Mull v. Motion Picture Indus. Health Plan

51 F.Supp.3d 910

Lenai MULL, Norman Mull, Danielle Mull, & Carson Mull, Plaintiffs

v.MOTION PICTURE INDUSTRY HEALTH PLAN & Board of Directors of Motion Picture Industry Health Plan, Defendants.

Motion Picture Industry Health Plan and Board of Directors of Motion Picture Industry Health Plan, Counterclaimants

v.Lenai Mull, Counterclaim–Defendant.

Case No. LA CV 12–06693–VBF.

United States District Court, C.D. California.

Signed Sept. 30, 2014.

Daniel E. Wilcoxen, Wilcoxen Callaham LLP, Sacramento, CA, Donald M. DeCamara, Donald M. De Camara Law Offices, Carlsbad, CA, for Plaintiffs.

Michael Rasalan Odoca, Elizabeth Rosenfeld, Kathryn Jane Halford, Wohlner Kaplon Phillips Young & Cutler PC, Encino, CA, for Defendants.

Opinion & Order

(1) Granting the Motion for Summary Judgment of Plaintiffs Norman, Danielle, & Carson Mull on the First Amended Complaint (“FAC”);

(2) Denying the Defendants' Motion for Summary Judgment or in the Alternative Summary Adjudication on the FAC;

(3) Directing the Moving Plaintiffs to File an Amended Proposed Order No Later than Monday, October 13, 2014

VALERIE BAKER FAIRBANK, District Judge.

This is an action under the Employee Retirement Income and Security Act of 1974, 29 U.S.C. § 1001 et seq., as amended (“ERISA”). The defendants are the Motion Picture Industry (“MPI”) Health Plan and the Board of Trustees of the Motion Picture Industry Health Plan (together “the plan”). Plaintiffs Norman Mull, Danielle Mull, and Carson Mull have moved for summary judgment on the FAC, and the defendants have moved for summary judgment on the FAC as well. As to plaintiffs' motion, the Court has considered the plaintiffs' opening brief (Document (“Doc”) 56 and the accompanying declarations of plaintiff Danielle Mull and plaintiffs' counsel (Docs 57–58), plaintiffs's Statement of Uncontroverted Facts and Conclusions of Law (Doc. 59), plaintiffs' exhibits (Docs 60–1 through 60–7), the defendants' opposition brief (Doc. 65), and plaintiffs' reply brief (Doc. 66). As to the defendants' motion, the Court has considered their opening brief (Doc. 63–1) and accompanying Statement of Uncontroverted Facts and Conclusions of Law (Doc. 63–2), plaintiffs' opposition brief (Doc. 64) and Supplemental Statement of Genuine Issues of Fact (Doc. 64–2), and defendants' reply brief (Doc. 67).

As explained in greater detail below, the Court will grant these three plaintiffs' motion for summary judgment on the ground that the reimbursement / recoupment provision which the Plan has enforced, is contained only in the Summary Plan Description (“SPD”) and not in any document which constitutes “the plan.” The determination that the provision is not legally enforceable also necessarily defeats the defendants' motion for summary judgment. That will leave only one plaintiff / counterdefendant, Lenai Mull, who is subject to a bankruptcy stay.

Defendants concede that this Court has subject-matter jurisdiction under 29 U.S.C. § 1132(a)(1)(B) and that venue is proper because the ERISA plan in question is administered in Studio City, California. See Amended Answer to First Amended Complaint (“Am. Ans.”) (Doc. 46–4) ¶¶ 1–2; see also Couvrette v. Couvrette, 2013 WL 2898531, *1 (S.D.Cal. June 13, 2013) (“Pursuant to the ERISA venue provision, an action may be filed ‘in the district where the plan is administered, where the breach took place, or where a Defendant resides or may be found.’ ”) (quoting 29 U.S.C. § 1132(e)(2) ). Defendants also concede that Lenai exhausted her administrative remedies before filing this action. See Am. Ans. ¶ 12. It is undisputed that defendant Plan qualifies as an “employee welfare benefit plan” as defined by ERISA, 29 U.S.C. § 1002(1). See Am. Ans. ¶ 1. It is also undisputed that all four plaintiffs are “participants” in the plan or “beneficiaries” as defined by ERISA, 29 U.S.C. §§ 1002(7) and (8). See Am. Ans. ¶ 4. The Mulls filed a two-count complaint against the Plan, seeking recovery of benefits pursuant to 29 U.S.C. § 1132(a)(1)(B) and injunctive relief pursuant to § 1132(a)(3). The Plan asserted a counterclaim against plaintiffs Lenai and Norman pursuant to 29 U.S.C. § 1132(a)(3)(B), and Norman successfully moved to dismiss the counterclaim. That left the counterclaim pending against plaintiff Lenai alone.

“Persons Empowered to Bring a Civil Action” provides that a civil action may be brought, inter alia,

(1) by a participant or beneficiary —

(A) for the relief provided for in subsection (cc) of this section; or

(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;

(2) by the Secretary, or by a participant, beneficiary, or fiduciary for appropriate relief under section 1109 of this title [personal liability for breach of fiduciary duty];

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter [I. Protection of Employee Benefit Rights] or the terms of the plan or (B) to obtain other appropriate equitable relief (I) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan;

(4) by the Secretary, or by a participant, or beneficiary for appropriate relief in the case of a violation of section 1025 [subsection] c of this title [Reporting of Participant's Benefit Rights–Individual Statement By Administrator Furnished to Participants ...];

29 U.S.C. § 1132(a)(1) through (4) (emphasis added).

BACKGROUND

Plaintiffs allege that while Lenai was entitled to comprehensive medical benefits under the Plan as a dependent of her father, she sustained severe injuries in an auto accident in February 2010, see First Amended Complaint filed Feb. 28, 2013 (Doc. 25) (“Am. Comp.”) ¶ 6 & Am. Ans. ¶ 6. Lenai underwent multiple surgeries, missed substantial time from college, and endured physical and mental pain and suffering, see Am. Comp. ¶ 6. Lenai's total accident-related medical expenses were about $190,000 as of February 2013, and the parties agree that the Plan has paid about $148,000 of those expenses on her behalf, see Am. Comp. ¶ 6 and Am. Ans. ¶ 6.

The parties agree that the other driver settled Lenai's claims against him for his liability insurance policy limit of $100,000, see Am. Comp. ¶ 7 & Am. Ans. ¶ 7. The Plan has demanded that Lenai turn that $100,000 over to the Plan pursuant to a subrogation and reimbursement provision in the Summary Plan Description (“SPD”) entitled Claims Involving Third–Party Liability. See id. (citing SPD² at 49–50). Plaintiffs concede that (1) “[b]y its terms,” this SPD provision “requires participants and beneficiaries to reimburse the Plan for medical expenses paid by the plan from any personal injury recovery”; (2) the SPD provision “purports to waive all equitable defenses to enforcement, including the make-whole doctrine, the common fund doctrine, and equitable apportionment”; and (3) this SPD provision states that acceptance of benefits from the Plan “ ‘shall act as a waiver of any defense to full reimbursement of the Plan from the Recovery.’ ” Id. ¶¶ 8–9 (quoting SPD at 50).

By contrast, plaintiffs allege, the cost of Lenai's injuries is at least $2 million, so the settlement did not make her whole. They reason that since Lenai recovered only about 5% of total damages in her settlement, “she also recovered title to only about 5% of all her damages, including medical expenses ...” Am. Comp. ¶¶ 7 & 9.

Disagreeing, the Plan has refused to pay additional medical bills for Lenai until Lenai turns over the third-party recovery plus interest. See Am. Comp. ¶ 11; see also Am. Ans. ¶ 15 (“Defendants allege that after the refusal of Plaintiff, Lenai Mull, to reimburse the Plan from the proceeds of her $100,000 Recovery in violation of the unambiguous terms of the Plan, the Plan began recouping the unreimbursed amount from future benefits provided by the Plan as provided at pages 44 and 49 of the Plan and ... SPD....”) and id. ¶ 18 (“Defendants admit that they have enforced the terms of the Plan providing for recoupment of the overpayment which arose from the failure of plaintiff [Lenai] Mull to reimburse the Plan from her $100,000 third[-]party recovery.”). The Plan has also refused to pay medical bills for the other plaintiffs, who were not parties to the third-party settlement, citing the same reimbursement / recoupment provision from the Summary Plan Description.

PROCEDURAL HISTORY AND PRIOR RULINGS

Plaintiffs asserted one legal claim and one equitable claim in their original complaint. Defendants filed a Fed. R. Civ. P. 12(b)(6) motion to dismiss for failure to state a claim on which relief can be granted. In December 2012, this Court partially granted and partially denied the motion to dismiss. As to plaintiffs' legal claim, the Court held that plaintiffs “failed to state a claim that the reimbursement provision violated the clarity requirements of the statute and regulations.” Mull v. MPI Health Plan et al., 937 F.Supp.2d 1161, 1174–77 (C.D.Cal.2012) (Fairbank, J.) (discussing 29 U.S.C. § 1022(a) and 29 C.F.R. §§ 2520.102–2 and 2520.102–3 ).

This Court allowed plaintiffs' equitable claim to survive, however, writing as follows:

[T]hese arguments by the Plan are not conclusive at the 12(b) (6) stage; they beg the question, which appears at least arguable, whether Ninth Circuit law permits a plan participant/beneficiary to assert equitable defenses to eliminate, restrict, or offset the unjustly harsh effects of a plan's application of a plan provision.

Defendants assert that the Court may not consider equitable defenses and principles in deciding whether, and how, and to what extent a plan administrator may implement a plan provision, until and unless the Plan affirmatively asks for judicial relief. Yet the defendants have not shown that Ninth Circuit precedent compels that conclusion. On the contrary, the defendants cite only a Seventh Circuit decision for their p

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