Shelby Health Care v. S. Council Industrial Workers, 99-5191
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
| Citation | 203 F.3d 926 |
| Docket Number | No. 99-5191,99-5191 |
| Parties | (6th Cir. 2000) Shelby County Health Care Corporation, Plaintiff-Appellee, v. Southern Council of Industrial Workers Health and Welfare Trust Fund,Defendant-Appellant, Tracy Mason, Defendant. Argued: |
| Decision Date | 07 December 1999 |
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v.
Southern Council of Industrial Workers Health and Welfare Trust Fund,Defendant-Appellant,
Decided and Filed: February 15, 2000
Appeal from the United States District Court for the Western District of Tennessee at Memphis; No. 98-02394--Julia S. Gibbons, Chief District Judge.
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Gary C. McCullough, Teresa A. McCullough, Memphis, Tennessee, for Appellee.
Deborah E. Godwin, Allen, Godwin, Morris & Laurenzi, Memphis, TN, Lynn A. Bowers, Allison A. Madan, Lynn A. Bowers, SLEVIN & HART, Washington, D.C., for Defendants-Appellants.
Before: JONES, BATCHELDER, and MOORE, Circuit Judges.
KAREN NELSON MOORE, Circuit Judge.
Shelby County Health Care Corporation ("Shelby") brought suit in this employee benefit case against Southern Council of Industrial Workers Health and Welfare Trust Fund (the "Fund") for payment of hospital services rendered to Tracy Mason, a former participant in the Fund. The Fund's plan administrator, the Board of Trustees, had denied Shelby's claim for benefits on the basis of untimeliness of the claim. The district court denied the Fund's motion to dismiss and sua sponte granted summary judgment to Shelby reversing the Board of Trustees' denial of benefits. We AFFIRM the district court's conclusion on summary judgment that the Board of Trustees' interpretation of the Fund's plan document (the "Plan") regarding when a claim is timely filed is arbitrary and capricious. We REVERSE the district court's sua sponte grant of summary judgment to Shelby awarding it the full amount of damages requested and REMAND to determine the proper amount of benefits owed under the terms of the Plan. In addition, we AFFIRM the district court's denial of attorney fees to the Fund.
I. FACTS AND PROCEDURE
Tracy Mason was struck by a car on June 30, 1995. Mason was a participant in the Fund at that time. He was taken to Shelby for medical treatment and signed an assignment of insurance benefits to Shelby for all hospital charges. Shelby incurred $31,770.22 for these services and billed the Fund for this amount in late July 1995.1 After receiving this bill and in accordance with the Fund's established procedures for claims involving potentially liable third parties, the Fund sent Mason a subrogation agreement, which included a questionnaire about the accident, on August 2, 1995; October 31, 1995; November 14, 1995; May 22, 1996; and June 12, 1996. These letters advised Mason that his claims would not be processed until the Fund received a subrogation agreement with his signature. On March 6, 1996, Shelby sent a letter to the Fund, along with a copy of Mason's assignment of benefits to Shelby, following up on the bill it had sent to the Fund and renewing its request for payment. In response, the Fund sent a letter to Shelby on April 17, 1996, informing Shelby that it had not received a subrogation agreement from Mason and that it could not process the claim without this information. Shelby filed suit seeking payment of this claim in May 1996; the district court dismissed Shelby's complaint for failure to exhaust administrative remedies in May 1997. As the litigation was pending, the Fund sent Shelby a subrogation agreement for Mason's signature on September 12, 1996, in response to Shelby's request. In this letter, the Fund warned Shelby that it was sending this agreement "without prejudice with respect to the Fund's ability to deny any claim filed for timeliness or any other reason consistent with the Fund's rules." J.A. at 131. Shelby submitted a signed subrogation agreement and a copy of the
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police report to the Fund on October 16, 1996.
On January 7, 1997, the Fund denied Shelby's claim on the ground of untimeliness. The Fund concluded that according to the Plan, all information necessary to process a claim, including a subrogation agreement where there is a potentially liable third party, must be submitted within its one-year deadline for filing claims. Shelby appealed the denial of its claim to the Board of Trustees and submitted for the Board's consideration a copy of Mason's assignment of benefits to Shelby, a police report for the accident involving Mason, and the subrogation agreement signed by Mason. On April 3, 1997, the Board of Trustees met and decided to affirm the denial of benefits to Shelby on the ground of untimeliness. It concluded that a claim for benefits relating to an accident involving third party action is not properly filed until all information, including a signed subrogation agreement, is submitted to the Fund. Under the Plan, a participant must file a claim for benefits within one year of the date on which the charges were incurred. In this case, Shelby provided medical treatment to Mason beginning on June 30, 1995, and the Fund did not receive a signed subrogation agreement until October 21, 1996. The Board of Trustees reasoned that Mason's failure to submit a timely subrogation agreement had prejudiced the Fund's ability to pursue damages from the driver of the car that struck Mason because of Tennessee's one-year statute of limitations for personal injury actions.
Shelby filed a complaint in district court challenging this conclusion under 29 U.S.C. § 1132(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA") on May 1, 1998. It attached as exhibits a copy of Mason's assignment of benefits to Shelby, the subrogation agreement with Mason's signature, a letter indicating that the Fund had made some payments for claims related to Mason's accident, and an affidavit stating the amount owed to Shelby. In response, the Fund filed a motion to dismiss Shelby's complaint arguing that the Board of Trustees' interpretation of the Plan and denial of benefits is not arbitrary and capricious. The Fund attached as exhibits to its brief excerpts of the Plan, an affidavit describing the Fund's attempts to contact Mason for a subrogation agreement, and copies of correspondence between Shelby and the Fund regarding the subrogation agreement and the status of Shelby's claim. Shelby filed a response to the Fund's motion to dismiss making the following arguments: that the Board of Trustees' interpretation of the Plan is arbitrary and capricious, that the Plan should be estopped from denying payment of the claim, and that the Plan failed to provide Shelby with a copy of the Plan in violation of 29 U.S.C. § 1132(c)(1). Shelby also attached several exhibits, including Mason's assignment of benefits, an affidavit describing its outstanding bill for services provided to Mason, correspondence between Shelby and the Fund, and a copy of the police report. Finally, the Fund filed a reply to Shelby's response and addressed each of Shelby's arguments. The Fund included as exhibits correspondence between the Fund and Shelby.
As the parties were filing these motions, the district court entered a scheduling order pursuant to Fed. R. Civ. P. 16(b), establishing the deadline for completing discovery on October 5, 1998, the deadline for filing potentially dispositive motions on November 5, 1998, and setting trial for January 25, 1999. On November 5, 1998, the Fund filed a motion for an extension of time to file dispositive motions until 30 days after the district court's order ruling on the Fund's motion to dismiss. The district court granted this motion. However, two months later the district court sua sponte converted the Fund's motion to dismiss into a motion for summary judgment and denied the motion in an order entered on January 5, 1999. The district court concluded that the Board of Trustees' interpretation of the Plan is arbitrary and capricious, sua sponte granted Shelby summary judgment, and ordered the Fund
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to pay Shelby $31,770.22, the full amount of benefits Shelby requested. The district court rejected Shelby's argument that the Fund should be estopped from denying payment and that the Fund violated 29 U.S.C. § 1132(c)(1) by refusing to provide Shelby with a copy of the Plan. Finally, the district court denied both parties' requests for attorney fees and Shelby's request for prejudgment interest. The Fund filed a timely notice of appeal of the district court's judgment.
II. ANALYSIS
A. Summary Judgment Sua Sponte
When a district court grants summary judgment sua sponte, its decision is subject to two separate standards of review. The substance of the district court's decision is reviewed de novo under the normal standards for summary judgment. See Salehpour v. University of Tennessee, 159 F.3d 199, 203 (6th Cir. 1998), cert. denied, 119 S. Ct. 1763 (1999). The district court's procedural decision to enter summary judgment sua sponte, however, is reviewed for abuse of discretion. See id. We have held that a district court may enter summary judgment sua sponte in certain limited circumstances, "'so long as the losing party was on notice that [it] had to come forward with all of [its] evidence.'" Id. at 204 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986)). More specifically, we have held that Fed. R. Civ. P. 56(c) mandates that the losing party must "be afforded notice and reasonable opportunity to respond to all the issues to be considered by the court." Employers Ins. of Wausau v. Petroleum Specialties, Inc., 69 F.3d 98, 105 (6th Cir. 1995). A clear example of the district court's power to grant summary judgment sua sponte is found in Fed. R. Civ. P. 12(b), which gives a district court the authority to turn a motion to dismiss into a motion for summary judgment where the court is presented with materials outside the pleadings. See Fed. R. Civ. P. 12(b); see also Employers Ins., 69 F.3d at104-05. This rule expressly states,
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Clark v. Stone, CIVIL ACTION NO: 4:19-CV-00166-JHM
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Taylor v. Office Of Representative John J. Duncan, No. 3:09-cv-318.
...it into a motion for summary judgment.” Shelby County Health Care Corp. v. Southern Council of Indus. Workers Health & Welfare Trust Fund, 203 F.3d 926, 932 (6th Cir.2000). The Court finds Plaintiff had ample opportunity to respond to the materials presented by Defendant. The motion to dism......
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Guillermety v. Secretary of Educ. of U.S., No. 01-CV-74904-DT.
...judgment if otherwise appropriate.'" Shelby County Health Care Corp. v. Southern Council of Indus. Workers Health and Welfare Trust, 203 F.3d 926, 932 (6th Cir.2000) (citing In re Century Offshore Mgmt. Corp., 119 F.3d 409, 412 (6th Cir.1997)); see also Markva v. Haveman, 168 F.Supp.2d 695,......