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Interstate Realty Management Company Voluntary Employee Benefit Plan v. Wood

United States District Court, E.D. California

July 24, 2019

INTERSTATE REALTY MANAGEMENT COMPANY VOLUNTARY EMPLOYEE BENEFIT PLAN, an ERISA Qualified, Self-Funded Health Plan, Plaintiff,
v.
SHELLY WOOD, an individual, Defendant.

          MEMORANDUM AND ORDER

          MORRISON C. ENGLAND JR UNITED STATES DISTRICT JUDGE.

         Through the present action, Plaintiff Interstate Realty Management Company Voluntary Employee Benefit Plan (“Plaintiff”), a self-funded employee group welfare plan (“Plan”) governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1101, et seq. (“ERISA”), asserts a subrogation and/or reimbursement claim to recoup medical benefits it paid to Defendant Shelly Wood (“Defendant”) under the Plan. In addition to seeking declaratory relief as to the rights and obligations of the parties under the Plan, Plaintiff also seeks equitable restitution to enforce its claim against settlement monies obtained by Defendant from a third party. Those proceeds were paid on behalf of a third party as a result of injuries sustained by Defendant in an accident. Plaintiff paid some $79, 914.14 in treatment costs as a result of those injuries and seeks reimbursement accordingly.

         Now before the Court is Defendant's Motion to Dismiss (ECF No. 5) the Second and Third Causes of Action of Plaintiff's Complaint, for injunctive relief and equitable restitution, accordingly. Defendant contends those claims are subject to dismissal under Federal Rule of Civil Procedure 12(b)(6)[1] for failure to state a viable cause of action. According to Defendant, the terms of the Plan do not require her to pay anything more than $6, 000 in out-of-pocket expenses and therefore precludes Plaintiff's restitution claim, as well as any claim that Defendant be enjoined from spending the funds she received in settlement of her injury claim. As set forth below, Defendant's Motion is DENIED.[2]

         BACKGROUND

         The facts of this matter are essentially undisputed. On or about August 10, 2013, Defendant was injured in an accident. Pursuant to the Plan, Plaintiff paid some $74, 914.14 in medical expenses for treatment Defendant received for her injuries.

         Defendant made a claim for money damages against the third party alleged to have been responsible for causing the accident, and the third party submitted that claim to its insurer, which ultimately resolved the claim by way of a monetary settlement. Plaintiff thereafter made a reimbursement claim against the settlement proceeds for an amount corresponding to the medical expenses it paid. Defendant's failure to satisfy that claim prompted Plaintiff to file the instant lawsuit.

         Plaintiff's Plan contains the following provision with respect to reimbursement for benefits provided due to injuries caused by a liable third party:

[I]f a Covered Person receives any payment from any Responsible Party or Insurance Coverage as a result of an injury, illness or condition, the plan has the right to recover from, and be reimbursed by, the Covered Person for all amounts the plan has paid and will pay as a result of that injury, illness or condition, from such payment, up to and including the full amount the Covered Person receives from any Responsible Party.

Plan, attached as Ex. A to the Decl. of Alan Laskin, ECF No. 5-2, p. 66.

         There is no dispute that “Covered Person, ” as used in the Plan, refers to Defendant herein, that payment from a “responsible party” or “insurance coverage” implicates the monies Defendant received to settle her claims as a result of the accident in which she was injured. Plaintiff seeks recovery under this provision.

         Defendant, on the other hand, claims that because the Plan requires that the member himself contribute a certain amount before the Plan itself begins to cover his or her needed medical services, that “out-of-pocket” contribution limits the Plan's reimbursement rights. The Plan provides:

Once [the member] satisf[ies] any applicable payment limit, the plan will pay 100% of the covered expenses that apply toward the limits for the rest of the Plan Year. Certain designated out-of-pocket expenses may not apply to the payment limit. Refer to your Schedule of Benefits for information on what covered expenses do not apply to the payment limits and for the specific payment limit amounts that apply to your plan.

Id. at p. 12.

         As set forth in the Plan's Summary of Benefits and Coverage (“SB&C, ” Ex. B. to the Laskin Decl.), the out-of-pocket payment limit required before the Plan kicks in to pay “covered expenses, ” is $6, 000. Defendant points out that the SB&C discusses “designated out of pocket expenses that [do] not apply to the payment limits” in specifically providing that “premiums, balance-billing charges, [and] health care the plan doesn't cover” do not suffice in satisfying the out-of-pocket limit. See Def.'s Motion., ECF No. 5-1, 4:22-5:2. According to Defendant, because a ...


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