Spires v. Sunflower Elec. Co-Op., Inc.

280 F.Supp.2d 1271

Sandra S. SPIRES, Plaintiff, v. SUNFLOWER ELECTRIC COOPERATIVE, INC., Defendant.

Sandra S. Spires, Plaintiff, v. Sunflower Electric Power Corporation, f/k/a/ Sunflower Electric Cooperative, Inc., and National Rural Electric Co-operative Association, Defendants.

Civil Action Nos. 87-4208-MLB, 01-1202-MLB.

United States District Court, D. Kansas.

September 10, 2003.

COPYRIGHT MATERIAL OMITTED

Kenneth G. Gale, Adams & Jones, Chartered, Wichita, KS, for Plaintiff.

L. Earl Watkins, Jr., Mark A. Rondeau, Watkins, Calcara, Rondeau, Friedeman, Bleeker, Glendenning & McVay, Chtd., Great Bend, KS, Darrell L. Warta, Mark A. Biberstein, Foulston Siefkin LLP-Wichita, Wichita, KS, John J Range, Peter J. Loughlin, Hunton & Williams, Washington, DC, for Defendants.

MEMORANDUM AND ORDER

BELOT, District Judge.

I. INTRODUCTION

Sandra S. Spires filed suit against Sunflower Electric Holdings, Inc., her former employer, and National Rural Electric Co-operative Association (NRECA), alleging that they "have not substantially complied with [a settlement] agreement to continue plaintiff's coverage under Sunflower's group employee medical plan" (Doc. 1 ¶ 10). This case is currently before the court upon motions for summary judgment filed by Spires, the Sunflower Electric Power Corporation and the National Rural Electric Cooperative Association (Docs.47, 50, 94). For the reasons stated, the motion filed by defendant NRECA is GRANTED, the motion filed by defendant Sunflower is GRANTED in part and DENIED in part and the motion filed by Spires is GRANTED in part and DENIED in part.

II. FACTS

Sunflower Electric Power Corporation, a Kansas cooperative, hired Spires on January 16, 1984, as a lab technician. Sunflower is a member of NRECA, a not-for-profit cooperative association which sponsors pension and welfare benefit plans for member systems. Cooperative Benefit Administrators, Inc. (CBA) is a wholly-owned subsidiary of NRECA and adjudicates claims made pursuant to NRECA's welfare benefit plans under the Employee Retirement Income Security Act.

In 1984, Sunflower participated in various plans sponsored by NRECA, including the pension plan, the medical plan, the long-term disability plan and the group life insurance plan. On June 30, 1985, Sunflower withdrew from participation in the NRECA medical plan and group life insurance plan and sponsored a group employee medical plan titled the Sunflower Self-Insured Medical Plan to take effect the following day. On November 7, 1985, Sunflower terminated Spires' employment. On August 1, 1987, CBA became the third party administrator for Sunflower's insurance plan and was responsible for processing and adjudicating claims based on eligibility and enrollment information provided by Sunflower.

In 1987, Spires filed a lawsuit alleging employment discrimination in the conditions of her employment and discriminatory termination. On December 12, 1988, Spires and Sunflower entered into a settlement agreement. The agreement, embodied in a Journal Entry of Consent Judgment, stated that

[d]efendant will immediately reinstate the plaintiff as a participant in defendant's group employee medical plan and will pay all premiums and future claims due under the terms of the plan. Such coverage will continue while plaintiff is on long-term disability or until such time as plaintiff is employed and covered under another employer's group medical plan.

Pursuant to that agreement, Sunflower reinstated Spires in the Sunflower Self-Insured Medical Plan. In addition to her reinstatement, Spires was at that time also on the NRECA long-term disability plan. Since the date of the 1998 settlement agreement and consent judgment, Spires has not again been employed or covered by another employer's group medical plan and remains on long-term disability through the NRECA plan.

On April 17, 1989, Anthony C. Williams, Director of the Retirement, Security and Insurance Department of NRECA, wrote a letter to L. Christian Hauck of Sunflower and stated in reference to the settlement agreement that NRECA was "agreeable to picking up 100 percent of Mrs. Spires' future medical expenses as provided under the settlement Sunflower reached with her. We will also have Mrs. Spires reinstated in group term life insurance as a disabled former employee."

On November 20, 1989, Spires, Sunflower, CBA, NRECA and the NRECA Group Benefits Trust settled a second lawsuit. The parties dispute whether the 1989 settlement agreement modified the 1998 settlement agreement and consent judgment. From January 1989 to March 31, 1993, Spires' group health coverage was provided pursuant to the Sunflower Self-Insured Medical Plan. The plan remained Spires' primary medical plan after she qualified for Medicare in May 1990. On March 31, Sunflower terminated the Sunflower Self-Insured Medical Plan and adopted on the following day the NRECA Medical Plan as its group employee medical benefit plan.

Prior to August 10, 1993, federal law required that Medicare be the primary insurance provider for those no longer actively working at age 65. If working, a private medical plan would remain primary until the employee reached age 69. The Revenue Reconciliation Act of 1993 allowed private medical plans to treat Medicare as the primary payer for disabled plan participants who were not actively working, regardless of age. The private medical plan was to remain primary to Medicare if the disabled employee was working. NRECA could therefore apply to disabled employees, eligible for Medicare and not actively working, the "carveout" provision of its medical plan that made Medicare the primary payer. Using a computer program it developed, CBA identified participants in the NRECA medical plan that were affected by the new law. For some unknown reason, the computer program did not identify Spires as being a member of this group. The participants were directed to forward their Medicare cards to CBA and to sign up for Medicare Part B.

On February 25, 1999, CBA informed Spires that Medicare should be the primary provider of her medical coverage pursuant to the carve-out provision of the NRECA medical plan and the Revenue Reconciliation Act. On May 19, 1999, CBA informed Spires that it would start to estimate Medicare's payment as of July 1, 1999, unless she provided it with her Medicaid card. In November 1999, CBA had not received Spires' Medicaid card as requested. It thus informed Spires that it would treat Medicare as the primary payer on all of her subsequent claims by estimating the amount that Medicare would pay and then deducting the estimates from its payments. For each claim submitted by Spires after July 1, 1999, CBA sent Spires an Explanation of Medical Benefits form detailing the amount of benefits set off from the payments made by CBA because Medicare was deemed the primary payer. Each form notified Spires of her right to appeal the CBA determination.

Medicare was adjudged by the Health Care Financing Administration of the U.S. Department of Health and Human Services to be the primary payer of Spires' covered medical expenses incurred on or after July 1, 1999. The Department allowed Spires to re-enroll in Medicare Part B retroactively to July 1, 1999, without incurring a penalty for late enrollment, but Spires instead elected to re-enroll retroactively only to February 1, 2000.

In February 2000, Sunflower transferred all of the NRECA Medical Plan participants, except for Spires, to a plan with Blue Cross and Blue Shield of Kansas. The Blue Cross and Blue Shield plan treats Medicare as the primary payer of medical expenses for non-active employees eligible for Medicare. Spires remained covered as the sole participant in a Sunflower subgroup of the NRECA Medical Plan.

III. SUMMARY JUDGMENT STANDARD

The usual and primary purpose of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Federal Rule of Civil Procedure 56(c) directs the entry of summary judgment in favor of a party who "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue is "genuine" if sufficient evidence exists "so that a rational trier of fact could resolve the issue either way" and "[a]n issue is `material' if under the substantive law it is essential to the proper disposition of the claim." Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998); see also Adams v. Am. Guar. & Liab. Ins. Co., 233 F.3d 1242, 1246 (10th Cir.2000). The mere existence of some factual dispute will not defeat an otherwise properly supported motion for summary judgment because the factual dispute must be material. See Renfro v. City of Emporia, 948 F.2d 1529, 1533 (10th Cir.1991).

A. Moving Party's Burden

The moving party must initially show both an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. See Adler, 144 F.3d at 670. The nature of the showing depends upon whether the movant bears the burden of proof at trial with respect to the particular claim or defense at issue in the motion. If the nonmoving party bears the burden of proof, the movant need not "support [its] motion with affidavits or other similar materials negating the opponent's" claims or defenses. Celotex, 477 U.S. at 323, 106 S.Ct. 2548 (emphasis in original). Rather, the movant can satisfy its obligation simply by noting the absence of evidence on an essential element of the nonmovant's claim. Adler, 144 F.3d at 671.

On the other hand, if the movant has the burden of proof on a claim or defense raised in a summary judgment motion, it must show that the undisputed facts establish every element of the claim entitling it to judgment as a matter of law. See, e.g., United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (...