Courtney v. ART Applied Reimbursement Techniques, Inc. et al

Filing 53

OPINION and ORDER GRANTING Motion for Summary Judgment filed by Defendants Kelly O'Brien, Vickie Kennedy, and Josh Patrick (doc. 39). Signed by Senior Judge Charles R. Butler, Jr on 5/5/2014. (adk)

IN
 THE
 UNITED
 STATES
 DISTRICT
 COURT
 FOR
 THE

SOUTHERN
 DISTRICT
 OF
 ALABAMA

SOUTHERN
 DIVISION

MELISA
 COURTNEY,

 Plaintiff,

v.

ART
 APPLIED

REEIMBURSEMENT

TECHNIQUES,
 INC.,

RALPH
 PATRICK,
 KELLY

O’BRIEN,
 VICKIE

KENNEDY
 and
 JOSH

PATRICK,

 Defendants.

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

CIVIL
 ACTION
 NO.

12-­‐00311-­‐CB-­‐B

OPINION
 and
 ORDER

This
 matter
 is
 before
 the
 Court
 on
 a
 motion
 for
 summary
 judgment
 filed
 by

defendants
 Kelly
 O’Brien,
 Vickie
 Kennedy
 and
 Josh
 Patrick
 (Doc.
 39),
 Plaintiff’s

response
 thereto
 (Doc.
 48),
 and
 Defendants’
 reply
 (Doc.
 50).

 Plaintiff
 concedes
 that

her
 state
 law
 claims
 are
 preempted
 by
 ERISA
 and,
 therefore,
 due
 to
 be
 dismissed.

She
 also
 concedes
 her
 ERISA
 claims
 against
 defendant
 Vickie
 O’Brien.

 She
 argues,

however,
 that
 there
 is
 evidence
 to
 support
 her
 ERISA
 claims
 for
 breach
 of
 fiduciary

duty
 against
 O’Brien
 and
 Patrick.

 For
 reasons
 discussed
 below,
 the
 Court
 finds
 that

Plaintiff’s
 evidence
 is
 insufficient
 to
 sustain
 an
 ERISA
 claim
 against
 these

defendants.1

1
 The
 summary
 judgment
 motion
 does
 not
 pertain
 to
 Plaintiff’s
 claims
 against

defendants
 ART
 Applied
 Reimbursement
 Techniques,
 Inc.
 and
 Ralph
 Patrick,
 both
 of

whom
 have
 filed
 bankruptcy
 petitions.

Facts

While
 Plaintiff
 Melisa
 Courtney
 was
 employed
 by
 defendant
 ART
 Applied

Reimbursement
 Techniques,
 Inc.
 (ART),
 the
 company
 had
 in
 place
 an
 ERISA
 Plan
 for

employee
 health
 insurance
 (the
 Plan)
 provided
 through
 Blue
 Cross
 Blue
 Shield
 (Blue

Cross).

 An
 amount
 was
 deducted
 from
 Courtney’s
 wages
 to
 cover
 a
 portion
 of
 the

premium,
 and
 ART
 was
 to
 pay
 the
 remainder
 of
 the
 premium.

 In
 January
 2012,

Courtney
 underwent
 nonemergency
 medical
 procedures
 only
 to
 discover
 that
 she

had
 no
 coverage.

 ART
 had
 failed
 to
 pay
 Courtney’s
 Blue
 Cross
 premiums,
 even

though
 her
 portion
 of
 the
 premium
 had
 been
 deducted
 from
 her
 paychecks.

Courtney
 was
 denied
 coverage
 by
 Blue
 Cross
 and,
 as
 a
 result,
 owed
 $27,860.28
 in

medical
 bills.

Defendant
 Vickie
 Kennedy
 was
 employed
 as
 a
 “team
 manager”
 for
 ART.

(Kennedy
 Aff.
 ¶
 2,
 Doc.
 41.)

 As
 such,
 she
 “was
 responsible
 for
 supervising
 a
 coding

and
 billing
 team
 for
 an
 emergency
 room
 account.”

 (Id.
 ¶
 3.)

 Kennedy
 had
 no

responsibility
 for,
 nor
 was
 she
 involved
 in,
 the
 administration
 of
 employee
 benefits.

Kennedy
 was
 not
 an
 owner
 or
 principle
 of
 ART
 and
 received
 no
 funds
 diverted
 from

the
 payment
 of
 insurance
 premiums.

Defendant
 Kelly
 O’Brien
 was
 employed
 by
 ART
 as
 Director
 of
 Administration

responsible
 for
 supervising
 team
 managers
 and
 for
 making
 sure
 departments
 were

running
 smoothly.

 (O’Brien
 Aff.
 3,
 Doc.
 41.)

 O’Brien’s
 responsibilities
 included

keeping
 up
 with
 employees’
 hours
 worked
 and
 requests
 for
 time
 off.

 (Id.
 ¶
 3.)

O’Brien
 had
 no
 discretionary
 authority
 with
 respect
 to
 the
 employee
 benefits
 plan

or
 medical
 insurance.

 (Id.
 ¶
 4.)

 O’Brien
 is
 not
 a
 principle
 or
 owner
 of
 ART
 and
 did

not
 receive
 funds
 diverted
 from
 paying
 medical
 insurance
 premiums.

 (Id.
 ¶
 6.)

2

Josh
 Patrick
 was
 ART’s
 Director
 of
 Information
 Systems,
 responsible
 for

“internal
 IT
 maintenance
 as
 well
 as
 client
 equipment
 installation
 and

implementation.”

 (Patrick
 Aff.
 ¶
 2,
 Doc.
 41.)

 Patrick
 was
 not
 responsible
 for

administration
 of
 employee
 benefits,
 was
 not
 a
 principle
 or
 owner
 of
 ART,
 and
 did

not
 receive
 any
 funds
 from
 diverted
 from
 the
 payment
 of
 medical
 insurance

premiums.

 (Id.
 ¶¶
 4,
 7.)

Kelly
 O’Brien
 and
 Josh
 Patrick
 are
 the
 children
 of
 ART
 owner
 Ralph
 Patrick.

According
 to
 Plaintiff,
 the
 two
 “were
 intimately
 involved
 in
 the
 details
 of
 running

ART”
 while
 Plaintiff
 was
 employed
 there.

 (Pl.’s
 Aff.
 ¶
 4,
 Doc.
 49.)

 During
 her
 time

with
 ART,
 Plaintiff
 “heard
 [O’Brien]
 on
 occasions
 speaking
 .
 .
 .
 about
 payroll

deduction
 and
 the
 insurance
 fiasco.”

 (Id.)

 Plaintiff
 also
 alleges
 that
 O’Brien
 “was

responsible
 for
 printing
 the
 paychecks
 at
 issue”
 and
 that
 “[i]t
 was
 common

knowledge
 throughout
 the
 office
 of
 ART’s
 financial
 problems
 and
 the
 fact
 that

employee
 premiums
 were
 being
 wrongfully
 diverted
 and
 used
 to
 prop
 up
 other

areas
 of
 the
 business,
 including
 the
 executive’s
 [sic]
 paychecks.”

 (Id.)

Procedural
 Background

Courtney
 filed
 the
 instant
 civil
 action
 against
 ART
 and
 the
 individual

defendants
 in
 the
 Circuit
 Court
 of
 Mobile
 County
 on
 April
 23,
 2012
 asserting
 several

state
 law
 causes
 of
 action.

 The
 Defendants
 removed
 the
 action
 to
 this
 Court
 on
 May

12,
 2012.

 As
 grounds
 for
 removal
 jurisdiction,
 Defendants
 relied
 on
 federal

question
 jurisdiction
 and
 the
 superpreemption
 doctrine
 applicable
 to
 certain
 ERISA

claims.

 After
 removal,
 ART
 filed
 a
 Chapter
 11
 bankruptcy
 petition.
 Courtney
 moved

to
 remand,
 and
 the
 Court
 found
 that
 the
 bankruptcy’s
 automatic
 stay
 provision,
 18

U.S.C.
 §
 362(a)
 did
 not
 preclude
 consideration
 of
 jurisdictional
 issues.

 This
 Court

3

agreed
 that
 the
 superpreemption
 doctrine
 applied
 and
 denied
 Courtney’s
 motion
 to

remand.

 (Doc.
 14.)

 After
 a
 period
 of
 delay,
 discovery
 got
 underway
 in
 late
 October

2013,
 and
 shortly
 thereafter
 Ralph
 Patrick
 filed
 a
 notice
 of
 bankruptcy.

 Therefore,

on
 December
 12,
 2013,
 the
 Court
 entered
 an
 order
 acknowledging
 that
 this
 action

was
 stayed
 pursuant
 to
 11
 U.S.C.
 §
 362(a)
 as
 to
 both
 Ralph
 Patrick
 and
 ART.2

In
 the
 Second
 Amended
 Complaint,
 Plaintiff
 asserts
 seven
 claims
 against
 the

Defendants.

 In
 Counts
 One
 and
 Two,
 Plaintiff
 asserts
 claims
 under
 ERISA.

 Count

One
 alleges
 that
 the
 Defendants
 breached
 their
 fiduciary
 duty
 under
 ERISA
 by

deducting
 monies
 from
 Plaintiff’s
 paycheck
 for
 health
 insurance
 premiums
 and

failing
 to
 pay
 those
 monies
 to
 Blue
 Cross.

 Count
 Two
 asserts
 a
 claim
 for
 improper

denial
 of
 benefits
 under
 a
 qualified
 ERISA
 plan.

 Counts
 Three
 through
 Seven
 assert

state
 law
 claims
 for
 fraud
 and
 suppression,
 wantonness,
 negligence,
 negligent

supervision,
 and
 criminal
 theft
 of
 property
 and/or
 theft
 by
 deception.

Issues
 Raised

Defendants
 Kelly
 O’Brien,
 Vickie
 Kennedy,
 and
 Josh
 Patrick
 seek
 summary

judgment
 with
 respect
 to
 all
 claims
 asserted
 against
 them.

 In
 response,
 Plaintiff

agrees
 that
 her
 state
 law
 claims
 (Counts
 Three
 through
 Seven)
 are
 preempted
 by

ERISA
 and
 consents
 to
 dismissal
 of
 those
 claims.

 She
 also
 agrees
 that
 Vickie

Kennedy
 is
 entitled
 to
 summary
 judgment
 with
 respect
 to
 the
 ERISA
 claims
 (Counts

One
 and
 Two).

 Therefore,
 the
 only
 issue
 remaining
 is
 whether
 the
 evidence,
 viewed

in
 the
 light
 most
 favorable
 to
 Plaintiff,
 supports
 a
 claim
 against
 Kelly
 O’Brien
 or
 Josh

2
 ART’s
 Chapter
 11
 bankruptcy
 petition
 was
 dismissed
 on
 January
 16,
 2014,

and
 Plaintiff
 filed
 a
 motion
 to
 lift
 the
 stay
 as
 to
 ART.

 However,
 ART
 subsequently

filed
 a
 Chapter
 7
 bankruptcy
 petition.

4

Kennedy
 for
 breach
 of
 fiduciary
 duty
 under
 ERISA
 or
 for
 failure
 to
 pay
 benefits

under
 ERISA.

Legal
 Analysis

Summary
 Judgment
 Standard

Summary
 judgment
 should
 be
 granted
 only
 if
 "there
 is
 no
 issue
 as
 to
 any
 material

fact
 and
 the
 moving
 party
 is
 entitled
 to
 a
 judgment
 as
 a
 matter
 of
 law."

 Fed.
 R.
 Civ.

P.
 56(c).

 The
 party
 seeking
 summary
 judgment
 bears
 "the
 initial
 burden
 to
 show
 the

district
 court,
 by
 reference
 to
 materials
 on
 file,
 that
 there
 are
 no
 genuine
 issues
 of

material
 fact
 that
 should
 be
 decided
 at
 trial."

 Clark
 v.
 Coats
 &
 Clark,
 Inc.,
 929
 F.2d

604,
 608
 (11th
 Cir.
 1991).

 Once
 the
 moving
 party
 has
 satisfied
 his
 responsibility,

the
 burden
 shifts
 to
 the
 nonmoving
 party
 to
 show
 the
 existence
 of
 a
 genuine
 issue
 of

material
 fact.

 Id.

 "If
 the
 nonmoving
 party
 fails
 to
 make
 'a
 sufficient
 showing
 on
 an

essential
 element
 of
 her
 case
 with
 respect
 to
 which
 she
 has
 the
 burden
 of
 proof,'
 the

moving
 party
 is
 entitled
 to
 summary
 judgment."

 United
 States
 v.
 Four
 Parcels
 of
 Real

Property,
 941
 F.2d
 1428,
 1437
 (11th
 Cir.
 1991)
 (quoting
 Celotex
 Corp.
 v.
 Catrett,
 477

U.S.
 317
 (1986))
 (footnote
 omitted).

"In
 reviewing
 whether
 the
 nonmoving
 party
 has
 met
 its
 burden,
 the
 court

must
 stop
 short
 of
 weighing
 the
 evidence
 and
 making
 credibility
 determinations
 of

the
 truth
 of
 the
 matter.

 Instead,
 the
 evidence
 of
 the
 non-­‐movant
 is
 to
 be
 believed,

and
 all
 justifiable
 inferences
 are
 to
 be
 drawn
 in
 his
 favor.”

 Tipton
 v.
 Bergrohr
 GMBH-­‐
Siegen,
 965
 F.2d
 994,
 999
 (11th
 Cir.
 1992)
 (internal
 citations
 and
 quotations

omitted).

 “However,
 we
 draw
 these
 inferences
 only
 “’to
 the
 extent
 supportable
 by

the
 record.’”
 Penley
 v.
 Eslinger,
 605
 F.3d
 843,
 848

 (11th
 Cir.
 2010)
 (quoting
 Scott
 v.

Harris,
 550
 U.S.
 372,
 381
 n.
 8
 (2007)
 (emphasis
 omitted)).

 Furthermore,
 “[a]

5

dispute
 over
 a
 fact
 will
 only
 preclude
 summary
 judgment
 if
 the
 dispute
 “might
 affect

the
 outcome
 of
 the
 suit
 under
 the
 governing
 law.”
 Id.
 (quoting
 Anderson
 v.
 Liberty

Lobby,
 Inc.,
 477
 U.S.
 242,
 248,
 (1986)).

Plaintiff
 Has
 Failed
 to
 Prove
 Individual
 Defendants
 Liable
 Under
 ERISA

The
 Second
 Amended
 Complaint
 asserts
 two
 distinct
 claims
 against
 O’Brien

and
 Patrick,
 although
 the
 parties
 do
 not
 clearly
 address
 both
 in
 their
 summary

judgment
 submissions.

 Count
 One
 asserts
 a
 claim
 for
 breach
 of
 fiduciary
 duty,

which
 falls
 under
 29
 U.S.C.
 §
 1132(a)(3).

 Varity
 Corp
 v.
 Howe,
 516
 U.S.
 489,
 515

(1996)
 (holding
 that
 ERISA’s
 catchall
 relief
 provision
 provides
 individuals
 remedy

against
 ERISA
 trustee
 for
 breach
 of
 fiduciary
 duty).

 Count
 Two
 asserts
 a
 claim
 for

improper
 denial
 of
 benefits
 under
 29
 U.S.C.
 §
 1132(a)(1)(B)
 which
 allows
 a
 plan

beneficiary
 to
 bring
 a
 civil
 action
 “to
 recover
 benefits
 due
 to
 him
 under
 the
 terms
 of

the
 plan.”

 “The
 proper
 party
 defendant
 in
 an
 action
 concerning
 [denial
 of]
 ERISA

benefits
 is
 the
 party
 that
 controls
 administration
 of
 the
 plan.”

 Garren
 v.
 John

Hancock
 Mut.
 Life
 Ins.
 Co.,
 114
 F.3d
 186,
 187
 (11th
 Cir.
 1997)
 (per
 curiam).

Presumably,
 Blue
 Cross
 administered
 the
 health
 insurance
 plan.3

 Kelly
 O’Brien
 and

Josh
 Patrick
 deny
 any
 role
 in
 the
 administration
 of
 the
 plan,
 and
 Plaintiff
 has

presented
 no
 evidence
 to
 the
 contrary.

 Therefore,
 Plaintiff
 cannot
 prevail
 against

these
 Defendants
 on
 her
 claim
 for
 improper
 denial
 of
 benefits.

Plaintiff’s
 claim
 for
 breach
 of
 fiduciary
 duty
 fares
 no
 better
 because
 neither
 of

these
 defendants
 qualifies
 as
 a
 fiduciary.

 It
 is
 true,
 as
 Plaintiff
 argues,
 that
 a
 party

may
 be
 a
 “fiduciary”
 within
 the
 meaning
 of
 ERISA
 even
 though
 he
 is
 not
 designated

as
 such
 in
 the
 plan
 documents.

 ERISA
 “defines
 a
 fiduciary
 not
 simply
 in
 terms
 of

3
 No
 evidence
 of
 the
 terms
 of
 the
 Plan
 has
 been
 presented.

6

certain
 designated
 offices,
 but
 also
 more
 flexibly,
 with
 reference
 to
 the
 functions

performed
 by
 a
 person.”

 Useden
 v.
 Acker,
 947
 F.2d
 1563,
 1574
 (11th
 Cir.
 1991).

 A

person
 is
 a
 fiduciary
 to
 the
 extent
 he
 “exercises
 any
 discretionary
 authority
 or

discretionary
 control”
 over
 the
 plan’s
 management
 or
 over
 management
 or

disposition
 of
 the
 plan’s
 asserts
 or
 “to
 the
 extent
 he
 has
 discretionary
 authority
 or

discretionary
 responsibility
 in
 the
 administration
 of
 the
 plan.”

 29
 U.S.C.
 §

1102(21)(A)(i)
 &
 (iii).

 Both
 Kelly
 O’Brien
 and
 Josh
 Patrick
 deny
 they
 had
 any

discretionary
 authority
 or
 responsibility
 over
 any
 employee
 benefits
 plan
 and
 also

deny
 that
 they
 had
 any
 fiduciary
 responsibilities
 regarding
 any
 employee
 benefits

plan.

Plaintiff’s
 evidence
 to
 the
 contrary
 is
 quite
 thin.

 In
 her
 brief,
 she
 points
 out

that
 Kelly
 O’Brien
 and
 Josh
 Patrick
 are
 the
 children
 of
 Ralph
 Patrick,
 the
 owner
 of

ART
 and
 that
 Kelly
 O’Brien
 was
 aware
 that
 funds
 withheld
 from
 employee

paychecks
 for
 health
 insurance
 premiums
 were
 being
 used
 for
 other
 purposes.4

Plaintiff’s
 deposition
 contains
 a
 bit
 more
 information
 about
 Kelly
 O’Brien’s

involvement
 and
 duties
 at
 ART,
 though
 none
 of
 it
 proves
 that
 O’Brien
 exercised
 any

discretionary
 authority
 regarding
 the
 Plan
 or
 its
 assets.

 Specifically,
 she
 states
 that

O’Brien
 spoke
 with
 Plaintiff
 and
 others
 about
 “payroll
 deduction
 and
 the
 insurance

fiasco,”
 that
 O’Brien
 was
 responsible
 for
 printing
 checks,
 and
 that
 “[i]t
 was
 common

knowledge
 that
 .
 .
 .
 employee
 premiums
 were
 being
 wrongfully
 diverted
 and
 used
 to

prop
 up
 other
 areas
 of
 the
 business,
 including
 the
 executive’s
 paychecks.”

 (Pl.’s
 Aff.

¶
 4,
 Doc.
 49.)

 O’Brien’s
 knowledge
 does
 not
 equate
 to
 “discretionary
 authority”
 over

4
 Plaintiff
 also
 asserts,
 without
 proof,
 that
 Josh
 Patrick
 and
 Kelly
 O’Brien
 were

“executives”
 in
 ART.

 Even
 if
 that
 were
 true,
 it
 is
 not
 evidence
 that
 they
 had

discretionary
 authority
 over
 the
 management
 of
 the
 Plan
 or
 over
 administration
 of

the
 Plan’s
 assets.

7

the
 Plan,
 its
 assets,
 or
 its
 administration,
 nor
 does
 her
 check-­‐printing
 responsibility.

Cf.
 LoPresti
 v.
 Terwilliger,
 126
 F.3d
 34,
 40
 (2nd
 Cir.
 1997)
 (holding
 that
 co-­‐owner

who
 used
 company
 assets
 to
 pay
 creditors
 rather
 than
 employee
 benefit
 Plan
 was
 a

fiduciary
 under
 ERISA
 but
 that
 co-­‐owner-­‐-­‐who
 had
 check-­‐signing
 authority,
 some

knowledge
 of
 payroll
 deductions,
 and
 no
 responsibility
 for
 determining
 order
 in

which
 creditors
 would
 be
 paid—was
 not).5

Conclusion

For
 reasons
 discussed
 above,
 it
 is
 hereby
 ORDERED,
 ADJUDGED,
 and

DECREED
 that
 the
 motion
 for
 summary
 judgment
 be
 and
 hereby
 is
 GRANTED.

DONE
 and
 ORDERED
 this
 the
 5th
 day
 of
 May,
 2014.

s/Charles
 R.
 Butler,
 Jr.

Senior
 United
 States
 District
 Judge

5
 In
 her
 deposition,
 Plaintiff
 makes
 a
 conclusory
 assertion
 that
 “Josh
 Patrick

and
 Kelly
 O’Brien
 “were
 involved
 in
 discretionary
 functions
 relating
 to
 policies
 and

procedures
 concerning
 the
 operation
 of
 ART
 and
 the
 Insurance
 issues.
 .
 .”

 (Pl.’s
 Aff.,

¶
 4.)

 That
 statement
 does
 not
 create
 a
 genuine
 issue
 of
 fact
 for
 two
 reasons.

 First
 it

is
 a
 conclusory
 assertion.

 See
 Fullman
 v.
 Graddick,
 793
 F.2d
 553,
 557
 (11th
 Cir.
 1984)

(party’s
 own
 conclusory
 allegations
 not
 sufficient
 to
 oppose
 a
 motion
 for
 summary

judgment).

 Second,
 it
 ties
 the
 Defendants’
 “discretionary
 functions”
 to
 things
 other

than
 the
 Plan,
 i.e.,
 operation
 of
 the
 business
 and
 undefined
 insurance
 issues.

Plaintiff
 also
 mentions
 in
 both
 her
 brief
 and
 her
 affidavit
 that
 Josh
 Patrick
 and
 Kelly

O’Brien
 are
 owners
 of
 a
 new
 company
 operating
 in
 the
 location
 and
 providing
 the

same
 services
 as
 ART.

 This
 information
 has
 no
 relevance
 in
 proving
 that
 either
 of

these
 Defendants
 exercised
 discretionary
 authority
 over
 the
 Plan
 at
 issue
 here,
 its

assets,
 or
 its
 administration.

8