Trane U.S. Inc. v. Neblett

• Decision Date: 02 January 2018
• Docket Number: NO. 3:16–cv–02625,3:16–cv–02625
• Citation: 291 F.Supp.3d 848
• Court: U.S. District Court — Middle District of Tennessee
• Parties: TRANE U.S. INC., Plaintiff, v. Carney NEBLETT, Defendant.

291 F.Supp.3d 848

TRANE U.S. INC., Plaintiff,

v.Carney NEBLETT, Defendant.

NO. 3:16–cv–02625

United States District Court, M.D. Tennessee, Nashville Division.

Signed January 2, 2018

Alvin Scott Derrick, Gullett, Sanford, Robinson & Martin, Nashville, TN, for Plaintiff.

D. Michael Andrews, Beasley, Allen, Crow, Methvin, Portis & Miles, P.C., Montgomery, AL, for Defendant.

MEMORANDUM OPINION

WAVERLY D. CRENSHAW, JR., CHIEF UNITED STATES DISTRICT JUDGE

This is an action that arises under a health care plan governed by the provisions of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"). As contemplated by the Magistrate Judge's Order of March 3, 2017, the parties have filed Cross–Motions for Summary Judgment. (Doc. Nos. 23 & 25.) Trane has filed a Response. (Doc. No. 26.) The motions are ready for decision. For the following reasons, Trane's motion will be granted and Neblett's motion will be denied.

I. Agreed Facts

The parties have filed agreed stipulations of fact for purposes of the cross-motions for summary judgment.¹ (Doc. No. 21.) They are as follows.

On or about November 14, 2012, Neblett was injured while cutting trees. The safety lanyard that Neblett was wearing broke and allowed him to fall. He sustained injuries in the fall.

Neblett was a participant and beneficiary of a self-funded employee welfare benefit plan sponsored by Trane. At all times relevant to this action, the Trane Employee Welfare Benefit Plan (the "Plan") was an employee welfare benefit plan as defined by ERISA. The Plan was established and maintained by Trane for the purpose of providing its employees and retirees certain medical benefits. The Plan was administered by Horizon Blue Cross/Blue Shield of New Jersey ("Horizon BCBS"). Xerox Recovery Services ("Xerox") was the authorized agent for representing Horizon BCBS in collection of the subrogation/reimbursement amounts from the payment of medical expenses for Neblett.

The Plan excludes coverage for medical expenses incurred as a result of injuries that are the result of the actions of a third party that is or may be liable for all or part of such medical expenses. By the terms of the Plan, if it provides benefits under circumstances where a third party is or may be liable for such expenses, the Plan is granted subrogation and reimbursement rights and an equitable lien against any funds a participant recovers from the third party. The Plan paid $148,240.00 in medical expenses incurred by Neblett as a result of his accident.

Neblett and his spouse brought a separate lawsuit in this Court, alleging that the lanyard Neblett was wearing was defective or unreasonably dangerous. Medical expenses of approximately $300,000.00 were an item of damages claimed in that lawsuit. That case was mediated on May 3, 2016. Following the mediation, the Nebletts' claim was settled for an amount in excess of the amount in dispute in this case. The settlement by the Nebletts was a settlement of any and all claims and one in which they gave a complete release of all claims.

Neblett's counsel sent correspondence to Horizon BCBS on April 13, 2016, and requested a claims listing, from November 14, 2012 to present, setting forth claims paid on Neblett's behalf related to his fall. On April 19, 2016, Xerox, on behalf of Horizon BCBS, sent correspondence to Spicer Rudstrom, PLLC, Neil Sambursky, Esq., and Neblett's counsel, and advised that the Plan that paid for Neblett's treatment was a self-funded employee welfare benefit plan under ERISA with subrogation and/or reimbursement rights. On April 21, 2016, Neblett's counsel sent correspondence to Xerox and expressed frustration at being unable to get information from Xerox regarding any subrogation/reimbursement interest for purposes of settling Neblett's separate products liability injury claim. On April 25, 2016, Neblett's counsel again wrote Xerox, acknowledged the notice of lien, and requested an itemization of the claimed lien amount. Xerox replied with an itemization of the amounts paid by the Plan for medical expenses incurred in Neblett's treatment.² On April 27, 2016, Neblett's counsel sent correspondence to Xerox acknowledging the itemization of the subrogation/reimbursement claim and asking that the lien amount be reduced.³

On April 29, 2016, James D. Kay, Jr., Esq., the mediator of Neblett's products liability case, wrote to Xerox. Kay advised that mediation of the case had been difficult, and he requested that the amount of $75,000.00 be accepted for the subrogation/reimbursement claim. On May 3, 2016, Neblett's counsel sent correspondence to Xerox, asserted that some of the medical claims ($3,795.00) were not related to Neblett's accident, requested that those be removed to lower the claim to $148,240.00, and asked that a settlement of the claim be accepted in the amount of $115,642.02 (21.99% less).

In a letter dated May 3, 2016, Brianne Santiago of Horizon BCBS wrote to Neblett's counsel and stated that Horizon BCBS would not be filing a lien for Mr. Neblett's medical expenses. Neblett had settled his product liability claims prior to receipt of this letter. The letter stated that "[i]f the member is part of a self-insured group or government plan, you will need to contact the group directly to determine whether the group will be filing a lien." (Doc. No. 21–10 at 2.) Neblett's counsel did not contact his self-funded group after receipt of Santiago's May 3 letter.

On May 5, 2016, Neblett's counsel wrote to Xerox stating that he understood Xerox had denied his request to reduce the lien amount of $148,200.00 and that the refusal to reduce the lien amount was disputed. In a letter written the dame day, Xerox advised Neblett's counsel that the subrogation/reimbursement claim was $148,240.00 and sent an itemization of the claim.

In a letter dated May 18, 2016, and sent via fax on May 23, 2016, Neblett's counsel wrote Xerox, attached a copy of the Horizon BCBS letter of May 3, 2016 (which stated that no subrogation/reimbursement claim was going to be made), and advised that he considered the subrogation/reimbursement claim concluded.

The next day, May 24, 2016, Ms. Santiago of Horizon BCBS called Neblett's counsel and advised him that Horizon BCBS would indeed be asserting a subrogation/reimbursement claim. On that same day, Santiago sent correspondence stating that the May 3 letter that indicated that no subrogation/reimbursement claim would be made was sent erroneously and that Horizon BCBS would still be making its subrogation/reimbursement claim through Xerox.

II. Legal Standard

In reviewing a motion for summary judgment, this Court will only consider the narrow question of whether there are "genuine issues as to any material fact and [whether] the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A motion for summary judgment requires that the Court view the "inferences to be drawn from the underlying facts ... in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) ). "The party bringing the summary judgment motion has the initial burden of informing the Court of the basis for its motion and identifying portions of the record that demonstrate the absence of a genuine dispute over material facts." Rodgers v. Banks, 344 F.3d 587, 595 (6th Cir. 2003). After the movant has satisfied this initial burden, the nonmoving party has the burden of showing that a "rational trier of fact [could] find for the non-moving party [or] that there is a ‘genuine issue for trial.’ " Matsushita, 475 U.S. at 587, 106 S.Ct. 1348. If the evidence offered by the nonmoving party is "merely colorable," or "not significantly probative," or not enough to lead a fair-minded jury to find for the nonmoving party, the motion for summary judgment should be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)."A genuine dispute between the parties on an issue of material fact must exist to render summary judgment inappropriate."

Hill v. White, 190 F.3d 427, 430 (6th Cir. 1999) (citing Anderson, 477 U.S. at 247–49, 106 S.Ct. 2505 ).

III. Analysis

This case is relatively straightforward. Neblett was badly injured; the Plan, which is governed by ERISA, paid his medical bills; Neblett recovered an amount in excess of the medical bills in litigation with a third party; and Trane seeks reimbursement from Neblett for $148,240.00 as a result. Trane's initial right to recover in these (common) circumstances is not disputed; rather, Neblett contends that Trane's cannot recover because it disclaimed its interest in the subrogration lien. More specifically, it appears that Neblett contends that the May 3, 2016 correspondence from Horizon BCBS to Neblett's counsel—stating that Horizon BCBS would not be filing a lien for Neblett's medical expenses—waived or estopped Trane's right to reimbursement.⁴ Trane maintains that these defenses are either unavailable or inapplicable here.

While ERISA preempts state law claims of waiver and estoppel, 29 U.S.C. § 1144(a), the ERISA statute itself does not specifically address whether the theories of waiver and estoppel under federal common law apply to actions brought under the statute. Otero v. Unum Life Ins. Co. of Am., 226 F.Supp.3d 1242, 1271 (N.D. Ala. 2017). "However, [ERISA] has interstices, and the Supreme Court has noted that Congress expected, in passing the statute, for the federal courts to fill those gaps with ‘a federal common law of rights and obligations under ERISA-regulated plans.’ " Glass v. United of Omaha Life Ins. Co., 33 F.3d 1341, 1347 (11th Cir. 1994) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) ). In other words, as the Sixth Circuit has broadly stated, where ERISA is silent on a...