Vescom Corp. v. American Heartland Health Admin.
| Decision Date | 22 February 2003 |
| Docket Number | No. Civ. 01-146-B-S.,Civ. 01-146-B-S. |
| Citation | 251 F.Supp.2d 950 |
| Parties | VESCOM CORPORATION, Plaintiff v. AMERICAN HEARTLAND HEALTH ADMINISTRATORS, INC., Defendant and Third Party Plaintiff and Merrion Reinsurance Company, Ltd., Defendant v. Rodney Murphy and Murphy & Associates, Inc., Third Party Defendants |
| Court | U.S. District Court — District of Maine |
Charles E. Gilbert, III, Julie D. Farr, Gilbert & Greif, P.A., Bangor, ME, for Vescom Corporation, plaintiff.
Thad B. Zmistowski, Eaton, Peabody, Bradford & Veague, Bangor, ME, John A. Claro, Ellis, Claro, Mee & Goodwin, LLP, Oklahoma City, OK, for American Heartland Health Administrators Inc, defendant.
Kevin M. Cuddy, Mark K. McDonough, Cuddy & Lanham, Bangor, ME, Jonathan Scharff, Harris, Shelton, Dunlap, Cobb & Ryder, Memphis, TN, for Rodney Murphy, Murphy & Associates, third-party defendants.
ORDER AFFIRMING THE RECOMENDED DECISION OF THE MAGISTRATE JUDGE
The United States Magistrate Judge filed with the Court on January 17, 2003 her Recommended Decision. Plaintiff filed its objections to the Recommended Decision on January 30, 2003 and Defendant American Heartland filed its response to those objections on February 18, 2003. Defendant American Heartland filed its objections to the Recommended Decision on January 31, 2003 and Plaintiff filed its response to those objections on February 13, 2003. I have reviewed and considered the Magistrate Judge's Recommended Decision, together with the entire record; I have made a de novo determination of all matters adjudicated by the Magistrate's Judge's Recommended Decision; and I concur with the recommendations of the United States Magistrate Judge for the reasons set forth in her Recommended Decision, and determine that no further proceeding is necessary.
1. It is therefore ORDERED that the Recommended Decision of the Magistrate Judge is hereby AFFIRMED.
2. It is ORDERED that American Heartland's Motion for Summary Judgment is DENIED with respect to Vescom's ERISA claim, Count I, and its defamation claim, Count V; and GRANTED with respect to Vescom's remaining common law claims, Counts II,III,IV,VI and VII.
3. It is ORDERED that American Heartland's request that the case be referred for arbitration is DENIED.
4. It is further ORDERED that Rodney Murphy and Murphy & Associates, Inc.'s Motion for Summary Judgment is GRANTED.
Plaintiff Vescom Corporation sued Defendants American Heartland Health Administrators, Inc., and Merrion Reinsurance Company, Ltd., in connection with the Defendants' administration and reinsurance of Vescom's self-funded employee health benefits plan. Vescom's claims against American Heartland Health Administrators 1
assert that American Heartland breached certain fiduciary duties in its role as plan administrator as well as various common law duties arising under both state and federal common law.2 In response to these claims, American Heartland filed a third party complaint against Vescom's insurance agent, Murphy & Associates and its principal, Rodney Murphy, seeking indemnification or contribution for any damages that might arise for alleged misrepresentations regarding the risks and benefits of the plan.3
American Heartland now moves for summary judgment against all of Vescom's claims. Rodney Murphy and Murphy & Associates similarly move for summary judgment against American Heartland's third party claims. Coupled with these dispositive motions are various non-dispositive motions addressing the composition of the summary judgment record. I now RECOMMEND that summary judgment enter against all of Vescom's claims, except its ERISA claim (Count I) and its defamation claim (Count V). I further RECOMMEND that summary judgment enter against American Heartland's Third Party Complaint, in its entirety.
Summary judgment is warranted only 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 a judgment as a matter of law." Fed.R.Civ.P. 56(c); Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir.2000). This District has prescribed a specific local rule that governs the manner in which parties must present motions for summary judgment. See D. Me. Loc. R. 56.
In addition to the parties' Local Rule 56 summary judgment statements of material facts,4 Vescom has filed four motions concerning the summary judgment record, two to strike certain witness statements given under the statutory alternative to the oath,5 one for leave to file a surreply memorandum and one to have its statement of additional material facts deemed admitted.6 For its part, American Heartland has filed one non-dispositive motion to amend its summary judgment motion and supporting memorandum. American Heartland also filed a "corrected" reply statement of material facts, which contains some record citations not found in the original. This latter filing is not partnered, however, with either a motion to amend or a motion to extend the applicable filing deadline and I have restricted my review of American Heartland's two reply statements to the first such document only.
Although the two pending summary judgment motions each generate separate statements of material facts, my recommendation on American Heartland's motion for summary judgment will effectively dispose of the claims in the Third Party Complaint as well. Therefore, the following facts are drawn from the fact statements filed in connection with American Heartland's motion. Because none of the non-dispositive motions warrant extended comment, I dispose of them in footnotes 5 and 6, supra, and footnotes 12, 13 and 23, infra.
Vescom Corporation ("Vescom") is a corporation with a principal place of business in Hampden, Maine. American Heartland Health Administrators, Inc. ("American Heartland") is a corporation with a principal place of business in Houston, Texas. Merrion Reinsurance Company, Ltd. ("Merrion") is a corporation with its principal place of business in Dublin, Ireland.7 Rodney Murphy resides, and Murphy & Associates has its principal place of business in, Cordova, Tennessee. Mr. Murphy and his insurance agency will collectively be referred to herein as "Murphy."
In January 1998, Vescom employed Murphy as its insurance agent, and requested that Murphy help Vescom locate a suitable health insurance plan through which Vescom could provide its employees with health benefits. Murphy located American Heartland, which is in the business of providing administrative and fiduciary services for single-employer, selffunded employee benefit plans. Docket No. 29, Ill. On February 6, 1998, Murphy faxed census data concerning Vescom's employees to Jack Ferguson, President and CEO of American Heartland, and requested a quote for a "co-pay plan." Docket No. 29, ¶ 5 & Ex. D; Docket No. 39, 115. In response, American Heartland presented Murphy with a proposal for a single employer, self-funded ERISA plan ("the American Heartland's Proposal"). Essentially, American Heartland proposed that Vescom self-fund its employees' healthcare benefits and explained that employer-funded healthcare plans are unlike traditional insurance, that American Heartland could serve as plan fiduciary and administrator and that reinsurance could be obtained to limit the risks involved with a self-funded plan American Heartland's Proposal also indicated that, should Vescom execute an administrative services agreement with it, American Heartland would "assist the Plan in securing quotes for reinsurance indemnity contracts to protect the Plan from losses incurred." Docket No. 29, 116 & Ex. E; Docket No. 39, 116. Included with American Heartland's Proposal was a Schedule of Contribution Rates, a sample Administrative Agreement, a sample Reinsurance Agreement and the proposed medical benefits for Vescom employees. Docket No. 39, 116. The Schedule of Contribution Rates indicated the estimated level of monthly contribution per employee, as determined by an independent underwriter,8 which monthly contribution American Heartland represented "should be adequate to permit the program to pay all claims incurred, or to purchase any reinsurance, indemnity, or stop loss coverage for the program, if desired," but not including any portion of the employer's agreed liability, if any. The Schedule further indicated that the quoted rates would be guaranteed for a period of twelve months and would change only if a material change occurred in Vescom's employee census data. Id.; see also Treadwell Depo. Ex. 1. These materials were provided to Murphy, who then provided them to Vescom. Vescom and American Heartland did not engage in any direct oral communications at this time. Docket No. 29, ¶ 7.
Vescom reviewed the Proposal and decided to self fund a health benefits plan of the kind proposed by American Heartland. Although the American Heartland Proposal indicated that varying levels of reinsurance could be selected, the quoted monthly contribution rates included 100% reinsurance through Merrion. Vescom selected this level of reinsurance and applied for reinsurance with Merrion, submitting the necessary papers through American Heartland. Docket No. 29, ¶ 8; Docket No. 39, 11118, 33.9 In April 1998, Vescom 10 entered into an Administrative Agreement with American Heartland. Pursuant to this Agreement, it was American Heartland's duty as Vescom's plan administrator to review all claims submitted in connection with the receipt of health care benefits by Vescom's employees, to adjudicate the claims and to submit the claims twice...
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