Winstead v. JC PENNEY CO., INC., 89 C 7788.

• Decision Date: 28 June 1990
• Docket Number: No. 89 C 7788.,89 C 7788.
• Citation: 740 F. Supp. 1358
• Parties: Marion M. WINSTEAD, Howard McDougall, R.V. Pulliam, Sr., Arthur H. Bunte, Jr., R. Jerry Cook, Robert C. Sansone, Robert J. Baker, and Harold Leu, Trustees of the Central States, Southeast and Southwest Areas Health and Welfare Fund, Plaintiffs, v. J.C. PENNEY COMPANY, INC. VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION; Aetna Life Insurance Co., a Connecticut corporation; Woman's Hospital Foundation, a Louisiana corporation; and Children's Hospital, a Louisiana corporation, Defendants.
• Court: U.S. District Court — Northern District of Illinois

740 F. Supp. 1358

Marion M. WINSTEAD, Howard McDougall, R.V. Pulliam, Sr., Arthur H. Bunte, Jr., R. Jerry Cook, Robert C. Sansone, Robert J. Baker, and Harold Leu, Trustees of the Central States, Southeast and Southwest Areas Health and Welfare Fund, Plaintiffs, v. J.C. PENNEY COMPANY, INC. VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION; Aetna Life Insurance Co., a Connecticut corporation; Woman's Hospital Foundation, a Louisiana corporation; and Children's Hospital, a Louisiana corporation, Defendants.

No. 89 C 7788.

United States District Court, N.D. Illinois, E.D.

June 28, 1990.

James D. O'Connell, Margaret M. Fahrenbach, David S. Allen, Joan P. Simmons, Rosemont, Ill., for plaintiffs.

Manuel Sanchez, Lori S. Yokoyama, Sanchez and Daniels, Chicago, Ill., for J.C. Penney Co., J.C. Penney Health Bene. and Aetna Life Ins.

Oreft Dachniwsky, Oppenheimer, Wolff & Donnelly, Chicago, Ill., Mary H. Thompson, Watson, Blanche, Wilson & Posner, Baton Rouge, La., pro hac vice, for Woman's Hosp.

MEMORANDUM OPINION AND ORDER

HOLDERMAN, District Judge:

Plaintiffs Marion M. Winstead, Howard McDougall, R.V. Pulliam, Sr., Arthur H. Bunte, Jr., R. Jerry Cook, Robert C. Sansone, Robert J. Baker and Harold D. Leu (the "Trustees") are the trustees and fiduciaries of the Central States, Southeast and Southwest Area Health and Welfare Fund ("CSS Fund"). The CSS Fund is a multiemployer trust fund and an employee welfare benefit plan, governed by and subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. (Amended Complaint, ¶¶ 2-3.)

Defendant J.C. Penney Company Inc. Voluntary Employees' Beneficiary Association ("J.C. Penney Plan") is a single employer trust fund and an employee health and welfare benefit plan, also governed by and subject to the provisions of ERISA. (Amended Complaint, ¶ 4.) Defendant Aetna Life Insurance Company, a Delaware corporation authorized to engage in business in Illinois, administers the J.C. Penney Plan. (Amended Complaint, ¶ 11.)

The Trustees filed their Complaint in this action after the J.C. Penney Plan denied benefits for certain medical expenses incurred by infant Brittani Louis at Woman's Hospital Foundation and Children's Hospital (collectively the "Hospitals") in Louisiana. The Hospitals are also named as defendants in plaintiffs' Amended Complaint.¹

Defendants J.C. Penney Plan and Woman's Hospital have moved to dismiss the Amended Complaint on the ground that plaintiffs lack standing to assert the claims of the Amended Complaint. For the reasons set forth below, the motion to dismiss will be granted.

BACKGROUND FACTS

It is well settled that in considering a motion to dismiss a court must take the well-pleaded factual allegations of the complaint as true, and dismissal is appropriate only if it is beyond doubt that the plaintiff can prove no set of facts consistent with the allegations of the complaint which would entitle plaintiff to relief. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).² The well-pleaded factual allegations set forth in the Amended Complaint depict the following scenario:

On or about December 5, 1988 Marlene Aikens gave birth to her daughter, Brittani Louis at Woman's Hospital Foundation in Baton Rouge, Louisiana. Brittani was born prematurely and was diagnosed as having respiratory disease syndrome, bronchopulmonary dysplasia and "stenoid dependency." (Amended Complaint, ¶ 10.) Her condition required and continues to require hospital and medical care and treatment. Brittani received treatment at Woman's Hospital Foundation and was later transferred to and received treatment at Children's Hospital in New Orleans, Louisiana. Brittani's medical expenses at Woman's Hospital Foundation total at least $139,882.98: her expenses at Children's Hospital total at least $131,922.59. (Amended Complaint, ¶ 22.)

Jeffrey Louis is Brittani's father. He and Brittani's mother have never been married, but lived together prior to and at the time of Brittani's birth. (Amended Complaint, ¶ 12.) Jeffrey Louis and his daughter Brittani were and are beneficiaries of the CSS Fund, pursuant to which they are entitled to certain medical and hospital benefits, subject to the terms and conditions contained in the CSS Fund's plan document. (Amended Complaint, ¶ 13.)

The Amended Complaint alleges that at all times relevant to this action, Ms. Aikens and Brittani "were and are beneficiaries entitled to receive, among other things, specified medical and hospital benefits for covered illnesses from the J.C. Penney Plan." (Amended Complaint, ¶ 11.) The Trustees contend that the J.C. Penney Plan and its administrator Aetna unreasonably refused to pay benefits on behalf of Brittani. (Amended Complaint, ¶ 19.) Aetna, according to the allegations of the pleading, has asserted that Ms. Aikens failed to enroll Brittani in the J.C. Penney Plan within the eligibility period. Aetna also denied coverage under the late enrollment exception provided in the J.C. Penney Plan because of Ms. Aiken's failure to demonstrate her daughter's insurability. (Amended Complaint, ¶ 18.) Ms. Aikens appealed Aetna's determination (Amended Complaint, ¶ 19): defendants have asserted that this appeal was denied subsequent to the filing of the Trustees' complaint in this court. (J.C. Penney Mem. In Opposition, p. 3, n. 3.)³

The Trustees contend that, under the terms of the CSS Fund Plan Document, the J.C. Penney Plan is Brittani's primary insurance carrier. Accordingly, the Trustees assert, the CSS Fund is only the excess carrier. (Amended Complaint, ¶ 21.) "Because of the J.C. Penney Plan's failure to assume its responsibility to provide primary benefits to or on behalf of Brittani Louis," the pleading alleges, "the CSS Fund will be obligated to pay the hospital and medical benefits incurred on her behalf." (Amended Complaint, ¶ 20.)

The Trustees rely on sections 5.01, 5.02 and 5.03 of the CSS Fund's Plan Document to support their contention that the J.C. Penney Plan is the primary insurer of Brittani's medical expenses. These provisions of the Plan Document provide as follows:

Section 5.01 PRIORITY OF COVERAGE WHERE COVERED INDIVIDUAL COVERED BY ANOTHER PLAN

If the benefits of this Plan duplicate or overlap with benefits for hospital, surgical, dental, psychiatric, chiropractic or other medical treatment provided by an Other Plan, such duplication or overlapping shall be avoided. In this regard, primary responsibility for providing benefits shall be determined in the following order.

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(d) If there is coverage for a Child by more than one (1) plan, the plan which covers the Spouse who has the earliest birthday (month and day) shall have primary responsibility, except that in the case of a child whose parents are separated or divorced, the following rules apply:

(1) The benefits of the plan of the custodial parent shall be primary to the benefits of the non-custodial parent;

(2) If the parents have joint custody, the plan which covers the Spouse who has the earliest birthday (month and day) shall have primary responsibility.

Section 5.02 EFFECT OF PRIORITY RULES ON AMOUNT OF PAYMENTS UNDER THE PLAN

Whenever this Plan is determined to have primary responsibility, the Covered Individual shall receive benefits without regard to coverage under the Other Plan. Whenever this Plan is determined not to have primary responsibility, this Plan shall pay, after the Other Plan has paid its maximum allowable benefits, any remaining covered charges up to the amount this Plan would have paid if the Plan had primary responsibility and without the payments from the Other Plan being taken into account in applying the specific benefit maximums indicated in this Plan.

Section 5.03 RECOVERY OF PAYMENTS Whenever this Plan has made benefit payments which exceed the amount of benefits payable under the terms of this Plan or which an Other Plan was required to make under Section 5.01, the Fund shall have the right to recover the amount of such payments from any persons receiving such payments or from any Other Plans having primary responsibility for the payment of benefits.

(Amended Complaint, ¶ 15.)⁴

The Amended Complaint alleges, on information and belief, that Ms. Aikens "has sole legal custody of Brittani Louis." (Amended Complaint, ¶ 16.) The pleading further alleges that Ms. Aikens' birth date precedes that of Mr. Louis in the calendar year. (Amended Complaint, ¶ 17.) Pursuant to sections 5.01(d)(1) and 5.01(d)(2), the Trustees assert, the J.C. Penney Plan is therefore the primary benefit provider.

The Amended Complaint alleges that "Section 5.01 places primary responsibility for providing benefits regarding Brittani's illness upon the J.C. Penney Plan." (Amended Complaint, ¶ 21.) "Because the Fund is the excess carrier and the J.C. Penney Plan is the primary carrier, the Fund is bringing this action pursuant to Section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3), to enforce the terms of the Fund's Plan Document." (Id.)⁵ The Trustees seek the following:

(1) a declaration that, as between the J.C. Penney Plan and the Fund, the J.C. Penney Plan had and continues to have responsibility for providing primary medical and hospital benefits to or on behalf of Brittani Louis (Count I);

(2) an order compelling Aetna, as administrator of the J.C. Penney Plan, to pay benefits on behalf of Brittani Louis in accordance with the terms of the J.C. Penney Plan (Count I);

(3) an order enjoining the Woman's Hospital Foundation and Children's Hospital from pursuing any action against the CSS Fund to collect any amounts due until it is determined which benefit plan is the primary benefit source (Count II); and

(4) costs and reasonable attorneys' fees.

(Amended Complaint, pp. 8-9.)

DISCUSSION

Section 502(a)(1) of ERISA, 29 U.S.C. § 1132(a)(1), in relevant part, provides:

A civil action may be brought —

(1) by a participant or beneficiary —

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(B) to recovery

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