Witcher v. Teamcare

          OPINION AND ORDER

          Kristine G. Baker United States District Judge.

         Before the Court is a motion for summary judgment filed by defendant TeamCare, a Central States Health Plan (“Central States”) (Dkt. No. 14). Plaintiff Charles P. Witcher failed to respond timely to the motion, but Mr. Witcher did file a belated response (Dkt. No. 16). Central States replied (Dkt. No. 17). The Court issued a short Order granting summary judgment (Dkt. No. 18), and the Court now enters this Opinion and Order stating its reasons.

         I. Factual Background

         A. Undisputed Material Facts

         Central States filed a statement of material facts (Dkt. No. 14-1). Mr. Witcher did not respond to, or dispute any allegations in, the statement. Therefore, the Court adopts Central States' statement of material facts as the undisputed facts in this case. The Court does not repeat those facts here but incorporates them by reference.

         B. Summary Of Claim

         Central States operates throughout the United States under the trade name TeamCare (Id., ¶ 1). Central States is an employee welfare benefit plan regulated by the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C. § 1001 et seq., and is established as an Illinois trust (Id., ¶¶ 2-3). Mr. Witcher was covered by Central States' Retiree Plan after his retirement on June 30, 2008 (Id., ¶ 4). Prior to his retirement, Mr. Witcher and his spouse, Vicki Witcher, were covered by Central States' Active Plan while Mr. Witcher was an active employee of United Parcel Service (“UPS”) (Id.). Mr. Witcher was the Covered Participant, and Ms. Witcher was the Covered Dependent (Id., ¶ 5). When he retired on June 30, 2008, Mr. Witcher elected coverage only for himself (Id.).

         Mr. Witcher alleges that Central States denied payment of his medical expenses, in violation of § 502(a)(1)(B) of ERISA (Dkt. No. 3, ¶¶ 7-8). See 29 U.S.C. § 1132(a)(1)(B). Mr. Witcher claims that this provision permits him as a plan participant to bring an action “to recover benefits due to him under the terms of his plan” and also “to enforce his rights under the terms of the plan.” (Dkt. No. 3, ¶ 8). Specifically, Mr. Witcher alleges that he was a member of the Central States Health Plan and that, on or about January 3, 2005, one of the individuals covered by the Central States Health Plan, Ms. Witcher, was in an automobile accident (Id., ¶ 4). Mr. Witcher alleges that Central States “refused to pay a single claim of the Plaintiff's after May of 2011” and that Central States claimed a subrogation lien in the amount of $9, 728.85 (Id., ¶ 6).

         Central States maintains that it paid medical bills of $9, 728.85 on behalf of Ms. Witcher as a result of the accident (Dkt. No. 15, at 1). Ms. Witcher, through her attorney, settled a third-party claim against the party responsible for the accident in the amount of $50, 000.00 (Id., at 1-2). After this recovery, Ms. Witcher refused to reimburse Central States based upon her attorney's assertion that the “make whole” defense applied regarding Central States' subrogation lien (Id., at 3).

         Mr. Witcher retired on June 30, 2008, and elected coverage for himself under Central States' Retiree Plan (Id., at 2). Because neither Mr. Witcher nor his spouse reimbursed Central States in the amount of its subrogation lien, Central States placed an overpayment against Mr. Witcher's Retiree Plan health and welfare coverage (Id.). According to Central States, until the overpayment was collected, Mr. Witcher's coverage was suspended, and his current claims were not paid (Id.). Central States sent a letter to Mr. Witcher on May 26, 2011, along with pertinent provisions of the Active Plan Document, that explained Central States' decision and the basis for that decision in the Active Plan Document language (Dkt. No. 13-4). The letter also advised Mr. Witcher of his right to appeal the determination (Id.).

         In pertinent part, the May 26, 2011, letter put Mr. Witcher on notice of the Claim of the Health and Welfare Fund (“Fund”) for recovery of its subrogation rights in the amount of $9, 728.85 (Dkt. No. 13-4, at 1). Central States explained:

The plan document basis of the Fund's Claim is Section 11.14 of the Active Plan Document which governs your obligations as a Covered Individual of the Fund. That provision, of which a copy is enclosed, states in part (emphasis added):

“(e) If at any time, either before or after the Fund becomes vested with Subrogation Rights, a Covered Individual directly or indirectly receives any Proceeds as full or partial satisfaction of his Loss Recovery Rights, including arrangements for an annuity or other similar installment benefit plan, and including any payment or reimbursement of expenses (including attorneys' fees) incurred by or on behalf of the Covered Individual, without prior written approval of an authorized Fund representative, the Fund shall be vested with each of the following mutually independent rights:

(1) The right, at any time, to decline to make any payment for any benefits on behalf of the Covered Individual related to the Disability on which the Proceeds were based;

(2) The right, at any time after the Fund becomes vested with Subrogation Rights, to decline to make any payment for any benefits on behalf of the Covered Individual, related to any circumstance or condition for which the Fund otherwise has a Coverage obligation, until the amount of such unpaid Coverage is equal to and offset by the unrecovered amount of the Fund's Subrogation Rights . . . .”

Notice is hereby provided to you that the Fund has decided to exercise its right to decline to make any payment for any benefits on your dependent's behalf until the full amount of the Fund's Claim has been recovered by the Fund through denial of your dependent's benefit claims.

This decision by the Fund constitutes an adverse benefit determination upon your dependent's right to past, present, and future Coverage . . . .

(Dkt. No. 13-4, at 1-2) (emphasis in original). The letter explained the appeal process available to Mr. Witcher and enclosed portions of the Active Plan Document.

         Central States sent a letter to Mr. Witcher on October 24, 2011, in response to an inquiry regarding coverage for Ms. Witcher, informing Mr. Witcher of the overpayment on file due to subrogation overpayment from a motor vehicle accident that occurred on June 27, 2008, and setting forth the language upon which Central States relied for the subrogation claim (Dkt. No. 13-5, at 52-53).

         Central States set forth the following:

The Fund, whenever it makes any payment for any benefits on behalf of a Covered Individual or other person related to any illness, injury or disability (collectively and separately “Disability”) of the person, is immediately subrogated and vested with subrogation rights (“Subrogation Rights”) to all present and future rights of recovery (“Loss Recovery Rights”) arising out of the Disability which that person and his parents, heirs, guardians, executors, attorneys, agents and other representatives (individually and collectively called the “Covered Individuals”) may have. The Fund's Subrogation Rights extend to all Loss Recovery ...