevant here, Plaintiffs Joseph Sellers, Jr., and Richard McClees (“Plaintiffs”) were residents of Virginia and the trustees of a benefits plan (“Plan”) sponsored by the International Association of Sheet Metal, Air, Rail and Transportation Workers (“Union”). ECF No. 541 ¶¶ 1-2, 38, 40-41; ECF No. 67 ¶¶ 38, 40-41. In these roles, Plaintiffs worked out of the Union's Washington, D.C., headquarters. ECF No. 54-1 ¶¶ 39, 42-43; ECF No. 67 ¶¶ 39, 42-43. The Plan provides disability benefits to Union members employed in the rail and bus industries and is regulated under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. ECF No. 54-1 ¶¶ 1-3, 37, 46; ECF No. 67 ¶¶ 37, 46. The Plan maintains two separate schedules of disability benefits: one for rail-industry employees, the other for bus-industry employees. ECF No. 54-1 ¶ 47; ECF No. 67 ¶ 47.
Anthem Life Insurance Company (“Anthem”), an Indiana corporation headquartered there, began providing disability insurance to the Plan's rail-industry members in 2010 and to the Plan's bus-industry members in 2012. ECF No. 14 ¶ 16; ECF No. 22 ¶ 17; ECF No. 54-1 ¶¶ 2-3. For several years, Anthem provided coverage to both sets of members under a “non-participating arrangement” with the Plan. ECF No. 54-1 ¶ 4. Under this non-participating arrangement, Anthem assumed the entire insurance risk, meaning that if claims paid by Anthem exceeded premiums paid to Anthem, Anthem would suffer the loss, but if premiums paid to Anthem exceeded claims paid by Anthem, Anthem would reap the profit. Id. ¶¶ 4, 50; ECF No. 67 ¶ 50. Anthem reportedly profited handsomely under this arrangement. ECF No. 54-1 ¶ 59; ECF No. 67 ¶ 59.
In late 2014, Plaintiffs and other representatives of the Plan began negotiating with Anthem representatives over the terms of the parties' arrangement for the 2015 calendar year. ECF No. 54-1 ¶ 5. Marc Rifkind, the Plan's counsel based out of Washington, D.C., was the Plan's primary point of contact with Anthem, and Mike Slifka, an account manager for Anthem based out of Ohio, was Anthem's primary point of contact with the Plan. See, e.g., ECF No. 52-4 at 2-4.
Although the parties' representatives at first discussed renewal under a non-participating arrangement, in December 2014 they broached the possibility of transitioning to a “participating arrangement” for the 2015 calendar year. ECF No. 52-1 at 23; ECF No. 54-1 ¶¶ 7-8, 59, 61; ECF No. 67 ¶¶ 59, 61. Under this participating arrangement, Anthem would charge higher premiums, but the parties would share the insurance risk and thus share any loss or profit. See ECF No. 52-1 at 23-24; ECF No. 54-1 ¶ 50; ECF No. 67 ¶ 50. The parties dispute what, exactly, they discussed as to how any profit-sharing amounts would be calculated under this participating arrangement. Compare ECF No. 51-2 ¶¶ 9-14, and ECF No. 67 ¶¶ 62-70, with ECF No. 54-1 ¶¶ 9-14, 62-70. But meeting minutes of their negotiations at least reflect some high-level discussion about a “50/50 split” of “excess receipts.” See ECF No. 52-1 at 35.
On January 30, 2015, the Plan decided to agree to a participating arrangement for the 2015 calendar year. ECF No. 52-1 at 35-36. That same day, Rifkind emailed Slifka with a letter attachment stating that the trustees “accept Anthem's offer set forth” in a previously shared “Final Product & Pricing Package” specifying the premiums to be paid and benefits to be provided under a participating arrangement for the 2015 calendar year for each benefits schedule. See ECF No. 52-4 at 2, 6; ECF No. 52-5 at 2-7. That “Package” did not, however, contain any terms specifying how the profit sharing between Anthem and the Plan would work. See ECF No. 52-5 at 5, 7. Thus, Rifkind asked Slifka to prepare written agreements containing “the terms governing the Participating Contracts for Rail and Bus” for the Plan's “review and approval.” ECF No. 52-5 at 4; see also ECF No. 51-4 at 4-6. Rifkind also told Slifka of the trustees' “understanding” about one term they expected to be in those documents-that Anthem would pay the Plan quarterly the “50% sharing.” ECF No. 52-5 at 3.
Slifka responded to Rifkind later that same day: the Plan's participants. ECF No. 53-6 at 2. And he said that the parties would need to meet soon to “start th[e] process” of implementing the participating arrangement. Id. The Plan then began paying premiums at the partici-pating-arrangement levels. ECF No. 54-1 ¶ 89; ECF No. 67 ¶ 89. And Anthem began “operating in ways that would suggest” an agreement was in place, including by accepting participating-ar-rangement-level premiums, paying participating-arrangement-level benefits, and reserving funds to pay the Plan the profit-sharing amount owed “based on what [Anthem] knew about the final structure of that agreement at that point in time.” ECF No. 54-4 at 14; ECF No. 54-14 at 3; see also ECF No. 54-1 ¶¶ 89-90; ECF No. 67 ¶¶ 89-90.
In May 2015, Slifka finally forwarded to Rifkind two draft “Experience Rating Refund” (“ERR”) Agreements containing the terms to govern the parties' profit sharing under the participating arrangement. ECF No. 51-5 at 2-8. One draft governed the profit sharing for the railindustry-members policy, and the other draft governed the profit sharing for the bus-industry-members policy, but the drafts were otherwise identical. Compare ECF No. 51-5 at 3-5, with ECF No. 51-5 at 6-8. See also ECF No. 51-4 at 6; ECF No. 54-1 ¶ 21.
These drafts specified that Anthem would pay the Plan annually any profit-sharing amounts owed. ECF No. 51-5 at 3-4, 6-7. They also contained a formula for how the profit-sharing amount would be calculated, specifying that the Plan would receive 50% of the difference of “Paid Premium - Incurred Claims - [Anthem's] Expenses.” Id. at 3, 6. By definition, Anthem's “Expenses” constituted “25% of paid premium.” Id. at 4, 7. Thus, the profit sharing would be a 50/50 split, but that split would be of funds left over after Anthem took out its “Expenses.” The drafts also included an early-termination-penalty clause that said, in essence, that the Plan would forfeit any profit-sharing payments otherwise owed to it if it terminated the participating arrangement before December 31, 2015. See id. at 3-4, 6-7. The drafts also contained a provision requiring the Plan to give Anthem a “written request” for payment, after which Anthem had sixty days to fulfill that request. See id. The drafts contained several other provisions addressing payment-related issues, the duration of the ERR Agreements, termination of the ERR Agreements, and other, more ancillary matters, including an Ohio choice-of-law clause and an integration clause. See generally ECF No. 51-5 at 3-8.
Rifkind responded to Slifka's email forwarding these drafts, asking him how the “25% expense ratio” was “calculated.” ECF No. 52-9 at 5. After some back-and-forth between Rifkind and Slifka on this point, Rifkind told Slifka that they “need[ed] to nail down this agreement.” Id. at 2-5. He suggested meeting in person “to discuss each of the components of the expense-ratio calculation” as well as the terms governing the “frequency” of profit-sharing payments. Id. at 2.
These efforts to “nail down” the ERR Agreements apparently did not go well. Rifkind wrote Slifka in September 2015 to tell him that the Plan was not “interest[ed] in [the] participatory contract that Anthem proposed.” ECF No. 52-10 at 2. He said that the Plan would proceed as if a non-participating arrangement was in place for the entire 2015 calendar year and demanded either a retrospective refund or a prospective credit for the higher participating-arrangement premiums the Plan had paid. Id. Slifka forwarded...
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