Aetna Life Ins. Co. v. Kohler

AETNA LIFE INSURANCE COMPANY, onbehalf of LEHMAN BROTHERSHOLDINGS, INC., Plaintiff,

v.THOMAS KOHLER and DIANE KIMSEU KOHLER, Defendants.

No. C 11-0439 CW

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

Dated: November 2, 2011

ORDER GRANTING

PLAINTIFF'S MOTION

FOR SUMMARY

JUDGMENT AND

DENYING AS MOOT

PLAINTIFF'S MOTION

TO STRIKE PORTIONS

OF THE DECLARATION

OF ANDREW KLIMENKO

(Docket Nos. 35

and 45)

Plaintiff Aetna Life Insurance Company, on behalf of Lehman Brothers Holdings, Inc., moves for summary judgment on its claim under section 502(a)(3) of the Employment Retirement Insurance Security Act (ERISA), 29 U.S.C. § 1132(a)(3), to recover funds from Defendants Thomas Kohler and Diane Kimeseu Kohler. Defendants oppose the motion. Aetna also moves to strike portions of a declaration submitted by Defendants in support of their opposition. Having considered the papers submitted by the parties and their oral arguments, the Court GRANTS Aetna's motion for summary judgment and DENIES as moot Aetna's motion to strike.

BACKGROUND

Aetna is the administrator and fiduciary of the Lehman Brothers Holdings, Inc. Benefit Plan, a self-funded plan governed by ERISA. Ms. Kimseu Kohler was employed by Lehman Brothers and was a participant under the Plan. Mr. Kohler, her husband, was acovered dependent under the Plan. In relevant portion, the Summary Plan Description (SPD) provides

Subrogation

Immediately upon paying or providing any benefits under this plan, the plan shall be subrogated to (stand in the place of) all rights of recovery a Covered Person has against any Responsible Party with respect to any payment made by the Responsible Party to a Covered Person due to a Covered Person's injury, illness, or condition to the full extent of benefits provided or to be provided by the plan.

Reimbursement

In addition, if a Covered Person receives any payment from any Responsible Party or Insurance Coverage as a result of an injury, illness, or condition, the plan has a right to receive from, and be reimbursed by, the Covered Person for all amounts this plan has paid and will pay as a result of that injury, illness, or condition, up to and including the full amount the Covered Person receives from any Responsible Party.

Constructive Trust

By accepting benefits (whether the payment of such benefits is made to the Covered Person or made on behalf of the Covered Person to any provider) from the plan, the Covered Person agrees that if he or she receives any payment from any Responsible Party as a result of an injury, illness, or condition, he or she will serve as a constructive trustee over the funds that constitutes [sic] such payment. Failure to hold such funds in trust will be deemed a breach of the Covered Person's fiduciary duty to the plan.

Lien Rights

Further, the plan will automatically have a lien to the extent of benefits paid by the plan for the treatment of the illness, injury, or condition for which the Responsible Party is liable. The lien shall be imposed upon any recovery whether by settlement, judgment, or otherwise related to the treatment for any illness, injury, or condition for which the plan paid benefits. The lien may be enforced against any party who possesses the funds or proceeds representing the amount of benefits paid by the plan including, but not limited to, the Covered Person, the Covered Person's representative or agent; Responsible Party; Responsible Party'sinsurer, representative, or agent; and/or any other source possessing funds representing the amount of the benefits paid by the plan.

First-Priority Claim

By accepting benefits (whether the payment of such benefits is made to the Covered Person or made on behalf of the Covered Person to any provider) from the plan, the Covered Person acknowledges that this plan's recovery rights are a first priority claim against all Responsible Parties and are to be paid to the plan before any other claim for the Covered Person's damages. This plan shall be entitled to full reimbursement on a first-dollar basis from any Responsible Party's payments, even if such payment to the plan will result in a recovery to the Covered Person which is insufficient to make the Covered Person whole or to compensate the Covered Person in part or in whole for the damages sustained. The plan is not required to participate in or pay court costs or attorneys fees to any attorney hired by the Covered Person to pursue the Covered Person's damage claim.

Cooperation

The Covered Person shall fully cooperate with the plan's efforts to recover its benefits paid. It is the duty of the Covered Person to notify the plan within 30 days of the date when any notice is given to any party, including an insurance company or attorney, of the Covered Person's intention to pursue or investigate a claim to recover damages or obtain compensation due to injury, illness, or condition sustained by the Covered Person. The Covered Person and his or her agents shall provide all information requested by the plan, the Claims Administrator or its representative including, but not limited to, completing and submitting any applications or other forms or statements as the plan may reasonably request. Failure to provide this information may result in the termination of health benefits for the Covered Person or the institution of court proceedings against the Covered Person.

The Covered Person shall do nothing to prejudice the plan's subrogation or recovery interest or to prejudice the plan's ability to enforce the terms of this plan provision. This includes, but is not limited to, refraining from making any settlement or recovery that attempts to reduce or exclude the full cost of all benefits provided by the plan.

Decl. of Kate Mellor in Supp. for Pl.'s Mot. for Summ. J. (Mellor Decl.) ¶ 4, Ex. A, at 40-41.

On July 4, 2008, Defendant Thomas Kohler suffered severe injuries when Lise Warren made an illegal u-turn and hit his motorcycle. Compl. ¶ 13; Answer ¶ 13; Defs.' Opp. to Pl.'s Mot. for Summ. J. (Opp.) at 2; Decl. of Andrew Klimenko in Supp. of Defs.' Opp. to Pl.'s Mot. for Summ. J. (Klimenko Decl.) ¶ 11, Exs. A-C, G. As a result of the accident, Mr. Kohler has required extensive medical treatment; he was hospitalized for eleven days, continues to suffer numerous health problems, and will likely undergo additional surgeries in the future. Opp. at 2; Klimenko Decl. ¶ 11, Exs. C, E, G. Kohler also suffered lost wages and the loss of his motorcycle. Klimenko Decl. ¶ 11, Ex. G. In total, Mr. Kohler's medical expenses were approximately $173,910.32. Klimenko Decl. ¶ 11, Ex. H. Aetna paid approximately $146,998.90 to $147,986.76 of these costs;¹ the remainder were paid by another insurer. Klimenko Decl. ¶ 11, Exs. H, L.

In a letter dated November 11, 2008, the Rawlings Company, LLC, on behalf of Aetna, notified Mr. Kohler of his duty to inform Aetna of any claim he intended to bring based on the July 2008 accident. Decl. of Denise M. Harris in Supp. of Pl.'s Mot. for Summ. J. (Harris Decl.) ¶ 3, Ex. A. Rawlings also informed Mr. Kohler that "if you receive a settlement or other payment from any other insurance company, person, or organization, you may be required to reimburse the health plan benefits provided as a result of the incident." Id.

In a letter dated June 11, 2009, Rawlings asked Mr. Kohler again whether he had brought a tort claim against the party responsible for the injuries he had suffered and whether he retained a lawyer. Id. Rawlings informed Mr. Kohler again of Aetna's right to reimbursement. Id. Defendants did not respond, notwithstanding that, on June 24, 2009, they had filed a complaint against Ms. Warren in the California Superior Court for the City and County of San Francisco. Decl. of Clarissa A. Kang in Supp. of Pl.'s Mot. for Summ. J. (Kang Decl.) ¶ 3, Ex. A. In a letter dated September 24, 2009, Mercury Insurance Company, Ms. Warren's insurer, informed Rawlings that litigation had begun on Mr. Kohler's claim and that Christopher Dolan was representing Mr. Kohler. Harris Decl. ¶ 4, Ex. B. The Dolan Law Firm serves as Defendants' counsel in this case.

In a letter dated September 30, 2009, Rawlings notified Andrew Klimenko of The Dolan Law Firm of Aetna's lien for medical benefits paid on behalf of Mr. Kohler on funds that might be obtained through a settlement with Ms. Warren and her insurer. Compl. ¶ 18; Answer ¶ 18; Harris Decl. ¶ 5, Ex. C. On December 9, Defendants responded, asking that Aetna withdraw its lien becauseMs. Warren had insufficient policy coverage and personal assets to make Mr. Kohler whole. Compl. ¶ 19; Answer ¶ 19. After Rawlings sent Defendants another letter on January 4, 2010 re-asserting Aetna's right to reimbursement for its payment of medical expenses, Defendants responded on January 7, 2010, reiterating their belief that Aetna could not recover any amount from Mr. Kohler. Compl. ¶¶ 20-21; Answer ¶¶ 20-21; Harris Decl. ¶ 5, Ex. C. On January 15, 2010, Rawlings again sent Defendants a letter explaining the legal basis for Aetna's claim for reimbursement. Compl. ¶ 22; Answer ¶ 22; Harris Decl. ¶ 5, Ex. C.

Defendants claim that, on May 20, 2010, their attorney spoke with Denise Harris of Rawlings and the parties "generally agreed that, given the limited insurance available, the customary three way split would be done in which the lien claimant would get 1/3 of the recovery, the attorneys would receive 1/3, and the client would receive 1/3." Decl. of Shawn R. Miller (Miller Decl.) ¶ 2.²

On June 16, 2010, Rawlings sent Defendants documentation of the medical expenses Aetna had paid on behalf of Mr. Kohler and of the Plan's subrogation and reimbursement language. Klimenko Decl. ¶¶ 5, 6, Ex. L. In this correspondence, Rawlings stated that claim reductions were considered on a case-by-case basis and that it would consider a reduction at a future time. Id.

On June 28, 2010, Defendants informed Rawlings that they had reached a settlement with Ms. Warren and her insurer. Comp...