United States District Court, N.D. California
For Alan Buschman, Plaintiff: Jeffrey Scott Raskin, LEAD ATTORNEY, Amy Jo Talarico, Morgan Lewis & Bockius, LLP, San Francisco, CA.
For Anesthesia Business Consultants LLC, Defendant: Kenneth E. Keller, LEAD ATTORNEY, Garth Aaron Rosengren, Krieg Keller Sloan Roman & Holland LLP, San Francisco, CA; Michael David Lisi, Keller Sloan Roman & Holland LLP, San Francisco, CA.
ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Docket No. 26)
EDWARD M. CHEN, United States District Judge.
Plaintiff, an anaesthesiologist, has sued Anesthesia Business Consultants, LLC, an entity which provides business, financial, and managerial services to Northern California Anesthesia Physicians, Inc. (a professional group of which Plaintiff is a member), alleging breach of contract and negligence causes of action. Plaintiff alleges that one of Defendant's responsibilities was to manage and administer benefits programs for the member physicians -- including the group disability insurance policy covering each participating member physician. An employee of Defendant's predecessor in interest erroneously informed the insurance company that Plaintiff was to be cancelled from the group disability insurance policy in 2006. In 2012, Plaintiff became disabled as a result of a surgery. The insurance company has declined coverage under the group policy, citing the 2006 cancellation. Plaintiff filed the instant suit against Defendant, alleging a cause of action for breach of contract and negligence arising out of the 2006 cancellation. Defendant has moved for summary judgment, arguing that Plaintiffs' causes of action are barred by the statute of limitations. For the following reasons, Defendant's motion is DENIED.
II. FACTUAL & PROCEDURAL BACKGROUND
A. Relationship Between Plaintiff, NCAP, and Defendant
Plaintiff, Dr. Alan Buschman, is an anaesthesiologist and member of the Board of Directors of Northern California Anesthesia Physicians, Inc. (" NCAP" ). Compl. ¶ 1 (Docket No. 1). NCAP is a group of approximately 50 anesthesiology physicians who are based in hospitals or operating rooms, and therefore do not have traditional offices. Id. ¶ 11. Accordingly, in or around 1993, NCAP hired Anesthesiologists Associated, Inc. (" AAI" ) to provide " management and consulting services related to, among other things, the billing and employee benefit services in which AAI specialized." Id. ¶ 6. AAI's services including " all management and billing related to employee benefits, including insurance coverage." Id. ¶ 5. AAI was, therefore, responsible for " overseeing, managing and bookkeeping responsibilities related to employee benefits, including timely payment of employee insurance premiums." Id.
On November 1, 2006, AAI and NCAP renewed the 1993 agreement. Id. ¶ 9. The " basic terms and conditions" in the 2006 contract were " substantially similar, if not identical, to the terms and conditions" of the prior contracts. Id. Under the 2006 agreement, AAI agreed to provide, among other things, " Financial Services including maintaining general ledger, payroll, draw and bonus calculations, processing and payment of physician expenses including insurance premiums, employee benefits and general business expenses . . . ." Id. ¶ 10 (emphasis in original); see also Services Agreement Between Anesthesiologists Associated, Inc. and Northern California Anesthesia Physicians, Inc., Ex. A-1.4 (" Processing and payment of Client expenses including insurance premiums, employee benefits and general business expenses" ) (Docket No.29-3). Accordingly, Dr. Buschman, as well as the other NCAP members, provided AAI with patient billings, expense information, and benefit information for direct
processing. Id. ¶ 12. AAI would then subtract fees for the services they provided the member physicians based on a variable fee schedule. Id.
In or around January 2008, Defendant Anesthesia Business Consultants, LLC acquired AAI. Id. ¶ 7. On that date, Defendant " assumed responsibility under the contracts that AAI entered, including the consulting agreement it entered with NCAP." Id. Defendant did, in fact, begin performing AAI's contractual obligations. Id. Further, Defendant " retained nearly all of AAI's employees, including those servicing NCAP." Id. ¶ 8.
B. NCAP Group Insurance Policy and Dr. Buschman's Disability Claim
In 1993, NCAP decided to provide group long term disability insurance plan to its physician members, including Dr. Buschman. Id. ¶ 15. Unum Life Insurance Company of America (" UNUM" ) underwrote this policy. Id. AAI undertook to negotiate the rates and coverage, enrolled the physician members in the policy, and ensured that the premiums were timely paid on behalf of the physicians. Id. ¶ 17. In addition to this group policy, Dr. Buschman secured an individual disability insurance policy through UNUM, beginning in or about 1990. Id. ¶ 19.
UNUM would send AAI monthly statements and an AAI employee named Marietta Kleve would look at the list of NACP physicians and make sure that the information on the monthly statement was correct -- for example, that names were spelled correctly and that no doctors needed to be added to or removed from the list, etc. Deposition of Marietta Kleve (" Kleve Dep." ) at 19 (Docket No. 27-4 & Docket No. 31-2). She would make the necessary changes on the monthly statement before sending it back to UNUM and paying the invoice. Id. In February 2006, she indicated on the monthly statement that Dr. Buschman's insurance was to be cancelled. Compl. ¶ 25. On the invoice, she listed that Dr. Buschman had been " terminated." Id. Ms. Kleve testified at her deposition that she would not cancel a participating physician's insurance coverage without that physician instructing her to do so and without creating a paper trail of the transaction. Kleve Dep. at 19-20. Dr. Buschman alleges that he neither knew of nor consented to the cancellation of his group disability coverage. Id. Further, at no point was Dr. Buschman terminated from NCAP -- he remains a member physician and board member of NCAP. Compl. ¶ 26.
In 2005, prior to the cancellation of Dr. Buschman's group coverage, AAI withheld $390 per month from Plaintiff's paycheck. Deposition of Marietta Kleve (" Kleve Dep." ) at 27; see also Rosengren Decl., Ex. E (monthly earning report for Dr. Buschman showing $318 in monthly premiums in 1997). Dr. Buschman admitted
during his deposition that approximately $390 was taken out per month (in 2005) for his group disability insurance coverage. Buschman Dep. at 125. He admitted that while he received the monthly statements in question, he did not review the documents in detail. Id. at 126. After February 2006, the withholdings for group coverage no longer are listed on Dr. Buschman's earning statements. See Rosengren Decl. F.
In 2012, Dr. Buschman underwent surgery to remove a spinal cord tumor. Deposition of Alan Buschman (" Buschman Dep." ) at 248 (Docket No.29-1). As a result of this surgery, Dr. Buschman became disabled and unable to work. Id. He suffered from extreme pain; sensitivity to cold, pressure, and touch; was unable to sit for extended periods of time; as well as additional symptoms. Id. at 256. As a result of this disability, Dr. Buschman attempted to make a claim under the UNUM group disability policy in May 2012. Compl. ¶ 22; Buschman Dep. at 278. He claims that UNUM's denial of coverage was the first time he learned that his coverage under the disability policy had been canceled erroneously in 2006. Id. at 269-70.
Dr. Buschman filed the instant lawsuit in California state court on March 22, 2013. Docket No. 1. The complaint alleges two causes of action -- breach of contract and negligence. Defendant remove the action to federal court on the basis of diversity jurisdiction on April 19, 2013. On March 10, 2014, Defendant filed the instant motion for summary judgment arguing that Dr. Buschman's claims are barred by the statute of limitations.
The notice of removal in this case contains insufficient allegations regarding the citizenship of Defendant. Specifically, the notice of removal alleges that " Defendant ABC, both at the time the state court action was filed and at present, is a resident of the State of Delaware, incorporated and existing under the laws of the State of Delaware and has its principal place of business in Jackson, Michigan." Docket No. 1, at 2. However, For purposes of determining diversity jurisdiction, a limited liability company is deemed to have the citizenship of each of its members. See Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (" We therefore join our sister circuits and hold that, like a partnership, an LLC is a ...