Northwell Health Inc. v. Lamis

NORTHWELL HEALTH INC., IN ITS CAPACITY AS PLAN ADMINISTRATORFOR THE NORTHWELL HEALTH FLEX BENEFITS PLAN, Plaintiff, v. LUZVISMINDA LAMIS and A. PAUL BOGATY, ESQ., Defendants.

18cv1178

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

September 25, 2019

OPINION & ORDER

WILLIAM H. PAULEY III, Senior United States District Judge:

Plaintiff Northwell Health Inc. ("Northwell"), in its capacity as Plan Administrator for the Northwell Health Flex Benefits Plan (the "Northwell Plan" or the "Plan"), brings this action under § 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(3), against Defendants Luzvisminda Lamis and A. Paul Bogaty, Esq. (collectively, "Defendants"). Northwell seeks the imposition of an equitable lien by agreement or a constructive trust over medical expenses paid by the Northwell Plan to treat certain of Lamis's injuries. Defendants move to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), or, in the alternative, for summary judgment pursuant to Rule 56. For the following reasons, the motion is denied.

BACKGROUND

On March 23, 2015, Lamis was injured while undergoing gallbladder surgery at Northwell's Forest Hills Hospital division. (Pl.'s Resp. to Defs.' Statement of Undisputed Material Facts and Additional Undisputed Material Facts, ECF No. 28 ("Pl.'s 56.1"), ¶¶ 2-3.) Lamis also worked at Forest Hills Hospital and was a participant in the Northwell Plan.¹ (Pl.'s 56.1 ¶ 2.) As a result, the Northwell Plan partially covered the medical expenses Lamis incurred in treating her iatrogenic injury. (Pl.'s 56.1 ¶ 4.) Those expenses totaled $79,055.50 (the "Funds"). (Pl.'s 56.1 ¶ 4.)

On December 9, 2015, Lamis filed a medical malpractice action in New York Supreme Court against Forest Hills Hospital and two of its employees, Michael S. Drew, M.D. and Martin Yu, P.A. (the "State Action"). (See Pl.'s 56.1 ¶ 5.) She was represented by Bogaty. (See Pl.'s 56.1 ¶ 5.) In August 2017, the State Action settled for $650,000 via a general release and an accompanying hold harmless agreement. (Pl.'s 56.1 ¶ 6.) The general release and hold harmless agreement named Northwell as a party, along with—among others—Physicians' Reciprocal Insurers, Forest Hills Hospital, and Drew. (See Affirmation of Counsel in Supp. of Mot. for Dismissal on the Pleadings or in the Alternative for Summ. J., ECF No. 19 ("Pl.'s Aff."), Exs. B, C.)

While the State Action was still ongoing, the Northwell Plan's subrogation agent, Optum, provided Bogaty with a ledger of medical expenses that the Plan paid on Lamis's behalf in treating her injury, as well as a copy of the Plan's "Plan Document (PD)/Summary Plan Description (SPD)" (the "PD/SPD"). (Pl.'s 56.1 ¶ 7-8.) Section 10 of the PD/SPD states in relevant part:

[I]f a third party causes a Sickness or Injury for which you receive a settlement, judgment, or other recovery from any third party, you must use those proceeds to fully return to the Plan 100% of any Benefits you received for that Sickness or Injury.

The following persons and entities are considered third parties:

a person or entity alleged to have caused you to suffer a Sickness, Injury or damages, or who is legally responsible for the Sickness, Injury or damages;

any insurer or other indemnifier of any person or entity alleged to have caused or who caused the Sickness, Injury or damages;

North Shore-LIJ Health System in workers' compensation cases; or

any person or entity who is or may be obligated to provide you with benefits or payments under:

underinsured or uninsured motorist insurance;

medical provisions of no-fault or traditional insurance (auto, homeowners or otherwise);

workers' compensation coverage; or

any other insurance carrier or third party administrator.

(Pl.'s Aff., Ex. E (the "PD/SPD"), at 88 (emphasis added).) Northwell contends that under § 10, the Plan is entitled to reimbursement of the Funds from Lamis's State Action settlement. (See Pl.'s 56.1 ¶¶ 8-9.) To date, however, Defendants have refused to reimburse the Plan. (Pl.'s 56.1 ¶ 9.)

DISCUSSION

I. Legal Standard

A motion to dismiss "must be treated as one for summary judgment" when "matters outside the pleadings are presented to and not excluded by the court." Fed. R. Civ. P. 12(d). "[A] court may convert a motion to dismiss into a motion for summary judgment, and . . . consider . . . external exhibits and affidavits, when it is satisfied that the parties are not taken by surprise or deprived of a reasonable opportunity to contest facts averred outside the pleadings and the issues involved are discrete and dispositive." Access 4 All, Inc. v. Trump Int'l Hotel and Tower Condo., 458 F. Supp. 2d 160, 165 (S.D.N.Y. 2006) (quotation marks omitted). Thus, "[t]he essential inquiry is whether the [non-movant] should reasonably have recognized the possibility that the motion might be converted into one for summary judgment." In re G. & A. Books, Inc., 770 F.2d 288, 295 (2d Cir. 1985); see also Ferguson v. Jones, 2011 WL 4344434 at *2 (S.D.N.Y. Sept. 12, 2011) (same). "A party cannot complain of lack of a reasonable opportunity to present all material relevant to a motion for summary judgment when both parties have filed exhibits, affidavits, counter-affidavits, depositions, etc. in support of and in opposition to a motion to dismiss." In re G. & A. Books, Inc., 770 F.2d at 295; see also Bruno v. City of New York, 2019 WL 690340, at *2 (S.D.N.Y. Feb. 19, 2019) (converting defendants' motion to dismiss into motion for summary judgment where "[d]efendants' moving papers provide[d] notice that [d]efendants [were] moving for, in the alternative, summary judgment pursuant to Rule 56" and where "[p]laintiff ha[d] filed his own Rule 56.1 [statement] and supplemented the record with his own exhibits" (quotation marks omitted)). Here, Northwell responded to Defendants' statement of undisputed material facts, appended its own additional statement of undisputed facts, and filed accompanying affidavits and exhibits. Accordingly, this Court treats Defendants' motion as one for summary judgment.

Summary judgment is proper only where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." Baez v. JetBlue Airways Corp., 793 F.3d 269, 274 (2d Cir. 2015) (quotation marks omitted). This Court is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Cioffi v. Averill Park Cent. Sch. Dist. Bd. of Educ., 444 F.3d 158, 162 (2d Cir. 2006) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)); Upadhyay v. Sethi, 848 F. Supp. 2d 439, 446 (S.D.N.Y. 2012) (denying summary judgment where court would have had to weigh the credibility of dueling affidavits).

"The party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists . . . ." Rodriguez v. City of New York, 72 F.3d 1051, 1060-61 (2d Cir. 1995). If the moving party meets its burden, "the adverse party must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 249 (citation and quotation marks omitted); Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009). "A party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment," as "[m]ere conclusory allegations or denials cannot by themselves create a genuine issue of material fact where none would otherwise exist." Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (citation and alterations omitted). "In determining whether a genuine issue of material fact exists, a court must resolve all ambiguities and draw all reasonable inferences against the moving party." Flanigan v. Gen. Elec. Co., 242 F.3d 78, 83 (2d Cir. 2001).

II. Equitable Relief Under ERISA

Under ERISA, "a participant, beneficiary, or fiduciary" is entitled to "obtain . . . appropriate equitable relief" to redress violations of or to enforce the terms of an employee benefits plan. 29 U.S.C. § 1132(a)(3); Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209 (2002). This "provision . . . authorizes the kinds of relief typically available in equity in the days of the divided bench, before law and equity merged." US Airways, Inc. v. McCutchen, 569 U.S. 88, 94-95 (2013) (quotation marks omitted). The Supreme Court has recognized that a claim to enforce a plan's reimbursement clause "[is] the modern-day equivalent of an action in equity to enforce a contract-based lien—called an equitable lien by agreement." McCutchen, 569 U.S. at 95 (quotation marks omitted). "[A]ll types of equitable liens must be enforced against a specifically identified fund in the defendant's possession." Montanile v. Bd. of Tr. of Nat'l Elevator Indus. Health Benefit Plan, 136 S. Ct. 651, 659 (2016) (emphasis removed); see also Iron Workers Locals 40, 361 & 417 Health Fund v. Dinnigan, 911 F. Supp. 2d 243, 255 (S.D.N.Y. 2012) ("[A] necessary characteristic of equitable restitution is that it impose a constructive trust or equitable lien on particular funds or property in the defendant's possession." (quotation marks omitted)).

Northwell contends that it is entitled to enforcement of an equitable lien by agreement on the Funds because § 10 of the PD/SPD straightforwardly requires Plan beneficiaries to "use [their settlement] proceeds to fully return to the Plan 100% of any Benefits . . . received for th[e] Sickness or Injury" from "any third party." (PD/SPD, at 88.) Here, Northwell argues that the requisite "third party" is any of Northwell, Physicians' Reciprocal Insurers, Forest Hills Hospital, Drew, or Yu. (See Pl.'s Mem. of Law in Opp'n to Defs.' Mot. to Dismiss, or in the Alternative for Summ. J., ECF No. 26 ("Pl. Opp."), at 14.)...