Annie O. v. Aetna Ins. Agency Inc.

749 F.Supp.2d 852

Annie O. and Herbert E. LEWIS, Plaintiffs,

v.AETNA INSURANCE AGENCY, INC., also known as ING Insurance Services, Sherwin Williams Company as Plan Administrator, and Sherwin Williams Salaried Medical Plan, Defendants.

Case No. 09–cv–641–JPG.

United States District Court, S.D. Illinois.

Oct. 29, 2010.

John A. Wolters, Cavanagh & O'Hara, Springfield, IL, John T. Long, Cavanagh & O'Hara, Swansea, IL, for Plaintiffs.

MEMORANDUM AND ORDER

J. PHIL GILBERT, District Judge.

This matter comes before the Court on the parties' cross-motions for summary judgment. Specifically, Plaintiffs filed a Motion for Summary Judgment and Memorandum in Support Thereof (Doc. 75), to which Defendants submitted a Response (Doc. 79). Defendants also filed a Motion for Summary Judgment (Doc. 76) and Memorandum in Support Thereof (Doc. 77), and Plaintiffs tendered a Response (Doc. 78) thereto. In addition, this matter comes before the Court on Defendants' Motion to Strike (Doc. 83), to which Plaintiffs filed a Response (Doc. 84).

For the following reasons, the Court, inter alia, DENIES the Plaintiffs' summary judgment motion, GRANTS in part and DENIES in part Defendants' summary judgment motion, and GRANTS in part and DENIES in part Defendants' motion to strike.

BACKGROUND

I. Facts

In analyzing a motion for summary judgment, the reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Spath v. Hayes Wheels Int'l–Ind., Inc., 211 F.3d 392, 396 (7th Cir.2000). The Court, construing the evidence and all reasonable inferences in the light most favorable to Plaintiffs, finds as follows:

Over the last nine years, Plaintiff Herbert Lewis (hereinafter individually referred to as “Herbert”) has worked for Defendant Sherwin Williams Company (hereinafter “Sherwin Williams”) ¹ in its paint and stain production facility in Flora, Illinois. He currently works in general production, and his duties include putting labels on cans and packing products into boxes.

As part of his employee benefits package, Herbert is a participant in the company's health plan, namely the Defendant Sherwin Williams Salaried Medical Plan (hereinafter “the Plan”). Sherwin Williams is the administrator of the Plan, and Defendant Aetna Insurance Agency, Inc. (hereinafter “Aetna”) is the Plan's fiduciary and claims administrator in charge of reviewing claims filed thereunder. To retain coverage under the Plan, Herbert has to make copayments and/or pay coinsurance. At all times relevant to this litigation, Herbert fulfilled all of his payment obligations under the Plan. Further, at all relevant times, Herbert's wife, Plaintiff Annie Lewis (hereinafter individually referred to as “Annie”), was a dependent and beneficiary under the Plan.

On December 17, 2006, Herbert and Annie (hereinafter collectively referred to as “the Lewises”) went horseback riding. Annie eventually came upon a limb on the trail. In her effort to avoid the limb, Annie's saddle broke, and she fell off her horse. She was taken for treatment at Clay County Hospital, which transferred Annie to a hospital in Mt. Vernon, Illinois, that same day. There, doctors reported that she had two broken ribs and a broken collarbone. When her collarbone did not heal, doctors referred Annie to the Bonutti Clinic in Effingham, Illinois. On March 6, 2007, Annie underwent surgery on her collarbone at St. Anthony's Hospital in Effingham, Illinois. By the time of Annie's release from care on May 21, she had incurred medical bills that spanned December 17, 2006, to May 30, 2007, and totaled $38,165.92.

In light of Annie's hefty medical bills, the Lewises began calling Aetna in March 2007. Aetna informed them that the claims were not yet being paid due to questions about Annie's preexisting conditions and other health insurance. Rather than formally denying these claims, Aetna “pended” them until it could satisfactorily conclude the requisite investigation.² To move this investigation along, Annie submitted forms on multiple occasions that indicated she had no medical insurance other than the Plan.

Despite the “pended” status of Annie's claims, the Bonutti Clinic sued the Lewises in April 2008, and St. Anthony's Hospital and Clay County Hospital sued the Lewises in August 2008. The Bonutti Clinic received a judgment in its favor in the amount of $6,497.77, and St. Anthony's Hospital and Clay County Hospital received a judgment in their favor in the amount of $13,756.11. Having grown increasingly frustrated with Aetna's failure to pay and its consequences, Herbert turned to the human resources officer at Sherwin Williams. Dissatisfied with the efforts of the human resources department, Herbert thereafter retained attorney Bryan Robbins (hereinafter “Robbins”).

On December 2, 2008, Robbins spoke with an Aetna customer service representative over the phone to see what needed to be done in order for Annie's claims to be processed. That same day, Robbins sent a letter to the representative that requested an explanation of Aetna's “denial” of Annie's medical bills. On December 9, Robbins spoke with the representative on the phone to confirm receipt of his letter, which she acknowledged. Robbins' subsequent calls to the representative were unsuccessful, and he was frequently referred to another representative of Aetna. Robbins sent another letter on February 6, 2009, in an effort to address the concerns previously voiced by Aetna representatives. In April 2009, an Aetna representative informed Robbins that the Lewises' claims had been referred to the company's legal department. Sometime during the next month, Robbins learned that, while some of the bills had been paid, a significant amount remained untouched. He subsequently drafted a third letter on May 22, 2009. Like the two before it, Robbins never received a response to this letter.

The Lewises and Robbins all believe that Aetna never provided a written explanation regarding its non-payment of Annie's medical bills. The Lewises, however, concede that neither they nor their attorney made a written request for information from Sherwin Williams.

Between March 2007 and approximately March 2009, Aetna completed its investigation into Annie's claims and made a number of payments thereon. Specifically, the company reduced the claims by $3,523.46 in accordance with the applicable provider agreement, paid $23,978.63 on the claims, and informed the Lewises that they owed $6,291.89 in copayments and coinsurance. With respect to Aetna's total payment of $23,978.63, the company paid $12,351.95 of this amount before December 2, 2008, $11,622.48 of this amount between December 2, 2008 and March 2009, and $4.20 of this amount on December 21, 2009. ³ As Aetna periodically satisfied Annie's claims, it sent the Lewises several written “Explanation of Benefits” (hereinafter “EOBs”). These EOBs explained the payments and adjustments made by Aenta and identified the portions of Annie's claims for which the Lewises bore responsibility. The EOBs also informed the Lewises of their appeal rights, which they never invoked. Instead, they sued.

II. Relevant Procedural Posture

On July 7, 2009, the Lewises had Robbins file suit in Clay County, Illinois, alleging a sole breach of contract claim against Aetna. At that time, the Lewises sought to recover $34,328.37 (Aetna had allegedly paid $3,837.55 prior to suit). Aetna thereafter removed the matter to this Court on the grounds that the Lewises' claims were preempted by the Employee Retirement Income Security Act of 1974 (hereinafter “ERISA”), 29 U.S.C. § 1001, et seq.

After retaining new counsel, the Lewises eventually filed an Amended Complaint (Doc. 27), which remains the operative complaint in this litigation. This complaint not only added Sherwin Williams and the Plan as defendants but pled six separate claims for relief. These claims are as follows: engagement in arbitrary and capricious actions by Aetna (Count I); violation of ERISA § 502(a)(1)(B), codified at 29 U.S.C. § 1132(a)(1)(B), by the Plan (Count II), and; violation of ERISA § 502(c)(1), codified at 29 U.S.C. § 1132(c)(1), by Aetna and Sherwin Williams (Counts III–VI). More specifically, Count III is an action by Annie against Aetna for violation of ERISA § 502(c)(1), Count IV is an action by Herbert against Aetna for violation of ERISA § 502(c)(1), Count V is an action by Annie against Sherwin Williams for violation of ERISA § 502(c)(1) and Count VI is an action by Herbert against Sherwin Williams for violation of ERISA § 502(c)(1). With respect to Counts III–VI, the Lewises seek the maximum statutory penalty and attorneys' fees and costs.

The Lewises now move for summary judgment on Counts III–VI, and Defendants move for summary judgment on all counts. Both assert several theories to justify the relief sought.

ANALYSIS

Following a general overview of the law governing summary judgment, the Court will delve into the relevant law surrounding each of the Lewises' ERISA claims.

I. Summary Judgment Generally

Summary judgment is proper where “the pleadings, the discovery and disclosure materials on file, and any affidavits 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)(2); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Spath v. Hayes Wheels Int'l–Ind., Inc., 211 F.3d 392, 396 (7th Cir.2000). In responding to a summary judgment motion, the nonmoving party may not simply rest upon the allegations contained in the pleadings but must present specific facts to show that a genuine issue of material fact exists. Fed.R.Civ.P. 56(e) (2); Celotex, 477 U.S. at 322–26, 106 S.Ct. 2548; Johnson v. City of Fort Wayne, 91 F.3d 922, 931 (7th Cir.1996).

A...