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)

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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  

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