Univ. Of Tn Wm. F. Bowld Hosp. v. Wal-Mart Stores

• Citation: 951 F.Supp. 724
• Decision Date: 16 December 1996
• Docket Number: No. 95-2648-D/V.,95-2648-D/V.
• Parties: UNIVERSITY OF TENNESSEE WILLIAM F. BOWLD HOSPITAL, as Assignee of Floyd Laster, Jr., Plaintiff, v. WAL-MART STORES, INC., a Delaware Corporation, Wal-Mart Associates' Group Health Plan, and the Administrative Committee of the Wal-Mart Associates' Group Health Plan, Defendants.
• Court: U.S. District Court — Western District of Tennessee

951 F.Supp. 724

UNIVERSITY OF TENNESSEE WILLIAM F. BOWLD HOSPITAL, as Assignee of Floyd Laster, Jr., Plaintiff, v. WAL-MART STORES, INC., a Delaware Corporation, Wal-Mart Associates' Group Health Plan, and the Administrative Committee of the Wal-Mart Associates' Group Health Plan, Defendants.

No. 95-2648-D/V.

United States District Court, W.D. Tennessee, Western Division.

December 16, 1996.

ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

DONALD, District Judge.

This matter is before the Court upon the motion of Wal-Mart Stores, Inc., a Delaware Corporation, Wal-Mart Associates' Group Health Plan, and The Administrative Committee of Wal-Mart Associates' Group Health Plan (collectively, "Defendants") for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure ("FED.R.CIV.P.").

Opposing the motion is The University of Tennessee William F. Bowld Hospital ("Plaintiff" or "UT Bowld"), a state owned and operated hospital located in Memphis, Tennessee. Defendants, respectively, are Wal-Mart Stores, Inc., a Delaware Corporation ("Plan Sponsor"), Wal-Mart Associates' Group Health Plan ("Plan"), and The Administrative Committee of Wal-Mart Associates' Group Health Plan ("Plan Administrator").

Plaintiff brought the underlying suit in this district against Defendants under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461, as amended (1974), as Assignee of Floyd Laster, Jr. ("Participant"), on three counts:

Count I: Pursuant to 29 U.S.C. § 1132(a)(1)(B), for failure to pay benefits for medical bills incurred by the Participant during hospitalization at Plaintiff's hospital;

Count II: Pursuant to 29 U.S.C. § 1021(a)(1), for failure to furnish a summary plan description; and,

Count III: Pursuant to 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1(f), for failure to furnish a written denial when a claim for benefits has been denied.

In support of their motion for summary judgment, Defendants posit that the Plaintiff lacks legal standing to sue on any of the enumerated counts because the Plan expressly prohibits the assignment of benefits and Plaintiff's only asserted standing is as Assignee of the Participant.¹ Defendants further posit that, if the Court were to find a valid assignment extant, then Defendants would still be entitled to summary judgment on the second and third counts because Defendants' alleged failure to furnish Plaintiff with the summary plan description and with a written denial, upon request, was not deliberate, and because Plaintiff suffered neither harm nor prejudice on account of Defendants' alleged failure. See Memorandum of Law Supporting Defendants' Motion for Summary Judgment, Docket No. 8, Page 11. To the extent that the motion for summary judgment relates to Defendants' subjective intent, questions of fact or mixed questions of law and fact predominate. The Court may grant summary judgment only where the material facts involved in the matter are undisputed and questions of law predominate. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Where questions of fact or mixed questions of law and fact predominate the Court must deny summary judgment. Id.

Jurisdiction in this Court is found in 29 U.S.C. § 1132(e) and (f). Regarding the assignability of welfare benefits under an ERISA-regulated insurance plan containing an anti-assignment provision, this appears to be a case of first impression in the Sixth Circuit. Neither the parties nor the Court has discovered controlling precedent. The issue has been extensively briefed by both parties. The Court has thoroughly examined the record in this case and has conducted an exhaustive review of applicable case law. For the following reasons, the Court hereby DENIES Defendants' Motion for Summary Judgment in all aspects.

FACTS

At all times relevant to this cause, Floyd Laster, Jr., was an employee of Wal-Mart Stores, Inc., and a participant in the Plan, a self-insured "employee welfare benefit plan" as defined by ERISA, 29 U.S.C. § 1002(1). Plaintiff UT Bowld is a state owned and operated hospital located in Memphis, Tennessee. On April 20, 1992, Laster was admitted to UT Bowld for treatment of a possible renal stone. On the same day the Participant executed a document purporting to assign and transfer his rights in and to any medical benefits payable to him under the Plan.² From April 20, 1992, until his death on September 25, 1992, Plaintiff provided medical care to the Participant. Plaintiff, in its alleged capacity as Assignee of the Participant, has submitted to Defendants claims for medical services in the amount of $191,190.45.

On December 1, 1993, Plaintiff requested a copy of the summary plan description (SPD) via certified mail, return receipt requested. Plaintiff's letter was directed to the "Wal-Mart Group Health Plan" at the address of the Plan Administrator in Bentonville, Arkansas. Defendants deny having possession of the December 1, 1993 letter. Subsequently in 1993, Plaintiff telephonically contacted Marc Weinberg, an employee of Defendants, for information regarding the purported denial of benefits. On February 1, 1994, Plaintiff sent another letter, certified mail, return receipt requested, to the same address, to the attention of Weinberg, enclosing therein certain forms requesting process of the Participant's benefit claim. In March of 1994, Plaintiff called Weinberg for an answer and sent Weinberg via facsimile the contents of the February 1, 1994 mailing. On March 31, 1994, Plaintiff again communicated telephonically with Weinberg about the claims. Finally, on April 12, 1994, Plaintiff, Weinberg and Weinberg's supervisor spoke about the status of the Participant's claims. Plaintiff received neither the claimed welfare benefit, the written denial, nor the SPD.

Defendants have, in the past, paid benefits under the Plan directly to health care providers. Defendants are unable to show any instance, other than with this Plaintiff, where Defendants have refused direct payments to health care providers under the Plan's anti-assignment provision, when so directed in writing by a Plan participant.

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). The Court may also consider any material that would be admissible or usable at trial, including exhibits that have been properly made a part of an affidavit. 10A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2d § 2721, at 40, § 2722, at 56 (2d ed.1983).

The party moving for summary judgment "bears the burden of clearly and convincingly establishing the nonexistence of any genuine issue of material fact, and the evidence as well as all inferences therefrom must be read in a light most favorable to the party opposing the motion." Kochins v. Linden-Alimak, Inc., 799 F.2d 1128, 1133 (6th Cir.1986). The burden on the party moving for summary judgment may be discharged by pointing out that there is an absence of evidence to support the nonmoving party's case." Kauffman v. Allied Signal, Inc., Autolite Div., 970 F.2d 178, 182 (6th Cir.), cert. denied, 506 U.S. 1041, 113 S.Ct. 831, 121 L.Ed.2d 701 (1992) (the moving party need not support its motion with affidavits or other similar materials "negating" the opponent's claim) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986)).

When confronted with a properly supported motion for summary judgment, the nonmoving party must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A genuine issue for trial exists if the evidence is such that a reasonable trier of fact could return a verdict for the nonmoving party. Id. The party opposing the motion must "do more than simply show that there is some meta-physical doubt as to the material facts." Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). In short, the nonmoving party may not oppose a properly supported motion for summary judgment by mere reliance on the pleadings. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. "[I]n the `new era' of summary judgments that has evolved from the teachings of the Supreme Court in Anderson, Celotex and Matsushita, trial courts have been afforded considerably more discretion in evaluating the weight of the nonmoving party's evidence." Cox v. Kentucky Dep't of Transp., 53 F.3d 146, 150 (6th Cir.1995). "If the record taken in its entirety could not convince a rational trier of fact to return a verdict in favor of the nonmoving party, the motion must be granted." Id.

EMPLOYEE RETIREMENT INCOME SECURITY ACT

ERISA is a "comprehensive and reticulated statute," Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 361, 100 S.Ct. 1723, 1726, 64 L.Ed.2d 354 (1980), providing "a panoply of remedial devices," Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 3092, 87 L.Ed.2d 96 (1985), for participants and beneficiaries of benefit plans. Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 108-109, 109 S.Ct. 948, 953, 103 L.Ed.2d 80 (1989).

The construction of an ERISA-regulated insurance contract is governed not by state insurance law rules but by principles of federal law. Turner v. Safeco Life Ins. Co., 17 F.3d 141, 145 (6th Cir.1994) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 1558, 95 L.Ed.2d 39 (1987)). See also Misic v. Building Serv. Employees Health and Welfare Trust, 789 F.2d 1374, 1377 (9th Cir.1986) ("When federal law preempts state law, federal...